Facing with the world of blockchains and cryptocurrencies for the first time, almost everyone is lost in the variety of altcoins, tokens and decentralized exchanges, for trading them. The matter of choosing cryptocurrency exchanges, we are trying to make it clear.
There are several criteria for this analysis: liquidity, ease of use, conflict of interest, regulation and reputation, commission costs, a variety of trading instruments.
Liquidity is an economic term denoting the ability of assets to be quickly sold at a price close to the market price. Liquid – circulating in money.
Using this definition, we will set TOP10 most liquid stock exchanges in the world according to the average daily volume of trading (according to the data of the site coinmarketcap.com). These are Bitfinex, Bithumb, Bittrex, Binance, HitBTC, GDAX, Poloniex, Coinone, Kraken, Bitstamp.
Convenience of use – in this case we mean language accessibility and information support.
To begin with, let us exclude the stock exchanges that target the Asian market, i.e. Bithumb and Coinone. From the point of view of information and technical support, it is difficult to work with the Poloniex exchange. Its specialists have a habit of not responding to clients for a long time, and the quality of answers requires dialogue in the future.
Conflict of interest is a situation in which the personal interest of the organization can influence the decision-making process and damage the interests of the clients.
Bitfinex can be identified in the list of exchanges. In my opinion, there is a conflict of interest there. The owners of the exchange are simultaneously issuers of Tether (USDT) crypto currency. Recently there has been an almost uncontrolled emission of this currency, which, in theory, can lead to large-scale purchases by the exchange for its cryptocurrency, for example, bitcoin, etherium and other currencies. In addition, there have been more cases of hacker attacks on this exchange.
Regulation – a set of measures to exercise control over all financial transactions in accordance with established legislation.
Reputation is the social assessment of a group of subjects about an organization based on a certain criterion. Reputation is a direct and very effective control mechanism in natural societies.
All of the exchanges above are not official and are not actually regulated by any organization.
This means that the manipulation of the market by both large players and the exchanges themselves is not only not banned, but rather even welcomed. However, among the exchanges one can distinguish those whose reputation is at a consistently high level. These can be considered as Kraken, Bitstamp, Bittrex, HitBTC, GDAX.
The variety of trading instruments is the aggregate of assets for trading on the cryptocurrency market.
Among the 5 exchanges, mentioned above there are those, whose reliability is high enough, but the variety of trading instruments often does not allow for the necessary transactions. This is GDAX and Bitstamp. The number of trading instruments there is about 10.
Analyzing cryptocurrency exchanges, we came to the conclusion that HitBTC, Kraken, Bittrex are suitable for trading. Commission costs for the latter are slightly higher than the rest. In total, the most attractive exchanges are Kraken (based on the stock quotes, the futures price is calculated on the Chicago Mercantile Exchange) and HitBTC (works from 2013).