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Factors to Consider When Choosing a Bitcoin Exchange

Bitcoin is not very different from a computer program or a mobile application that provides a personal wallet, allowing users to send and receive Bitcoins. Although there are many exchanges available for people seeking for an opportunity to trade or invest in BTC, knowledge on how the system works is critical before starting out. The process of transferring money over an exchange can be a rigorous process. It is not easy to acquire, which explains why it is important to involve Bitcoin brokers or exchange. The process of finding a broker or exchange is more than finding one with the best-looking website. The factors to consider when choosing an exchange include:

Liquidity

It is traded in a market where traders and investors are looking for an opportunity to sell or buy the currency. Therefore, it is advisable to consider the liquidity an exchange has. The term liquidity refers to the ability to sell an asset without the prices being affected significantly, in turn causing the prices to drop. When there are more sellers and buyers, the more the liquidity. Some of the largest exchange offer high selling prices, which in turn creates an effect that allows the system to generate into a large network where more people can join.

Proximity

Bitcoin remains relatively unregulated money, although the landscape is expected to change in the long-term. There is more exposure by financial industries and media in this regard. We will experience more governments wanting to exert some control over how monetary value is transmitted. This is attributed to the governments need to check and prevent the instrument from being used for illegal activities, such as money laundering, illegal drug smuggling and terrorism. Because of the difference in prices it is important to verify the geographic location of any exchange. Furthermore, the location of the exchange will dictate to investors and traders what laws they have to follow.

Fees

Buying and selling does involve money. The money is ideally the incentive for the brokers or exchange. Nonetheless, unlike buying bonds or stocks, Bitcoin exchanges charge a percentage, while discount brokers used by most investors charge flat rate fees. The percentage model, purchasing and selling over time can prove expensive. Some of the popular exchanges charge higher percentage fees on the basis of a sliding scale, based on volume. Hence, they charge less percentage where more volumes have been traded within a period of thirty days.




Source by Jesskay Githu Raai

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