So you’ve heard about Bitcoin. You’ve seen that the price of Bitcoin has shot up in the past and turned people into millionaires seemingly overnight.
If you want a piece of that action, you’re going to buy some cryptocurrency of your own. To buy cryptocurrency, you’re going to need a cryptocurrency exchange.
A cryptocurrency exchange is a website that allows people to buy, sell and trade cryptocurrency – it’s as simple as that.
Different types of cryptocurrency exchanges
For first time buyers, this is going to be the type of exchange you’re after. If you didn’t know, ‘fiat’ refers to a government issued currency such as USD, GBP, EUR. On-ramp means that the exchange provides a ‘ramp’ into the world of cryptocurrency.
In simpler terms, a fiat on-ramp is an exchange that lets you use your real world money to buy cryptocurrency. Not all exchanges support fiat, and most fiat on-ramps only support a small number of fiat currencies. This is due to regulations, banking restrictions, fees and many more reasons.
Other exchanges only support cryptocurrency. This means that to use these exchanges you have to already own some crypto. For example, if you hold a bit of Bitcoin you could deposit it into a crypto only exchange and use it to purchase a different type of crypto.
Why are there so many exchanges?
When you start to look into it you’ll realize there are loads of different exchanges. At first, you’ll probably wonder why there are so many – surely they all do the same thing, right?
Like most businesses, there is fierce competition between exchanges to capture the market share and earn money. Beyond this, different exchanges offer different products and fit varying niches that can’t all be encompassed by one exchange.
For example, some traders care a lot about security and regulation, so they use the most secure and reputable exchange they can find. Others care about decentralization and anonymity, so they find the most secret exchange they can.
The exchanges used varies by geography. Naturally, companies are better at catering to a few specific locations rather than the entire world, and this is reflected in their product offering and language support.
As you may know, there are thousands of different cryptocurrencies. Most exchanges only support a limited number, so if there is one you really want, you’ll have to hop onto a new exchange to get it.
A lot of people don’t actually care about buying – they care about trading. So they are looking for advanced trading features such as high leverage, tight spreads and deep liquidity.