Cryptocurrency is continuing to take the world by storm as a payment option. It is new enough that many still do not understand it or know whether they should invest in it or use it. Before you engage in crypto trading, it is essential that you have some knowledge, a digital wallet, and an online exchange platform to use for trading one cryptocurrency with another. You should also understand the types of crypto trading platforms and the concept of trading them before you decide whether to get involved in cryptocurrency trading. Here are four cryptocurrency exchange platforms and how they work.
Conventional Cryptocurrency Exchange
On conventional cryptocurrency exchange platforms, trading essentially follows the stock and commodity exchange markets’ trading mechanism. The conventional cryptocurrency exchange is a platform where trading is conducted among the buyers, sellers, and an intermediary source based on the current market price of any cryptocurrency.
For each transaction, the middleman charges a certain percentage commission. The fee can be in the form of currency, or it can be in cryptocurrency. Online platforms, such as Coinbase’s GDAX, Bittrex, Binance, Kraken, and Shapeshift, are few conventional cryptocurrency exchange platforms. For example, if one wants to convert a cryptocurrency into any foreign currency, they can easily utilize the conventional cryptocurrency exchange platform to do so securely.
Direct Trading Exchange
The direct trading cryptocurrency exchange is directly traded and cuts out the middleman, unlike the conventional cryptocurrency exchange platform. Such online exchanges trade directly, and there is no concept of a middleman. The buyers and sellers trading without an intermediary and the seller determines their own cross-currency equivalence and does not use the absolute market price.
Cryptocurrency Brokers
Cryptocurrency broker platforms act much the same as brokers within the stock exchange. These sites facilitate trades between the buyer and seller. These platforms are web-based portals and applications for cryptocurrency exchange and are convenient to users. Using a cryptocurrency broker site or app allows the buyer and seller the convenience of having access to trade via smartphones, tablets, a laptop, or a desktop. These websites and apps play the identical role of a stockbroker, and the prices are already fixed before the purchase or trade of the cryptocurrency.
Cryptocurrency Funds
The cryptocurrency fund platform allows buyers and sellers to exchange through a pool of funds. Professionals manage these pools to facilitate the purchasing and selling of cryptocurrency through the pooled fund. These pooled funds platforms are primarily meant for investors who want to purchase cryptocurrencies and hold them for a long period.
Other Information on Cryptocurrency Exchange
While like the stock exchange, cryptocurrency exchange platforms are not part of the stock exchange. How the trades are made are similar but not done in the same arena or on the same platforms. It is suggested that an amateur or a fresh entrant should initiate their first cryptocurrency trade through a cryptocurrency fund since the trades are handled by a professional. Until you are a professional yourself in cryptocurrency exchange, you should always seek a professional. A novice can also use Coinbase, a cryptocurrency exchange platform known to be easy to understand and user-friendly. The only limitation is that it only trades in Bitcoin, Ethereum, and Litecoin.
Bitcoin is becoming rarer as it was frantically erratic in 2017. At that time and since then, bitcoin either helps you become filthy rich or incur a massive loss. It is suggested that while trading in cryptocurrencies, that you trade in a variety of cryptocurrencies such as a mixture of Bitcoin, Ethereum, and Litecoin. Though Bitcoin has been a cryptocurrency that has made many a lot of money, there is little in circulation, and it is rare to trade in it today. Therefore, it is suggested that if you are looking to get into cryptocurrency trading, you look into all the options and find the one right for you.
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