There are a lot of bitcoin exchanges on the internet, and it isn’t easy to choose a particular exchange with high security and a lot of features. By increasing the popularity, the number of exchanges is also increasing because the founder of exchanges knows there are millions of bitcoin users. If they use their exchange, then the company will earn a high profit. However, exchanges charge fees for every transaction, and the fees are different in various exchanges according to their regulations. In this article, we will talk about the advantages and disadvantages of bitcoin exchanges. So, without wasting time, let’s explore the positive and negative sides of bitcoin exchanges.
Bitcoin in brief:
Bitcoin is a famous global cryptocurrency that came into existence in 2008 by founder Satoshi Nakamoto. Bitcoin is the first cryptocurrency that came into existence to solve the fiat currency problems because you cannot do multiple things with fiat currency, but it is possible with bitcoin. Such things are investing, trading, buying, accepting bitcoins, mining, online shopping, sending, etc. Bitcoin is a decentralized currency that means only you are the controller of your wallet, and no one except your transfer can see your transactions or your identity.
What are exchanges:
Bitcoin exchanges are third parties that provide extra features to bitcoin users. Since blockchain is a decentralized system, anyone can see your transaction ID, spend amount and the receiver’s wallet address. However, it will not show your name or your identity. So many people want privacy in their transactions and to their wallet address. That is the reason people use exchanges. Bitcoin Exchange charges fees for providing these extra services. You have to fill in your personal information and identity proofs to grab all the features or services of bitcoin exchange. Learn more about bitcoin trading and start investing in bitcoins online Bitcoin Storm
Advantages of bitcoin exchanges:
There are a few benefits of using bitcoin exchanges in this digital era:
- GUI: The significant benefit of using bitcoin exchange is GUI (Graphical User Interface). The user interface is straightforward for every bitcoin exchange, making everything easy, such as investing, trading, buying, selling, etc. Therefore, a student can easily buy and sell bitcoin through an exchange without guidance because it is straightforward.
- Fast transactions: If you are trading bitcoin, fast transactions are vital. If you have purchased bitcoin at a certain amount and if the transaction takes time, the price of bitcoin will decrease at the moment, and you can suffer loss. So the second benefit of a bitcoin exchange is fast transactions.
- Quickly deposit and withdrawal: Go to your profile section, and there will be an option of deposit and withdrawal funds. There are multiple options for depositing money in fiat currency such as net banking, UPI, debit or credit card, Google Pay, PhonePe, Paytm, etc. In addition, you can deposit and withdraw money anytime to your bank account.
- Trading: Exchanges make easy trading by showing the charts. You can analyze various cryptocurrencies through a chart and customize the time and date of the chart performance.
- Security: Some exchanges provide extra security options such as a PIN or finger lock before opening the app. You can also choose the two-step authentication that means you will get code to your mobile number or email address.
- Sending and receiving: You can also transfer bitcoin from your exchange wallet to another wallet, or you can also receive it from your exchange wallet from another wallet.
Disadvantages of Bitcoin exchanges:
As we read the positive side of the bitcoin, there are also negatives of bitcoin exchanges:
- Centralized system: Bitcoin exchanges are centralized systems that control them by a third party. If the exchange gets hacked, all the users will lose their crypto coins, never getting them back. If you use blockchain, there will be no fear of losing coins because there is no central point of failure.
- High fees: Fees of exchanges depend upon the exchange’s popularity, and if you are using a famous exchange, then transaction fees will be high. On the other hand, if you are doing trade, some percentage will be deducted by an exchange.
- No privacy: Since bitcoin exchange is a centralized system, there is no privacy. When you create your account on an exchange, you have to fill your personal information with identity proof, and exchange managers can track all the transactions. Furthermore, they can suspend your account anytime because they are the managers and controllers.
- No long-term investment: You cannot hold bitcoin for the long term in an exchange because if the exchange gets hacked or fails, you will lose all the coins in the future. It is suitable for short-term trading.