You’ve probably read somewhere or heard that you could purchase Bitcoin via a crypto exchange. Maybe you’re wondering why you need a Bitcoin exchange to buy this virtual currency when somebody can send the tokens directly to your digital wallet and pay them with fiat money. Well, Bitcoin exchanges are the cryptocurrency marketplaces. They are online platforms where people trade Bitcoin.
Some crypto exchanges allow users to trade other decentralized cryptocurrencies. For instance, a platform can allow you to purchase and sell Bitcoin, Ethereum, and other popular virtual assets. However, trading centralized currencies may not be an option on these platforms. For instance, you may not purchase and sell the digital Yuan on a decentralized crypto exchange. That’s because the Chinese governments issues and regulates this currency. Therefore, you can only buy and sell it at website of yuan pay group.
Nevertheless, decentralized Bitcoin exchanges allow traders to monitor market trends and decide when to purchase or sell their holdings.
What Are Bitcoin Exchanges?
Bitcoin exchanges are digital marketplaces where people or entities register to start buying and selling Bitcoins using altcoins or fiat currencies. They are online platforms that act as the go-between for cryptocurrency buyers and sellers. It’s also right to say that Bitcoin exchanges match crypto sellers with buyers.
A Bitcoin exchange works like a conventional stock exchange, allowing users to purchase and sell this virtual currency by inputting a limit order or a market order. Upon selecting a market order, the trader authorizes the platform to trade Bitcoins for the most favorable price available on the marketplace. Choosing a limit order means the trader allows the crypto exchange to exchange tokens for a value lower than or above the current ask or bid, depending on whether the user is selling or buying.
How to Use a Bitcoin Exchange
Bitcoin exchanges require users to register before purchasing or selling this virtual currency. After signing up, a new user completes a verification process to authenticate their true identity. The user gets an account after completing the authentication process. Purchasing Bitcoin requires the user to load their crypto exchange account with fiat money.
Depending on the Bitcoin exchange you choose, you will have different options for payment methods. For instance, a Bitcoin exchange can accept direct bank transfers, bank drafts, credit or debit cards, and bank wires. Some platforms take e-wallets, gift cards, and money orders.
Also, Bitcoin exchanges provide different methods for withdrawing money from trader accounts. Such methods may include PayPal transfer, bank transfer, cash delivery, credit card transfer, bank wire, and check mailing.
Why Are Bitcoin Exchanges Important?
Most people won’t access Bitcoin were it not for crypto exchanges. Initially, people could get Bitcoins through the mining process. However, this process has become increasingly expensive as competition increases among miners. Setting up a Bitcoin mining rig is currently a costly and probably an unprofitable undertaking. Therefore, most people prefer buying Bitcoins or accepting crypto payments.
Here’s why Bitcoin exchanges are essential:
- 24/7 operations: Bitcoin exchanges allow users to purchase or sell this virtual currency 24/7/. Thus, you can access and buy Bitcoins whenever you need them provided you have an account with a crypto exchange.
- Quick currency transfers: These platforms connect Bitcoin sellers and buyers. The duration a Bitcoin transaction takes depends on when a person places an order. However, Bitcoin decentralization reduces the time a transfer takes.
- Fractional buying: You can purchase a fraction of Bitcoin on a crypto exchange. Thus, you deposit the amount you wish to spend on your Bitcoin purchase after registering with a crypto exchange.
- Instant settling: People can buy or sell Bitcoin instantly on crypto exchanges. Thus, you don’t have to wait days to settle a Bitcoin transaction on a crypto exchange.
Bitcoin exchanges are innovative platforms that allow people to buy or sell this virtual currency with fiat money. Successful sign-up with a crypto exchange means you can always access and buy or sell Bitcoins.
