Cryptocurrency exchanges were created after the launch of Bitcoin in 2009 and altcoins that followed in their wake. They provide an electronic platform to trade cryptocurrencies for other assets, including digital and fiat currencies. Basically, they act as a ‘middle man’ between a buyer and seller and they make money through commissions and transaction fees.
In this in-depth guide you’ll learn:
- Best Crypto exchanges
- difference between a centralized and decentralized cryptocurrency
- difference between a cryptocurrency broker and a cryptocurrency exchange
And lots more…
Let’s dive right in…
👉 There are over 500 decentralized cryptocurrency exchanges in today’s market with 24-hour trade volumes in the billions. These exchanges shut down as fast as they start up. It’s essential to choose a crypto exchange that is steadfast and safe to use, and choosing one that is committed to KYC (Know Your Customer) and AML (Anti-Money Laundering).
Our 7 Best Handpicked Cryptocurrency Exchanges of 2023:
👉 Binance is a leading cryptocurrency exchange marketplace that provides traders with an electronic platform to trade various cryptocurrencies, including Bitcoin, Ethereum, Litecoin and Binance Coin. As of April 2023, Binance was the largest cryptocurrency exchange in the world by trading volume.
👉 The exchange accepts a wide range of currencies and makes it easy for you to buy crypto using USD, Euros, Pound Sterling and other fiat currencies. You can also buy cryptocurrencies with accepted stablecoins such as Binance USD, Coinbase USD Coin, Paxos, Tether and True USD.
👉 Launched in 2016, Bisq is an open-source, peer-to-peer (P2P) application server that was created to allow for a safe, private and decentralised method of exchanging fiat currencies for cryptocurrencies. The server itself cannot access users’ funds which means hackers cannot access any money either.
👉 Due to its decentralised software, Bisq is regarded as extremely secure and you can trade cryptocurrencies on the platform without being too concerned about security issues.
👉 Coinbase Global Inc., known as Coinbase, is a US-based fintech company that operates a user-friendly cryptocurrency exchange platform. Founded in 2012, Coinbase is one of the most valuable new listings of any US newcomer in history.
👉 You can trade a wide variety of cryptocurrencies on Coinbase via its advanced trading platform, including the major coins; Bitcoin, Ethereum, Litecoin, Bitcoin Cash and Ripple. Coinbase is fully regulated and licensed in all US states except Hawaii.
👉 Coinmama is a global cryptocurrency exchange broker that offers people a fast, safe and easy way to buy digital coins from anywhere in the world using a credit or debit card; in other words, you can use fiat money to buy and sell cryptocurrencies. Coinmama is different to a cryptocurrency exchange like Binance in that Coinmama sells cryptocurrencies out of its personal inventory.
👉 Founded in 2013, the Israel-based exchange is one of the most established cryptocurrency platforms in the blockchain market. Traders can use Coinmama to buy Bitcoin, Ethereum, Bitcoin Cash, Cardano, Litecoin and Tezos.
👉 When you use Coinmama, you aren’t trading with other crypto investors. You buy and sell digital coins directly with Coinmama. The US operations are under New Bit Ventures Ltd which is regulated by FINCEN (Financial Crimes Enforcement Network).
👉 Gemini Trust Company Ltd is a highly-regarded Bitcoin and Ethereum exchange platform that is used to buy, sell and store digital assets. It was founded by the Winklevoss twins in 2015 who are famous for having sued Mark Zuckerberg on claims he stole the idea for Facebook. Users are able to Bitcoin and Ethereum as well as fiat currency on the open market as well as transfer USD to and from their main bank accounts.
👉 Gemini is regarded as one of the most secure cryptocurrency marketplaces in the world. Getting into the exchange’s wallets requires multiple signatures from cryptographically-sealed devices that were never linked to the Internet.
👉 Gemini facilitates the purchase and storage of Bitcoin and Ethereum through a complex system of private keys and password protected environments; only a small percentage of Gemini’s stock of digital coins is held online to minimise the risk of loss from hacking.
👉 Kraken is a cryptocurrency exchange and licensed bank that provides users with a platform to trade several cryptocurrency and fiat money. It offers services that are not typical of crypto exchanges, such as dark pool and OTC trading, margin trading and futures trading. Founded in 2011, the US-based exchange is rated as one of the most secure, trustworthy crypto exchanges on the market.
