Online cryptocurrency exchanges – what they are and how they work
You may have noticed that 2022 has been a difficult year for cryptocurrency holders from Russia. Many exchanges used by Russians to save digital money and multiply it by gambling on the exchange rate have closed their access.
The way out was a cryptocurrency exchanger, a service that exchanges cryptocurrencies for other types of currency, fiat money to cards or cash.
The platforms have their pros and cons, which we will try to understand.
What is a cryptocurrency exchange and how does it differ from an exchange?
A digital money exchanger is a platform for exchanging (buying/selling) coins.
The resources have no functionality that allows you to store your assets on them.
Immediately after the exchange, the funds are withdrawn to the address specified by the user at the time of the transaction.
In the case of coins, it is an e-wallet, in the case of fiat currency, a bank card can be specified.
Some exchangers also allow you to exchange digital money for cash, but more on that later.
To get a clearer idea of the difference between an exchange and an exchanger, you can draw a parallel to buying and selling cash currency.
For example, you have a certain amount of dollars or euros in your hands. You want to exchange it for roubles or other fiat currency.
You have two choices: either you choose a quick exchange at a less favourable rate, or you go the hard way, but you change money profitably and may even earn a little more.
The first route is a crypto-exchange
You simply go to the bank or other financial company, give the cashier the money, he returns it to you with the equivalent in the currency of your choice.
The second way is the stock exchange
You come in, register, open a brokerage account, deposit money into it. Once the money is in the account, the owner effectively loses control over it.
The assets are managed by the broker, who must follow the owner’s instructions and carry out the exchange.
In the case of digital money, you can often find complaints online about brokers who do not want to withdraw money immediately on request, or who do not withdraw the full amount.
This is the danger of a stock exchange – as long as your coins are there, the broker can put them into circulation more than once without your knowledge.
Even if his deals are profitable, the owner will not know about it and will get his interest. And if the broker goes bust, all your assets are burned along with him.
So if risk is not your noble cause and rapid profits with minimal effort are not the goal, it is better to change digital currencies through cryptocurrency exchanges online.
How cryptocurrencies work
Platforms where you can exchange one cryptocurrency for another or fiat money with withdrawal to your card work automatically.
As soon as a request is received, the system processes it. Many users complain about unfavourable exchange rates on online exchangers.
In fact, the system determines the rate based on the average of the world’s exchanges. Such a rate is called an express rate.
Every buyer who wants to buy or sell coins for fiat money, and also a holder who wants to exchange part of their crypto-asset for another, must have a crypto-wallet.
If you need to exchange crypto for fiat money or buy coins with it, you will also need a bank card or e-wallet.
The exchange algorithm is quite simple:
- Go to the website and in the exchange section look for the currency pair you are interested in. To do this, under “give” you find your currency, under “receive” the currency you want;
- After you need to give the data for the exchange. Standardly, this is the email address and cryptocurrency wallet, bank card number;
- Then be sure to read the terms and conditions of the site. If you are using a bitcoin exchanger for the first time, study the information carefully. Any claims that are stipulated in these documents will not be considered;
- Making payment. Usually it is enough to confirm the transaction with a click of a button;
- Wait for the transaction. The time depends on the exchanger, system load and several other factors.
As you can see, the exchanger is not interested in your personal data, there is no need to register, so the process is completely anonymous.
This simple algorithm is the main advantage of exchanging cryptocurrencies online. But it is not the only one.
Advantages and disadvantages of cryptocurrencies
Like any service, especially one that works with real and virtual money, cryptocurrency exchanges have advantages and disadvantages.
The main advantages of exchanging cryptocurrencies online are as follows:
- Accessibility – any internet user can use the service;
- Simplicity – as a rule, the interfaces of the platforms are designed to be simple and intuitive for users, so even a novice can make their first exchange without much difficulty;
- Speed of transactions – normally the exchange process takes no more than 15 minutes, but much depends on the functionality of the service itself;
- Availability of bonuses and other incentives – many platforms have their own loyalty programme and also referral and savings programmes.
But it is also worth mentioning the disadvantages of cryptocurrency exchange platforms:
- Unprofitable rate – this disadvantage can be called conditional, because it all depends on what you are comparing it to. If you compare it with an exchange, then yes, the exchange rate on the services is not so profitable, but if you compare it with P2P services, where the exchange is done without intermediaries and the rate can be set by the participants themselves, then the exchanger is sometimes even better and more profitable;
- The risk of running into scammers – if you choose the right and competent service, the risk of fraud is zero. Of course, if you don’t know how to choose the right service for exchange, you can lose your coins even more easily than on the exchange.
If you don’t like unnecessary risk, learn how to choose the right service to exchange cryptocurrencies for other coins and cash.
How to choose a USDT cryptocurrency exchanger?
When services are popular among users, their number grows, demand breeds supply, but alas, it is not always the most profitable and fair in the market.
So before exchanging USDT on a platform, determine how reliable it is or reconsider your choice based on such parameters:
- The exchange rate is the most common, but not always justified, selection criterion. An attractive offer can hide such a high commission that you quickly go from being a plus to a minus and end up exchanging much less than you bargained for;
- User-friendly interface – this criterion is of great importance, especially for newcomers. With complicated navigation it is very easy to make a mistake and not complete a transaction;
- Reserve – it may seem that this criterion is only important for large exchange volumes, in fact there have been cases where other users have run out of reserve while filling out data and have had to wait for it to be replenished. Also, the reserve is an indicator of reliability. The bigger the reserve, the higher the financial stability of the exchanger, the more users and the more reliable the operation;
- Fees – Usually exchangers charge a certain percentage of the amount exchanged for their services. But there are services that charge a fixed fee. Whether or not it is appropriate to choose one type of fee or another depends on the amount of currency to be exchanged;
- Portfolio of cryptocurrencies, fiat currencies and services – if you use a cryptocurrency exchanger all the time, choose a service with a diversified portfolio. This reduces risk and allows for more profitable subsequent exchanges;
- Additional options and features. Exchangers sometimes offer loyal customers the opportunity to take part in loyalty programmes, receive rewards and bonuses.
The function of exchanging cryptocurrency for cash fiat money is considered very convenient among users.
The Wellcoinex service, for example, offers such a service.
The cryptocurrency exchange in many countries operates in parallel online and offline.
If you want to exchange crypto for cash, come to the office and make the exchange. There is also an option of ordering cash to be delivered by courier.
If you want to use the cryptocurrency exchange service online and are not going to store coins in exchange accounts, then cryptocurrency exchange is the right choice.
Recall that the exchange of digital currencies in Russia and in many other countries is not legally regulated.
That is, the holder of crypto-assets simply has no way to exchange them legally through a bank.
In this regard, online exchangers have become the fastest, most reliable and convenient option. Provided, of course, that you choose the right service.