A cryptocurrency exchange is a place (platform, service) where you can both exchange cryptocurrency for another and trade them on an ongoing basis to make a profit. Among the most well-known cryptocurrency exchanges that support fiat conversions at the same time are Mt.Gox, BTC-E, OKCoin, Huobi, BTC China, Cryptsy, BitStamp, and Vircurex. At the same time, apart from Bitcoin, other currencies have almost not become widespread. Litecoin and Namecoin are more or less well-known, and the rest are most often used for some speculation and making money on exchange rate differences, and are almost not used for these purposes.

Cryptocurrency Exchanges

Cryptocurrency exchanges do not have official recognition as full-fledged exchanges, and have not received licenses. In fact, they function as large (or not so large) online services where you can buy or sell cryptocurrency, making money on the exchange rate difference between pairs. At the same time, the most well-known services are already acquiring features inherent in exchanges, for example, they allow you to conduct margin transactions (on credit, with a certain "leverage"). Users point out a few points:

• The technical support of such "exchanges" does not fully protect participants from fraud,
• In addition to the technical side, it is quite difficult to deal with the legal support of transactions,
• Some of the services are projects with a short lifespan, from which it is important to have time to withdraw funds on time - before they are closed.

How to Make Money on a Cryptocurrency Exchange

To make money on a cryptocurrency exchange, you must first acquire a certain amount of such currency, then enter it into the system (on the exchange) and exchange it at the most favorable rate for other currencies, including fiat. Depending on the current exchange rate and exchange rate differences, you can make quite a significant profit. One of the most tempting moments for those who would like to make money on a cryptocurrency exchange is the 55.8-fold increase in the value of bitcoin in 2013. However, many courses are quite speculative, which means that such earnings are difficult to plan and predict, unstable and controversial.

How to trade on a cryptocurrency exchange

To trade on a cryptocurrency exchange, compare the current and previous rates of individual cryptocurrencies and fiat currencies, and transfer funds to the form that suits you. The services provide quite complete information and an excellent set of tools – they build charts, keep records of transactions performed, their volume, and provide detailed data on trades. When trading, consider:

• the volume of cryptocurrency in circulation,
• the dynamics of changes in this volume to the limits of the total emission volume (for bitcoin – 21 million units, for litecoin – 84 million units),
• the volume of transactions made on a particular exchange and "neighboring" ones (often indicated not only in bitcoins, but also in USD).

The Most Popular Cryptocurrency Exchanges

One of the most popular and sought-after cryptocurrency exchanges in the trading market is Bitfinex. On the stock market, the volume of its turnover is quite high. In terms of trading volume, it is one of the largest in the world The following cryptocurrencies are traded – BTC and LTC. BTC to USD, BTC to LTC, and LTC to USD exchange directions are available. The Bitstamp exchange is also in demand among customers. This exchange works only in BTC cryptocurrency, there is only one pair for exchanging currencies. BTC-e is in high demand among Russian-speaking clients and is one of the five largest bitcoin exchanges on the network. It allows its clients to take part in trading without going through the verification procedure.

Online Cryptocurrency Exchanges

Among the online cryptocurrency exchanges, a few years ago, the BTC China exchange was considered the largest in terms of trading volumes. However, in 2013, China issued several laws that began to control virtual currency and its trade, and regulate exchange operations. The exchange has gradually lost its former popularity, although it retains a good position in the market. The online cryptocurrency exchange Bter is also registered in China. Within this trading platform, you can carry out transactions for the purchase and sale of such currencies as LTC, CNY, BTC. In total, there are more than 35 currency pairs in the list of the site. The exchange offers clients a minimum percentage of commission for participation in trading - 0.2%.

Major international stock exchanges

Among international trading platforms, not only Bitstam and BTC China are in demand among customers. For example, the American Cryptsy allows you to trade more than a hundred cryptocurrencies of various types. Interest on the account balance is accrued in BTC currency.

Kraken and the bitcoin exchange of the same name were launched in San Francisco more than five years ago. The exchange has a high level of security.

Another American international cryptocurrency exchange, Poloniex, was launched just a year ago, but may be of interest to traders due to low interest rates and the availability of p2p loans.

Differences between a cryptocurrency exchange and stock and currency markets

If you compare the cryptocurrency market with the currency and stock markets, it is worth noting that on bitcoin exchanges, the volatility indicators are several tens or even hundreds of times higher. Volatility can affect the value of a cryptocurrency at any given time. The bitcoin rate has risen by more than 5000% over the past three years. You will definitely not see such results in the stock market.

The bitcoin exchange allows a trader to enter trades with a minimum investment of personal funds and win 5 or even 10 times more on a colossal difference in the value of currencies. On the other hand, the risks of cryptocurrency trading are also much greater than when working in the stock market.

Important Rules for a Cryptocurrency Exchange

1. Any trading must be conducted confidently and calmly. Greed on a cryptocurrency exchange will become your enemy. Sometimes you just shouldn't expect that an already grown currency will regain its value. Especially when forecasts say that prices will start to fall. It is important for a trader to have time to sell bitcoins before they fall.
2. You have to be patient enough to wait for signals to sell or buy a currency. Impulsiveness in such an inherently risky trade will play a cruel joke on the trader.
3. The list of quotes must be constantly monitored – it is the main source of information for the exchange.

The mood of players on the exchange largely depends on capitalization and volume for the cryptocurrency markets. Based on this data, you can predict how the quotes will behave.