There are two types of bitcoin exchanges. They are peer-to-peer and standard (or regular).
Standard bitcoin exchanges function in the way many regular currency exchanges operate. They have an engine with an order book that matches buyers and sellers. Neither buyers nor sellers know who the other party is, which adds a layer of privacy and protection. This is the most common form of bitcoin exchanges. In a way, this form contradicts one of the main principles of bitcoin, which is a peer-to-peer exchange of funds between parties.
Peer-to-peer bitcoin exchanges more fully adhere to the philosophy behind bitcoin. They match buyers and sellers. Buyers and sellers then complete transactions directly, without the exchange holding or having access to any of the funds during any stage of the process.
There are bitcoin exchanges that allow you to find bitcoin users in your area, meet face-to-face and initiate transfers with them. Obviously, not every bitcoin user has a desire to meet other users in person. Some prefer to conduct transactions using PayPal or a bank transfer rather than meet in person.
Depending on your needs, peer-to-peer exchanges and transactions can be more convenient and beneficial than standard exchanges. Generally, you will not need to provide any information about your identity during a peer-to-peer exchange.
Most cryptocurrency peer-to-peer exchanges have a built-in reputation system for their users. When using a peer-to-peer platform, you are dealing with other cryptocurrency users directly, which is why the issue of trust is very important and it makes a lot of sense that users would like to know the trading history of the people they are trading with.
Cryptocurrency exchange rates
Many people compare the world of cryptocurrencies to the gold rush in Alaska and California in the nineteenth century because while it is clear that the bitcoin network is a modern miracle that brings tremendous value to people and organizations, there are still a lot of unknowns about the world of cryptocurrencies.
Because of these unknowns, the prices of bitcoin and other coins can fluctuate significantly. The rates may fluctuate because of certain events, because of the time of day and they can also vary depending on an exchange platform.
Bitcoin is about freedom, personal responsibility, and transparency. Because of these criteria, bitcoin trading is very competitive in nature. Every bitcoin exchange and trading platform is looking to get as many clients as possible because the more clients an exchange has, the more money it will make. In most cases, the biggest market for bitcoin exchanges is users who have never experienced bitcoin and other cryptocurrencies before, which is why so many cryptocurrency exchanges focus their efforts on making cryptocurrencies as accessible as possible.
Whenever you are looking to buy or sell cryptocurrencies, start with checking the current price of the cryptocurrency first. Over the last several years, some exchanges started offering a service of being able to buy and sell coins for a fixed price if you complete a transaction within a certain short period of time. For example, when converting bitcoins into a local currency, you may need to complete your transaction in ten minutes in order to get the current exchange rate. If you fail to complete the transaction within this timeframe, you may see a different rate on the confirmation page. The rate will not always go up. Sometimes it may go down, too.
To increase your profits and avoid losses, make it a habit to monitor the exchange rate between bitcoin and your local currency. Whichever tools and sources you choose, use graphs similar to stock price and regular currency exchange rate graphs to get a better understanding of the short-term and long-term trends.
Understanding transaction fees at cryptocurrency exchanges
When you buy bitcoin and other cryptocurrencies with regular currency, there’s also typically an exchange fee in addition to the transaction fee. Some platforms charge you a fee after a transaction and some add a fee to a transaction. There may also be a fee when you withdraw funds from your exchange account to your regular bank account. For this reason, you want to make sure that you understand the fee structure and the ways and times that the platform you are using is going to be charging you.