Bitcoin exchanges are an integral part of the virtual currency world and its ecosystem in particular. Prior to the fall, Mt. Gox enjoyed the status of being a monopolist as it dominated an estimated 80-90% of the Bitcoin-Dollar trading volume. Though the collapse of Mt. Goxraised many questions, but the aftermath only lasted for a short span and the trading volumes rose again at various other exchanges. The exchanges today claim to have learned from Mt. Gox and present themselves as advanced models with better security mechanisms in place. The article covers some of the prominent platforms (in no particular order) for buying and selling Bitcoins.

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AN OVERVIEW ON THE FAMOUS BITCOIN EXCHANGES
VARUN KESAVAN, RESEARCH SCHOLAR, E – MAIL ID –
varunkesavan@yahoo.com
Bitcoin exchanges are an integral part of the virtual currency world and its
ecosystem in particular. Prior to the fall, Mt. Gox enjoyed the status of being
a monopolist as it dominated an estimated 80-90% of the Bitcoin-Dollar trading
volume. Though the collapse of Mt. Goxraised many questions, but the aftermath
only lasted for a short span and the trading volumes rose again at various other
exchanges. The exchanges today claim to have learned from Mt. Gox and present
themselves as advanced models with better security mechanisms in place. The
article covers some of the prominent platforms (in no particular order) for buying
and selling Bitcoins.
BITSTAMP
Bitstamp, a Slovenia based Bitcoin exchange, is one of toppers in terms of trading
volume. It facilitates instant buy-sell orders for USD/BTC pair with withdrawals and
deposits available in currencies other than dollars as well. The exchange offers trading
using limit orders where a pre-determined price can be set for buy and sell orders.
Bitstamp has earned a strong reputation in the Bitcoin world. The two youngsters, Nejc
Kodrič and Damian Merlak, who are behind Bitstamp, are to be commended for running
the exchange very professionally with sound audits and regulatory compliance.

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To buy Bitcoins, clients need to open an account with Bitstamp, which is followed by
transferring money into the account. This can be done through SEPA, international wire
transfer, etc. For those using SEPA, there is an additional step for change over
from Euros to Dollars for trading and then Dollars to Euro while withdrawal. There is a fee
levied on withdrawals - the fee for SEPA is fixed at 0.90 after conversion into Euros while
the fee for any international withdrawal is 0.09% (minimum fee being $15). Bitstamp earns
a trading fee on the successful trades which is based on the 30 day trading history of
clients. The minimum fee rate is as low as 0.5% - usually for new accounts and those with
a thin volume (<$500).
BITFINEX
Bitfinex is a platform providing advanced trading tools like margin trading, short
selling and liquidity swaps to buy or sell Bitcoins, Litecoins and Darkcoins. Bitfinex was
launched in 2013 and has grown in a short span to be one of the largest exchanges going
by the trading volume (USD). The platform is currently in a beta testing phase and is
looking to add new and advanced features going forward. The people behind Bitfinex are
very paranoid (as they call themselves) about the security issues. They store 99.5% of
the assets in cold storage and only 0.5% is in wallets to allow for convenient deposits and
withdrawals. Once a day, a backup of the database of the exchange is taken which is
encrypted and then archived. The backup is sent to different locations as a further
measure of protection. The servers is protected with up-to-date software’s and the
exchange is regularly tested by Arcui to detect (and prevent) any intrusion.

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COINBASE
Coinbase has emerged as one of the high profile names in the Bitcoin world placing itself
on the top as a one stop solution for Bitcoins - it’s a wallet for storing, spending, buying
and accepting Bitcoins, it acts as a Bitcoin processor (merchant tool) for many merchants
and businesses (example; Expedia, Overstock.com, Dell), and is among the top Bitcoin
exchanges. Coinbase is a San Francisco, California based company and its initial offering
was primarily restricted to the U.S. but now it has entered Europe providing, buying and
selling services to around 18 countries.
Coinbase works on a slightly different principle wherein the client needs to link the bank
account with the Coinbase account and has to initiate an ACH automatic transfer system
for buying Bitcoins every time since Coinbase does not hold dollars in customer accounts.
Though the order is placed at the time of placement of order but Bitcoins are released
once the amount is credited from bank into Coinbase account which typically takes 3-5
working days. This mechanism of payment makes it unfit as a day trading exchange. It is
designed for newcomers who are learning about Bitcoin trading or those who trade with
a longer view. Currently, Coinbase does not cater to advanced trading tools like bids,
asks, limit orders, margin trading, or short sale orders. There is a fee for each transfer
from dollars to Bitcoin or vice versa, charged at 1% plus a $0.15 bank fee.

