Do you know about the trending cryptocurrency of today’s time? Bitcoin is one of the best and most popular cryptocurrencies of the decade. People across the world are coming forward and accepting bitcoin for their businesses. There are unique perks of using bitcoin to make payments.
It is a digital currency, and therefore it is entirely different from fiat currencies. In order to buy and sell bitcoin using fiat currencies or other cryptocurrencies, there are special marketplaces known as exchanges. A bitcoin exchange is an online marketplace that allows traders to buy and sell bitcoins easily.
Bitcoin exchange is a kind of online platform that acts as a mediator between cryptocurrency buyers and sellers. In order to buy and sell bitcoins through bitcoin exchanges or any trading app, the users need to pay fees for using the service. There are various bitcoin exchanges, and each exchange has a different exchange rate. Let us understand more about bitcoin exchanges in detail.
What are Bitcoin Exchanges?
Since this is a quiet lengthy article, we have added a table of contents for easier navigation.
The bitcoin exchanges are the online platforms that make buyers meet the sellers and act as intermediaries between both. The bitcoin exchanges are somewhat similar to stock exchanges as exchanges, and traders can either buy or sell bitcoin tokens by contributing either a limit order or a market order.
Once a limit order or market order gets selected, it allows traders to authorize the exchange to sell their bitcoins at the best price in online exchanges.
Suppose a user wants to buy or sell bitcoin on a bitcoin exchange. In that case, he/she needs to register themselves with the process of exchange and have to complete the verification process to validate the user’s identity.
Once the verification process gets completed, an account gets opened for the user, which allows them to transfer the funds directly into their account to buy coins further. All the exchanges use different payment methods through which users can deposit funds, including bank drafts, debit/credit cards, bank wires, money orders, gift cards, and direct bank accounts.
Decentralized nature of Bitcoin Exchanges
Bitcoin exchanges are decentralized in nature, which means that these involve no central authority. The bitcoin exchanges allow two parties to follow the peer-to-peer network of digital currencies and require no government to facilitate or authenticate the transactions.
Bitcoin users prefer decentralized exchanges because it provides some unique benefits. At first, the bitcoin users feel that exchanges provide better and clearer details of every exchange and require no personal information from their clients.
Secondly, the decentralized bitcoin exchanges allow users to transfer the assets to other users directly. It eliminates the need to transfer the assets to exchange and reduce the risk of fraud and hacks. Next is that decentralized exchanges are less vulnerable to deceitful trading activities and price manipulation. You can contact us for bitcoin exchange to naira. We have the sweetest rate out there.
Some unique considerations
Some people often get confused between bitcoin exchanges and bitcoin wallets. Bitcoin exchange is a platform that allows bitcoin users to buy and sell bitcoins directly, whereas the bitcoin wallet is a storage device that stores bitcoin.
If we say in technical terms, a bitcoin wallet is a program that stores the private keys through which users can make transactions. There are some bitcoin exchanges that provide bitcoin wallets to their users and charge a fee for providing the service.
While making deposits and withdrawals at the bank, the users are charged fees. This is also in bitcoin exchanges, but it depends on the type of payment method that the user chose to transfer the funds.
The bitcoin exchanges also charge funds transfer fees and currency conversion fees from users. It depends on the type of currency that the bitcoin exchange accepts. All the exchanges charge a different transaction fee, and this fee is applied to both buy and sell orders.
Makers and takers
In technical terms, the bitcoin exchanges name buyer and seller as makers or takers. Once the buyer or seller places the market order, it is written in the order book of them by the exchange until another trader matches the exact value.
Once the value is matched, the one who sets the limit price is known as the maker, and the other one is the taker.