May the Best Bitcoin Exchange Win – The Great Race to Banking 2.0

The Best Bitcoin exchanges offer you world class security, services, features, user experience (UX), privacy and control.

Being in the cryptocurrency scene since 2017, I have come across some of the biggest, most hyped up exchanges on the planet.

Adoption have been coming thick and fast.

This space is on fire. Not many can pass the litmus test and claim to be the best.

Nonetheless, you may have run into some of these popular bitcoin exchanges trying to bribe their way to market dominance:

1. Coinbase – Earn up to $161+ learning crypto
2. BlockFi – Get $20 BTC Bonus from depositing
3. Binance – The Amazon.com of Crypto
4. Cex.io – Get 7% Cashback on your BTC purchases
5. Coinmama – Save up to 25% on fees (Loyalty program)
6. Bybit – $90 Bonus After depositing
7. Phemex – $80 Bonus After depositing
8. CashApp – Get $5 when you send $5
9. Localbitcoins – No fees (P2P) Exchange
10. Paxful – No fees (P2P) Exchange
11. Crypto.com – $50 After staking 50 MCO
12. Liquid – 10% discount on trading fees
13. Luno – Get $6 BTC if you buy/sell $60
14. Bitfinex – Save 6% on Fees for new Sign Ups
15. Kraken – Earn up to 6% APY Twice/week Staking
16. Kucoin – Hold KCS and Get Kucoin bonus

Top Bitcoin Exchanges are offering plenty of services today.

It is no longer just about spot trading bitcoin.

All crypto companies are converging to become full fledged financial institutions with Bitcoin (BTC) as capital (instead of USD, Euro, Pounds, Yuan, Yen, etc).

With the competition heating up, everyone is racing to adopt as many offerings as they can or risk losing market share in the future.

Many smaller exchanges will not be able to keep up once ‘the category winner‘ is decided. (Just like Apple in the mobile industry or Google in the search engine space)

It all boils down to the Network Effect.

The second, third or N^th order in the category exists as the long tail-end of the curve; never really gaining anything significant in terms of market share.

In other words, this competition between exchanges is great for you and me.

The low switching cost for users ensure that exchanges need to be the best in the business or lose users to other providers within minutes.

You can get access to hundreds of Bitcoin exchanges thanks to the permissionless nature of the open blockchain network.

And, you don’t even have to fill in paperwork.

Bitcoin is democratizing finance like how the internet democratized knowledge for us.

Bitcoin is freedom capital. Holding it gives more power to the people.

High capital mobility puts more pressure on exchanges to stay ahead of the competition.

Why do you think Bitcoin exchanges are racing to offer us the best features & services?

With capital come financial services, and the opportunity to generate more capital.

As a result, exchanges are among the fastest innovating in history. It’s a competition to consolidate as much capital as possible.

Now let’s take a closer look at each Bitcoin Exchange and see how they fare:

The 12 Best Bitcoin Exchanges to use in 2020

1. Coinbase

Coinbase is a credible “unicorn” company, a major bitcoin exchange that is trusted by millions in 32 countries.

It offers two main products; a professional trading platform (Coinbase Pro) and a user-friendly retail broker interface.

You can buy and leave your bitcoins in its web wallet. ( But: You should really “cash out” your bitcoins into a hardware wallet)

Over the years Coinbase has achieved many glorious milestones, including:

• Making $1 billion in revenues in 2018.
• More users than stock brokerage Schwab.
• Backed by Y Combinator.
• Sold over $1M bitcoins per month
• Raised $75M from Andreessen Horowitz, Tim Draper.

But what seems to be a recurring theme are the abrupt platform crashes during major bitcoin price fluctuations.

Then of course there is the widely controversial sharing of user data with tax enforcement agencies which led the move to boycott the exchange.

Coinbase is more than just a Bitcoin exchange, it offers other advanced features such as:

• Staking – Earn rewards on your crypto (i.e. Tezos staking annual return ~5%)
• Custody – You don’t need to move funds to trade with the Coinbase vault
• Payments – Commerce to receive payments directly / Coinbase card for spending.
• Internal Gain/loss calculator for tax without needing to port into a third party program.

2. BlockFi

Where can I earn the most interest on my money? BlockFi. 

It’s currently the best savings account in the world. You can let your money work for you and earn up to 8.6% APY.

That’s more than 140 times the average savings account your local bank can offer you.

Not only that…

BlockFi allows you to keep your cryptocurrencies, put it up as collateral, and receive a USD loan funded directly to your bank account. Learn more about how it works: Read The BlockFi Review.

They do loans ranging anywhere from $2,000 to $10,000,000, and they’re perfect for helping you reach your financial goals of all sizes.

3. Cex.io

Cex.io offers three core products; a marketplace to trade bitcoin, a platform for margin trading via CFDs (contracts-for-difference) and a direct instant exchange.

If you’ve never dabbled with cryptocurrency exchanges before, you do so within minutes on CEX.

This crypto exchange actually started out as a Bitcoin mining company in the U.K. Not long after, they started to allow users to buy bitcoin directly with a debit or credit card.

