We’ve talked a lot about mining bitcoins in our Knowledge Base, but what if you prefer to simply buy them? The easiest way is by using an online exchange and trading platform. Here’s a quick look at some of the largest, how they work, and what they charge for a typical $1,000 transaction, listed alphabetically.
A new platform in beta, Bitfinex is owned by iFinex, Inc. and will soon be operating under a fully-licensed model. Their recent 30-day trading volume was over 1.5 million bitcoins. Users trade bitcoins by placing a buy or sell order that’s matched with an appropriate offer using an exchange wallet. Fees range up to 0.2%, depending on the order’s size and type. Bitfinex also offers margin trading that allows users to borrow funds from peer liquidity providers to trade bitcoins. The fee for our hypothetical $1,000 transaction would be $2.00.
Bitstamp was founded as a European alternative to Japan’s Mt. Gox before the Asian exchange’s collapse. Today it has the third-largest bitcoin trading volume. It’s simple to use and has a track record, but a recent hack may raise security concerns, although Bitstamp said it would reimburse users for any losses. Bitstamp charges higher fees than some other exchanges, starting at 0.5%. They also charge a small fee for holding deposits. Our thousand dollar deal would cost $4.60 with Bitstamp historically, but the company implemented a new fee structure this month which should reduce the cost of a small trade by half.
A popular European exchange with experienced traders, BTC-e maintains such a high level of secrecy that no one’s really sure where it’s located. Rumors say Bulgaria. In spite of a distributed denial of service (DDOS) attack about a year ago, it remains one of the largest bitcoin and cryptocurrency exchanges. It offers sophisticated management programs for more sophisticated traders in addition to basic exchanges. Transfer fees run at least 1%, and trades of under 500 BTC are subject to a 0.2% fee, making our cost $2.00 on $1,000.
Coinbase lets users buy and sell bitcoin at the current market rate with bank transfers in the United States and 18 European countries. Through the end of March, 2015, trading fees are suspended, but beginning April 1 will be based on a “maker/taker” model with takers incurring a 0.25% charge. San Francisco-based Coinbase is very popular with non-technical traders and includes a user-friendly wallet service for storing and transacting in bitcoin. Our $1,000 exchange would be free for the moment, but would run $2.50 starting in April. Credit cards and merchant services are also supported for some users.
With offices in New York and Singapore, itBit was co-founded by bitcoin pioneer and Wall Street veteran Charles Cascarilla in 2012. With a daily trade volume approaching 3,000 BTC, itBit accounts for about 5-8% of the global market. They have a flexible fee schedule that applies to both buyers and sellers, depending on the type and volume of transactions, with a maximum of 0.5%. A one-time $1,000 purchase would cost $5.00.
LocalBitcoins is based in Finland and is a peer-to-peer marketplace where buyers and sellers are matched. There are no trading fees, but trade prices are set by the individual parties, so costs don’t necessarily track the current market rate. Bitcoins are stored in the LocalBitcoins web wallet and outgoing transfers are charged between 0.0001-0.0004 BTC. While there would be no exchange fee for our purchase, the true cost would depend on storage fees and the difference paid above or below the current market value.
OKCoin is a digital currency trading platform and exchange based in Beijing and is the largest bitcoin exchange in China. Fees range up to a maximum of 0.2% and all withdrawals are subject to a 0.1% fee with a $50,000 cap on each withdrawal. OKCoin also offers a futures market for Bitcoin and Litecoin as well as peer-to-peer lending. Our hypothetical exchange would cost $2.00 and some other bank charges might apply.
This look at bitcoin exchanges is offered for your information only and should not be interpreted as an endorsement of any of them by Amagi Metals. As with any important financial transaction, we encourage you learn as much about these exchanges as you can and choose the one that’s right for you with the same care you would in choosing a stock broker or financial institution.
For more information about these exchanges, check out this article at CoinDesk.com.