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Exchange Platform – What are cryptocurrency exchanges and how do they work?

Also known as cryptocurrency exchanges, exchange platforms are companies that buy and sell cryptocurrencies for fiat currencies (dollar, euro, real, peso) or for other cryptocurrencies.

In this sense, exchange platforms are true pillars of the crypto world. They fulfill the important function of extending access to cryptocurrencies to a wider audience. Ultimately, their existence allows greater integration of crypto with the rest of the economy.

Since the birth of Bitcoin in 2009, many things have changed with respect to exchanges. Initially, when the cryptocurrency was still taking its first steps, the activity of the exchanges was marked by amateurism, low confidence and countless scams.

After more than ten years, the scenario is different. In a market valued at more than 900,000 million dollars, a figure that is expected to grow even more in the coming years, exchanges have become professional and have turned into gigantic businesses. Today, transparency and compliance are the key for this market.

In this article, the Cripto InterCambio blog explains what an exchange platform is and what parameters are important when choosing one of them.

Exchange Platform: What is it? How does it work?

Exchange platforms serve as intermediaries between buyers and sellers of crypto. To carry out this service, exchanges usually charge fees.

We’ll try to explain the operation of an exchange platform through an example. Let’s say you decided to buy $ 100 of Bitcoins. What do you need? Let’s see it step by step.

Registration on an exchange

In most exchanges, the first step is to register on the platform. For this, it will be necessary to provide your data, copies of your documents and, in some cases, even a confirmation selfie.

This process of registration and confirmation of identity is known as KYC, which is the acronym for Know Your Costumer.

Although this process gives more security to the company, which stores a huge amount of data for each of the registered people, from the customer’s point of view the need to register can be uncomfortable.

After all, KYC is quite questionable. In addition to being bureaucratic, since it can take a few hours to be confirmed, such a process puts an end to anonymity, which is one of the main pillars of the cryptocurrency industry.

Deposit on an exchange

Once the registration is approved, the buyer must deposit $ 100 on their exchange platform account.

In general, platforms accept payment in several ways:

  • Credit or debit card;
  • Bank transfer;
  • Ticket;
  • Online payment platforms (PayPal, Neteller, Skrill, etc.)

The largest exchanges in the market are custodial, which means that they store your money. However, for those who seek more security, this may be another obstacle of the traditional exchange platforms.

First of all, it’s a question of trust: you have to be sure that en exchange will store your money correctly, that it won’t be hacked and so on.

Also, the big problem may be the difficulty of withdrawing this amount later. If you want to transfer your $ 100 back to your bank account, you will probably have to pay some charges for the service.

Buying/selling on an exchange

Once you have registered and deposited the $ 100 on your exchange platform account, it’s time to buy your coins.

For that, there are two options:

  • Limit order: in this case, the buyer enters the amount they are willing to pay. If the platform finds a seller that accepts the price, the purchase is confirmed.
  • Market order: in this case, the purchase is realized at the best price available at the moment.

Once the transaction is completed, the coins are yours.

You can store them in the virtual wallet of the platform itself or in a virtual wallet somewhere else: computer, mobile phone or hardware. Read more about this topic in the article Virtual Wallet: what is it? on our blog.

What is the biggest exchange platform?

According to CoinMarketCap, the largest exchange platforms in terms of liquidity are:

  • HitBTC;
  • Bitfinex;
  • Binance;
  • Huobi Global;
  • Kraken.

All major exchanges offer services of buying and selling crypto. If you want to use them, you should check whether they operate in your country, accept your local currency and what fees they charge. In addition, all of them are custodial and require registration (the so-called KYC).

Use Cripto InterCambio to exchange cryptocurrency!

Aware of the main needs of crypto users, we created Cripto InterCambio. Based in Chile, we offer our services in all Latin American countries – and beyond!

On CIC we do not work with fiat currencies (dollar, peso, real, etc.) yet, only with cryptocurrencies. On our site, we offer the possibility of exchanging between more than 110 types of crypto assets, including altcoins, stablecoins and tokens.

To offer the best possible prices to our customers, our algorithm searches prices on the principal exchange platforms in the world and displays them on the main page of our website.

The main features of our service are:

  • Anonymity: we do not have any type of KYC. We value anonymity above all, and to use CIC it is not necessary to register.
  • No fees: we do not charge fees for transactions between cryptocurrencies.
  • No custody: we do not store your money. Cryptocurrencies leave one virtual wallet and, after the exchange, return to another wallet.
  • Security: during transactions, it is possible to monitor the status of your money at any time.
  • Speed: each transaction does not take more than a few minutes to complete.

In our FAQ, you can find the main questions about our service. Also, if you still have questions or want to make any kind suggestion, you can contact us at [email protected]

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