To date, they’ve processed over $1 billion in card payment.

Other services & features include:

• Mobile app
• Withdrawals to debit/credit cards
• Staking – Earn by simply holding TRX, MHC, ONT, NEO, XTZ and ATOM
• Instant Sell with immediate card top-up

4. Coinmama

Coinmama is a crypto broker. To use this exchange, first you need to have a Bitcoin wallet.

Is this a good or a bad thing? Well, it depends.

On the one hand you encourage users to “cash-out” their bitcoins into a wallet, which is a lot more secure. But it is not the most convenient option. (Not your keys, not your bitcoins)

You can check out our: CoinMama Walkthrough Guide for Beginners: Buying BTC with Cards

Normally the prices you see displayed on the exchange already includes a 5.9% brokerage fee. You can avoid any additional credit card processing fees if you use bank transfers via SEPA or SWIFT.

5. Bybit

Bybit is a popular Bitcoin derivatives exchange based in Singapore. This exchange doesn’t require any KYC but it does excludes U.S. residents from trading.

Its most popular product is the BTC-USD perpetual swap, although it also offers leveraged trading up to 100X on BTCUSD and BTCUSDT futures contracts.

One of the best things about Bybit is its guides to margin trading. These help traders learn the terms required to effectively swap derivative products.

WARNING: These are highly complex financial instruments. Please avoid if you don’t know what you’re doing. You will lose ALL your money.

6. Phemex

Phemex is another Singapore-based crypto derivatives platform. It was founded by eight ex-Morgan Stanley executives late 2019.

Similar in many ways with Bybit, this exchange offers:

• Derivative Trading – perpetual contracts
• Spot Trading
• Membership at $9.90/month for zero fee spot trading
• Simulated trading – learn how to trade with zero risk

7. Binance

Binance offers what few companies can in a hyper-accelerated fin-tech environment, a complete suite of crypto financial services for the average Joe. It is the fastest company in history to reach the coveted “unicorn” status.

The world’s largest cryptocurrency exchange is also a bastion of KYC-less trading.

There are some caveats though. For one thing, U.S. citizens must trade on Binance US, which comes with KYC.

Spot trading can be accessed without requiring KYC, and you can withdraw up to 2 BTC per day. For margin trading, however, as well as various other Binance products, KYC is required.

Here are some of the core product Binance offers:

• Spot Trading
• Margin & Futures Trading
• OTC Trading desk
• P2P crypto exchange from local verified vendors
• Decentralized Exchange (DEX)
• Academy – Learning, tutorials, guides
• Launchpad – Token launch platform
• Cloud – build your crypto business in minutes
• Savings
• Staking
• Binance card – easy payments
• Crypto loans
• and much more…

What’s also unique inside the Binance ecosystem is its native coin called BNB. Holding this token inside your account gives you additional rebates and benefits. For instance, you’ll receive a 25% discount on your trading fees using BNB.

8. Cash App

Cash App is the #1 app in finance on the Apple App Store. Developed by Twitter CEO Jack Dorsey, the Cash App is streamlined to make your BTC purchases fast and super easy in the U.S.

Dorsey himself is an ardent advocate of Bitcoin. As of 2018, the service recorded over 7 million active users.

How to Buy Bitcoin with your Cash App

1. Deposit some money inside the app.
2. Tap the squiggly line at the bottom of your screen.
3. Tap on “Buy” and decide how much you want.
4. Choose the drop down menu to select “One time purchase” or auto “recurring purchases”
5. Verify your ID, Only works in the U.S.

9. Localbitcoins

Localbitcoins is a peer-to-peer bitcoin marketplace. An over-the-counter (OTC) exchange of local currency for bitcoins (BTC).

Imagine an online bazaar, with sellers and buyers hawking over how much each bitcoin is worth in a certain currency.

You can find anywhere from hundreds to thousands of dollars worth of BTC, and pay via Venmo, Western Union, Amazon Gift Cards or even in-person meetups.

Yes, you can pay for your bitcoins in-person anonymously. There’s no paper trail, and you can use a pseudonym. But there are certain risks you need to observe.

For one, anything above $100 is subjected to money-laundering laws. Different jurisdictions have different laws and it’s your responsibility to know them.

Reach out to sellers with good reviews. Localbitcoins review system helps you weed out the scammers. So you don’t have to worry about potentially meeting a sketch bag.

During a trade, the money you send is held on Localbitcoins’ escrow service. The funds are only released when the transaction has been confirmed and completed.

10. Paxful

Paxful is similar in many ways to Localbitcoins. Except, they don’t charge you a fee. There are over 300 ways you can use to transact bitcoins here.

Notice the big zero on the left? That’s right, Paxful doesn’t charge buyers any fees to buy bitcoin.

However, you’ll need to pay close attention to the exchange rate set by the seller. You may need to hunt for a better rate. Sellers tend to mark up their prices on peer-to-peer marketplaces.

The rate can vary depending on your verification status, payment method, currency pair (such as USD, EUR, CNY), and order size. Make sure to find an offer that best suits your needs!

