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What Does Bitcoin Exchange Entail?
Bitcoin exchanges are digital marketplaces that allow traders to sell and purchase bitcoins using different altcoins and fiat currencies. The bitcoin currency exchange is an online podium that is an intermediary between sellers and buyers of cryptocurrency. The currency ticker utilized for bitcoin is either XBT or BTC.
Comprehending Bitcoin Exchange
Bitcoin exchange platforms partner buyers with sellers. Like your traditional stock exchange, traders can bid to buy or sell bitcoin by either placing a limit order or market order. In case of a market order, the trader authorizes the exchange to trade his coins for the best possible price in the online marketplace. In case of a limit order, the trader gives direction to the exchange to trade coins for a price below the present ask or higher than the current bid, contingent on whether they are selling or buying.
For a user to transact in bitcoin on a cryptocurrency exchange platform, he must register with the exchange and undergo the verification process to authenticate his identity. Once authentication is done, and an account is opened for him, which enables him to transfer money into the account before he can buy coins. Check out more on Crypto Head.
Deposits, Withdrawals And Payment Methods
Different exchanges offer various payment methods, which can be utilized for depositing funds, for example, bank wires, credit or debit cards, direct bank transfers, money orders, bank drafts, and sometimes gift cards. A trader who wants to withdraw money from his account could do so by utilizing the options offered by his exchange, which could be via PayPal transfer, check mailing, bank transfer, bank wire, cash delivery or credit card transfer.
Making withdrawals and deposits usually comes at a price, contingent on the preferred payment method to transfer funds. The more significant the risk of a chargeback from a payment method, the higher the fee. Wiring money or making a bank draft to the exchange has a lower risk of a chargeback in comparison to funding your account with a credit/debit card or PayPal where the funds that are transferred can be returned or reversed to the user if he requests it from the bank.
Currency Conversion Fees
Apart from fund transfer fees or transaction fees, traders may also be charged currency conversion fees, conditional on the currencies, which are accepted by the bitcoin exchange. Say a user is transferring Canadian dollar to an exchange that merely deals in US dollars, the exchange or the bank will convert the CAD to USD at a fee. It is always best to transact with an exchange, which accepts your local currency to avoid the FX fee.
Bitcoin Exchange Vs. Bitcoin Wallet
Bitcoin exchange is not the same as a bitcoin wallet. While the former provides a platform where bitcoin users can transact with each other, the latter is merely a digital storage service that can be used by bitcoin holders to store their coins securely. Most bitcoin exchange platforms offer bitcoin wallets for users, but they may charge a fee.