Understanding Cryptocurrency Exchange
As you probably might have observed, cryptocurrencies and cryptocurrency exchanges have caused quite the uproar in online forums, social media, and possibly even at your dinner conversations. Yet, despite the soar in popularity, the meanings of these terms still elude many people’s comprehension. To make it easier for you, we have developed a complete guide on understanding cryptocurrency exchange.
Cryptocurrency exchanges are platforms that facilitate the trading of cryptocurrencies for other assets, including fiat and digital currencies. Essentially, cryptocurrency exchanges work as intermediaries between sellers and buyers and earn money via transaction fees and commissions.
For instance, during conventional cryptocurrency exchanges, you can exchange $100 for bitcoin of equivalent value and vice-versa. In the same way, you can swap bitcoin worth $100 for an equal Litecoin value. The same concept applies to various assets depending on what the exchange offers.
How Do Exchanges Determine Their Prices?
A common myth is that exchanges determine the prices of cryptocurrency. However, this is unfounded as there is no official, international price.
The exchange rate of a cryptocurrency generally depends on the extent of access to buyers and sellers. In addition, external competition from institutional entities such as the government and corporate companies creating their branded platforms of digital currencies affects the stability of the exchange prices.
Every exchange determines the price based on its trading volume, liquidity, along with the demand and supply of its users, implying that the higher the exchange, the more market-appropriate prices you can get.
What to Look for in A Cryptocurrency Exchange
Here are some things you should keep in mind when looking for a cryptocurrency exchange.
Your location might prevent you from purchasing and selling cryptocurrencies on some exchanges due to national or state regulations. For example, certain countries such as China have completely prohibited citizens from using cryptocurrencies exchanges. Therefore, it is essential to research which deals will be accessible to you and ensure their rates meet your requirements.
There is a lot of regulatory uncertainty regarding cryptocurrency in the US, and certain states have imposed their laws. For instance, New York necessitates exchanges to get a BitLicense before starting operations in the state and only permits registered and licensed firms to offer specifically approved cryptocurrencies. The restrictions in several other states aren’t as stringent as New York; however, they do regulate in one way or another.
Central institutions generally don’t back cryptocurrencies, and your digital assets aren’t secured the same way as money in traditional investments or banks. Thus, whether you plan on keeping your cryptocurrency during an exchange or have it there for a brief period before moving it into your wallet, the security of the exchange should be the top priority. At ChainMyne, our digital asset market is thoroughly secured with managed firewalls, integrated, proactive monitoring, DDoS protection, in-house IDS/IPS, and more. We recommend storing your crypto assets in a cold storage wallet if you are not looking to execute trades on an exchange.
If you plan to trade, buy, or sell your digital assets, the trading platform you choose should have sufficient trade volume to ensure that you do not get locked out during peak trading times when the market is dropping or on the rise. ChainMyne is plugged into all the largest liquidity providers globally in our internal liquidity from buyers/sellers on the trading platform.
Wrapping It Up!
ChainMyne is a Canadian-owned digital currency platform headquartered in Quebec. We offer superior customer service with a tailored experience, a high level of security, easy access to growing wealth, numerous digital currency offerings, and smooth post-trade settlements into fiat currency. For more information, please feel free to contact us!