Newer sellers and vendors with fewer ratings tend to offer better prices. But you should always take precautionary measures before transacting in larger sums of money.

Choosing a payment method is key to the amount of BTC you can get.

For instance, $100 through bank transfers can get you as much as $93.36 worth of BTC with a certain seller, but $100 through a certain gift card only gets you $68.99 worth of BTC. That’s nearly a $30 difference!

11. Crypto.com

Crypto.com approaches the Bitcoin exchange scene from a very different angle.

They started out as a wallet, then added borrowing and lending services, finally rolling out a full-blown exchange platform.

In the past year, they have been the most exciting project to follow. They’ve a whole slew of products including:

• Mobile wallet for your crypto
• Pay and Get Paid in Crypto – Merchant
• Credit – deposit and get instant loan
• Earn – deposit and earn interest paid weekly in crypto
• Debit cards with min. 2% back on all spending + perks
• Instant coin purchase and top up in-app
• Exchange – 0% fee trading for 90-days

Currently, Crypto.com is running a $50 referral offer program for newcomers. You’ll receive US$50 in MCO tokens for going through the KYC process and completing the staking requirements.

Here’s the breakdown of getting the referral offer:

1. Sign up with a referral code: heq9qnuzam
2. Verify your identity & submit proof of address
3. Make a qualifying purchase & hold 50 MCO (~$200)
4. Done. Your stake of 50 MCO will be locked for 180 days before you can withdraw.
5. You can withdraw that $50 bonus in MCO right away.

12. Liquid

Want honest trading volumes? Looking for a proper BTC price discovery? Then look no further.

Liquid by Quoine is right at the top when it comes to liquidity.

Headquartered in Tokyo, Japan.; this exchange is a result of a merger between Quoinex and Qcryptos in 2018.

Fully regulated by the JFSA (Japan Financial Service Agency) the company is known for its Internal World Book technology which matches orders of different trading pairs to give it one of the deepest markets imaginable.

A market with deeper liquidity means that you get the best network effect.

Liquidity begets liquidity. The marginal user tends to join an exchange that already offers the deepest markets at the lowest spreads.

This means that anyone can sell their assets in real-time with minimum loss of value.

For instance, the volume of BTC/JPY is very high on Liquid, volume of BTC/USD isn’t. With internal world book, you still have a great liquidity because the order book of BTC/USD contains all orders of BTC/JPY.

With their External World Book under development, soon you would see crazier levels of liquidity, thus, embodying the name “Liquid” given to the platform. (This project will connect their order books to other regulated exchanges within their network).

Not only that, you already have one of the biggest fiat exchanges with some of the most popular fiat pairs in the world (USD, EUR, SGD, HKD, AUD, CNY, INR, JPY, PHP, IDR)

Liquid exchange not only offers spot trading, but:

• Margin Trading up to 25X
• Liquid Inifnity – CFDs up to 100X
• Liquid Perpetuals up to 100X
• Instant Crypto Buys with VISA
• Instant Crypto-to-crypto swaps
• Lending Crypto
• 98% of all customer assets are stored offline

Conclusion

Over the next decade, competition between cryptocurrency exchanges will shift from adding more and more assets (Altcoins, tokens, etc.) to adding more features that would allow users to do more with their existing capital.

At the end of the day, BTC is just capital (The scarcest of all known assets would attract the most capital), and crypto companies will compete voraciously to lure as much of it as possible to their internal markets and ecosystem.

But it’s also important to remember what the Bitcoin movement is all about.

The basic pillars:

• – Open
• – Borderless
• – Neutral
• – Censorship resistant
• – Decentralized
• – Publicly verifiable
• – Immutable

Using a Bitcoin Exchange as your bank account barely moves the needle of progress. 

While these crypto finance companies mean well, they all still share the same flaws as their predecessors.

They’re a single point of failure. A central point of attack. Make no mistake, they will get hacked one way or another, internally or externally.

That’s why you shouldn’t just leave all your hard earned bitcoins in a wallet provided by an exchange.

Get a Hardware Wallet that secures your bitcoin offline.

Here are two hand-picked guides to help you understand this a little better:

• The 7 Best Bitcoin Hardware Wallets (for the Extra Paranoid) in 2020
• 5 Things to Watch If You Leave Bitcoin on an Exchange

We’ve only just begun…

In the world of Bitcoin, there’s so much more to delve into. That’s why I created The Zodiac Collection, that tells the story of the Bitcoin revolution from every angle you can dream up.

There’s a lot of exciting stuff to read — I’ve selected a few posts, to start with, below.

• The 12 Best Bitcoin Mobile Apps For 2020
• How to Escape the Rat Race (And… the Origin of New Year’s Day)
• Countdown to the Best Cryptocurrency Exchange in 2020
• Top 20 Decentralized Exchanges on the Planet (Latest DEXs in 2019)
• 6 Top Ways to Instantly Exchange One Cryptocurrency for Another [300+ Altcoins]
• Why Binance is Building its Own Decentralized Exchange (DEX) for the Future