Cryptocurrencies exchange is a place where people exchange some cryptocurrencies for another or for main national currencies (dollar, euro, yen etc.) It is a secondary place to earn them after mining and, currently, primary to spend.

Contents

Investments

Thanks to the high volatility of cryptocurrencies most people use them to speculate in different exchanges. During 2013 the Bitcoin exchange rate has risen by 5580% which is in no way comparable to 30% return in the stock market. This particular quality of cryptocurrencies is what attracts a lot of major investors. For example Winklevoss brothers invested $11 million in Bitcoin in April 2013 and in the end of the same year Andreessen Horowitz venture fund along with some other investors have invested a record $25 million in the cryptocurrency thanks to the Coinbase wallet system.

Types of exchanges

Exchanges can be divided into two types:

• Those where exchange of bitcoins and some primary forks for fiat money (USD, EUR, GBP) is possible. Usually these are major exchanges.

• Those where it is only possible to exchange for Bitcoin. Fork trading happens here.

Some forks can only be sold/exchanged in particular exchanges.

Adding new coins to exchange

Exchanges with fiat currencies

The very first cryptocurrencies exchange. It was established in 2007. In the beginning it was trading Magic the Gathering game cards from which time comes the name: M agic T he G athering O nline eX change. During August 2013th about 47% of all transactions in the Bitcoin network were made through this site. Throughout January 2014th the exchange was third largest stock exchange in terms of trading extent and the Bitcoin exchange rate was significantly higher than in other similar exchanges due to delays in withdrawing funds in dollars, arising due to the actions of the U.S. authorities.

Bitstamp

The second largest exchange after Mt.Gox. You have to confirm your identity to trade in it. The trading is only conducted in the BTC/USD pair.

The largest Russian exchange which conducts trading between fiat and cryptocurrencies in real time. Support is available in both English and Russian languages. As of February 2014 it ranks second in terms of trading volume in the BTC/USD pair and first in BTC/RUR.

The exchange isn’t connected to Russian legal system in any way because one of the banks providing services to it is situated in Czech Republic, the company itself is registered in Bulgaria, the managing company is based on Cyprus and the owners are two Russian programmers that claim to have been working at Skolkovo at some point.

Features:

• The exchange has its own trading bot MetaTrader 4
• There’s chat function in three languages (English, Russian and Chinese) with some restrictions: there’s a time interval between one user’s messages and you have to have at least $100 on your account to access the chat.
• No identity confirmation is needed

Buttercoin

US venture-backed exchange.

BTCChina и Huobi

Two Chinese exchanges. Trading is only conducted in the national currency: BTC/CNY.

BTCChina was the world’s largest cryptocurrency exchange and exerted a strong influence on the global rate of Bitcoin up to January 2014th. Then the Central Bank of China started introducing restrictions on Bitcoin operations and soon prohibited the trading altogether. But on January 30th the exchange resumed trading.

Huobi gained popularity after BTCChina’s closing.

Hong Kong Exchange. Called First Bitcoin Stock Exchange. First Hong Kong Bitcoin Exchange who starts trading with Hong Kong Dollar. Now at 1Bse open 22 trade pairs for Bitcoin, Litecoin, Dogecoin, Darkcoin, Hong Kong Dollar, US Dollar, Euro, Singapore Dollar & Chinese Yuan.

Exchanges with fork trading

Here are the exchanges that support trading only between cryptocurrencies. The main cryptocurrencies that are exchanged for all others are [Bitcoin], Litecoin and Primecoin.

• cryptsy.com – one of the biggest of such exchanges. It provides the most wide choice of forks that can be traded for Bitcoin. Trading is conducted in pairs with BTC, LTC and XPM. Trading volumes on popular forks are around $0.5 million. The average order is

20 BTC.

• bter.com – the main feature of this exchange is a large choice of forks that can be traded for national currency (CNY) and other cryptocurrencies. Trading is conducted in pairs with BTC, LTC and CNY. The average bid/buy order of popular forks is

  1.5 BTC.

• coinedup.com – here different forks can be exchanged for primary cryptocurrencies: BTC, LTC and DOGE. Some cryptocurrencies are traded here exclusively. Average order is

  1.5 BTC.

• poloniex.com – trading in pairs with BTC and LTC. There are some exclusive cryptocurrencies. Average order is <1 BTC.

• www.mintpal.com – major amount of trading is conducted in pairs with Bitcoin. Only Mintcoin is traded for LTC. There are several exclusive cryptocurrencies. Average bid/buy order for popular forks is <1 BTC although there are occasional rate shocks for different pairs with average orders rising up to 3-4 BTC.

• coinex.pw – wide choice of trading pairs with BTC, LTC and DOGE. Average order for popular forks is <1 BTC.
• mcxnow.com – primary cryptocurrencies exchange for Bitcoin. Average order is <1 BTC.

Principles of trading in cryptocurrencies exchanges

Main principles of trading and speculation on cryptocurrencies and stock markets are similar (buy low, sell high). Therefore to achieve some success in this sphere you first have to study basics of stock exchange trading (trading with stocks, futures, options etc.)

Main information components of exchanges

When entering any exchange site one can spot several principal components:

• Chart
• Buy orders / Sell orders
• History of transactions
• Trading volume (shown in some exchanges)

Let’s examine each of them in more detail.