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CRYPTSY
Cryptsy is a platform not only for Bitcoins, but also the variants which are collectively
called altcoins. The exchange provides services to trade more than 200 different types
of cryptocurrencies currently, including the names like
Litecoin, Dogecoin, MazaCoin, Peercoin and so on. The exchange is headquartered in
Florida and is a FinCEN registered MSB (Money Services Business); it will be beta tested
in the near future. The exchange plans to offer services to merchants who are open to
accepting the different digital currencies as a mode of payment.
The exchange, which was launched in summer of 2013, has witnessed strong growth in
a short span with a broad spread consumer base and high trading volume. According to
the Cryptsy.com, the number of registered users is 270,000 and the volume crosses 300K
trades per day. The trading fee is 0.20% for buyers and 0.30% for sellers, while the
transaction fee varies with the coin trading in (depends on the wallet charges).
BTC-E
BTC-e emerged as a popular exchange from the time trouble started to surface at Mt.
Gox and its eventual fall. The Bulgaria based (supposedly) exchange came into existence
in 2011, offers a choice virtual and fiat currency to its users. The MetaTrader4 platform
offers a choice to trade Bitcoins, Litecoins, Peercoin, Feathercoin, Terracoin, Novacoin
and Namecoin with U.S. Dollars, Russian Rubbles, Pound, Chinese Yuan (CNH) and
Euros.

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The exchange has a fee for the transactions carried out on the platform at 0.2% per
transaction; however, there may be variations as the fee depends on individual accounts.
BTC-e has two interfaces, one inEnglish and the other in Russian. There are speculations
that the company is actually headquartered in Russia and not Bulgaria, the anonymity
factor about founders has deepened such thoughts. The exchange on the positive side
offers high volumes in trading and invaluable experience.
KRAKEN
Kraken is a feature loaded trading platform with fast deposits and withdrawals for
professional and advanced traders. It offers advanced order and trading tools - stop loss,
stop loss limit, trailing stop, trailing stop limit, take profit limit, stop loss take profit
limit, leverage, margin, etc. The exchange caters well to the needs of more sophisticated
traders but that doesn’t turn it unsuitable for beginners.
The digital currency options available at Kraken are Bitcoin, Litecoin, Dogecoin,
Namecoin, Ripple and Ven. The exchange supports Euro, U.S. Dollar and South Korean
Won. The trade fee is dependent on two factors, one being the currency pair; the other is
the 30 day trading volume. In addition, certain charges need to be paid for deposits and
withdrawals which are over and above the trading fee. Kraken, a division of Payward Inc.,
is particular about its audit and compliance and has even received $5 million from
Hummingbird Ventures for its Series A funding round.

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BTCCHINA
BTCChina is among the largest platforms for buying and selling Bitcoins based on trading
volumes. The exchange was founded in 2011 and is one of the oldest exchanges as well.
It supports trading of Bitcoins and Litecoins done in the Chinese currency (CNY); however
it allows for deposits and withdrawals in Hong Kong and U.S. dollars also. The liquidity
offered by the exchange due to its high volumes is one of its advantages. It also offers
secure storage of Bitcoins (offline) as the exchange uses many cold storage techniques
for the purpose. The exchange does not charge any deposit and trading fee for BTC, LTC
and CNY, it charges a withdrawal fee.
BITCOIN SOURCE
Bitsource.org by Bitcoin Source is one of the newer platforms for trading Bitcoins but has
already made a place for itself. The exchange launched in 2014 is based in Belize and is
owned and managed by DCE24 Group Ltd. One of the features that enhance its appeal
is the acceptance of deposits by various methods including credit card payments like
Visa, Discover Card, MasterCard, and American Express in additionto methods like ACH
transfer. The exchange has trading options with U.S. Dollars and Euros. As a measure to
prevent loss or theft, 98% of the funds are stored in cold wallets or offline bank vaults.
The exchange also offers high speed transactions and cashing out along with prompt
account funding facility. A fee of 1% is charged per trading transaction. There are
additional charges depending on the deposit option used. In case of credit cards,
an interchange rate of 2.99% plus 0.30 applicable while for an eCheck/ACH transfer, a
fee of $0.25 per transaction is deducted. A handling fee of $5 is deducted for both options
on the deposited amount.

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THE BOTTOM LINE
Other than the exchanges listed above, there are few other names which can be reviewed
by investors and traders in Bitcoins and other digital currencies, they are CampBX, Bter,
itBit, OKCoin, HitBTC, AskCoin, etc. With more than 60 trading platforms available, there
is sure a lot of choice available but the selection should be done after weighing features
like liquidity, fee schedule, country (headquarters), trading facilities, etc.