👉 Kraken trades in 20 cryptocurrencies, including the major coins such as Bitcoin, Ethereum, Litecoin, Bitcoin Cash, Ripple and Tezos. It also supports 5 fiat currencies; US Dollars, Canadian Dollars, Japanese Yen, Euro and Great Britain Pounds. Currently, Kraken is the fourth-largest cryptocurrency exchange by trading volume and has over 6 million clients.
👉 Luno is a cryptocurrency exchange and a payment service provider with a market capitalisation of $3.7 million. The fintech company provides users with an easy-to-use, inexpensive and secure digital platform to buy, sell and store Bitcoin, Ethereum and other altcoins.
👉 Originally named BitX, Luno started in South Africa as a digital platform for Bitcoin trading. The idea was to provide traders in Africa with an opportunity to trade the cryptocurrency market with their mobile phones and make the widespread adoption of cryptocurrency trading on the continent a reality.
👉 Founded in 2013, the now London-based exchange has found a niche in emerging markets, serving over 3 million users across Southeast Asia, Africa and Europe. In September 2020, Luno was acquired by Digital Currency Group which is a New York-based venture capital company, focusing on the digital currency market.
What is the difference between a centralised and decentralised cryptocurrency exchange?
A centralised crypto exchange is the most common type of exchange. They are privately-owned and offer an electronic platform to buy, sell and store digital coins. They require registration and identification to comply with K2C (Know Your Client) regulations. Examples include Binance, Coinbase, Gemini and Kraken.
Centralised exchanges are used to conduct trades using both cryptocurrencies and fiat currencies. They function in the same way as forex brokers who facilitate the trade of currency pairs.
A decentralised crypto exchange (DEX) has no central point of control. Basically, it acts as a server but where each computer within the server is spread across the world and each computer that makes up one part of that server is controlled by an individual. Decentralised exchanges work in the same way as a cryptocurrency like Bitcoin does. Examples of a DEX include AirSwap, io, Barterdex and Blocknet.
Decentralised exchanges cut out the middle man. This is a crucial difference. A DEX generates a ‘trustless’ environment using peer-to-peer exchanges. Transactions are done entirely based on smart contracts and atomic swaps, and fiat and digital assets are never held by an escrow service.
What is the difference between a broker exchange and an exchange marketplace?
A broker exchange holds the cryptocurrency and sells cryptocurrency directly to you for fiat money. An example of a broker exchange is Coinmama.
An exchange marketplace matches two independent buyers and sellers and the transaction takes place when the market is met; basically, when the buyer and seller agree on a price. An example of an exchange marketplace is Binance.
What is the difference between a cryptocurrency broker and a cryptocurrency exchange?
A cryptocurrency broker is a firm or individual broker that acts as the ‘middle man’ between traders or investors who buy and sell cryptocurrencies. The brokerages buy and sell for customers at prices set by the broker, and the broker charges a fee to facilitate the transaction.
An example of a crypto broker is Bitpanda. Their user-friendly, “trade-everything” platform allows you to invest in a range of stocks, cryptocurrencies and precious metals CFDs.
A cryptocurrency exchange or digital currency exchange (DCE) provides an electronic platform for retail traders to buy and sell cryptocurrencies with each other, based on current market prices. They also act the ‘middle man’ and charge a fee to facilitate the transaction.
An example of a DCE is Coinbase and Binance which allows customers to trade Bitcoin and altcoins for other assets, including fiat money. A DCE is typically a market maker which takes the bid-ask spreads as a transaction fee for its service.
Are cryptocurrency exchanges legal in South Africa?
Yes, cryptocurrency exchanges are legal in South Africa and you can buy, sell and store digital coins on these platforms. Currently, the industry is not regulated and there are no specific laws or regulations that address the purchasing and storage of virtual currencies in South Africa. Consequently, no legal protection or recourse is afforded to users of virtual currencies.
The South African Reserve Bank (SARS) has issued warnings with regards to trading cryptocurrencies in general. You are also obliged to declare any profit made from trading crypto assets on your tax returns.
Forex Trading Africa Disclaimer
Trading in cryptocurrencies on exchanges is associated with high risks and can lead to traders and investors losing money. The cryptocurrency market is highly volatile and you can expect prices to fluctuate dramatically.
The information in this article should only be used to educate yourself on how cryptocurrency trading works and the benefits of trading on cryptocurrency exchanges that accept traders in South Africa. Pay due caution to the risks involved in trading currencies and take the necessary precautions to avoid losing money on these transactions.