MimbleWimble is a privacy-oriented blockchain protocol with mysterious origins. Much like other top privacy cryptocurrencies, MimbleWimble attempts to make transactions completely opaque, while still allowing for external verification. 

Additionally, MimbleWimble looks to keep its blockchain’s size on disk as small as possible while maintaining quick verification for all clients.

So far, two privacy cryptocurrencies have launched on top of MimbleWimble technology: Grin and BEAM. 

What is MimbleWimble?

The original MimbleWimble whitepaper was released on July 19, 2016, by an anonymous person that signed the whitepaper as “Tom Elvis Jedusor.”

Just a few months after the release of the original whitepaper, another anonymous person stated that they were working on an implementation of MimbleWimble, which would be known as Grin.

The name “MimbleWimble” and the signing name on the whitepaper are both references to JK Rowling’s Harry Potter novels. Where MimbleWimble is a spell that stops its target from being able to speak coherently. And the name  “Tom Elvis Jedusor” is an anagram for “Je suis Voldemort”, the name chosen by the antagonist in the French version of the novels.

MimbleWimble Goals

MimbleWimble has three goals that are outlined in its whitepaper:

Privacy

MimbleWimble is first and foremost a privacy blockchain protocol. Its designer had a very good understanding of the privacy technologies it is built upon. And using that understanding, MimbleWimble’s designer created a new and more secure strategy that increases transaction privacy to a whole new level. We’ll go into the technical details of this below.

Small Blockchain

Blockchain size on disk is a major issue for those looking to run full nodes for any cryptocurrency. Put simply, blockchains grow. This growth makes maintaining a large number of nodes more problematic over time.

MimbleWimble’s designer saw blockchain size as a major issue and pushed to make MimbleWimble blockchains as small as possible. The whitepaper states that the technique used could reduce the size of Bitcoin blockchains from a size of 80GB to a size of 30GB. An impressive change, especially given that MimbleWimble maintains user privacy through this size reduction.

Quick to Verify

The last goal MimbleWimble aims for is verification speed. Having a tiny blockchain is only good if the processing power required to verify it is equally tiny.

Cryptocurrency Grin launches on MimbleWimble technology

Cryptocurrency BEAM launches on MimbleWimble technology

How does MimbleWimble’s technology work?

MimbleWimble uses its own transaction and block schemes. They work together to hide transaction data as much as possible while still allowing verification to occur.

Put simply, both use zero-knowledge proofs, with blocks building on the math used in the transaction to further hide the information.

No Addresses

MimbleWimble has no concept of a blockchain address. Rather than tying all outputs to an address, outputs have no data regarding where they came from, and are spent via a private key.

This does mean that the wallets of the involved parties wallets have to talk to each other when making a transaction. But the method of communication and time taken is up to the user. One could, for example, negotiate a transaction using encrypted email.

Opaque Transactions

MimbleWimble’s transactions use zero-knowledge proofs (specifically a mixture of Confidential Transactions and CoinJoin) for security. Outside verifiers can independently prove that no cryptocurrency was created or destroyed over the transaction. This is somewhat similar to how Monero secures its transactions, but with added protection from CoinJoin and the total lack of addresses.

Putting together a MimbleWimble transaction requires communication between both parties as discussed above. The following steps are what happens during that communication:

1. The parties agree on the amount to be transferred.

2. The sender picks the inputs they want to use to create the amount to be transferred and adds together all the blinding factors for that transaction.

3. The sender sends the transaction data to the receiver. The receiver then picks the blinding factors for the outputs of the transactions, adds them together, and sends them back to the sender along with any additional required information.

Once the above steps are complete, the transaction can be sent to the network and confirmed.

In the above steps, I mention a blinding factor. The blinding factor makes up part of the zero-knowledge proof system used in Confidential Transactions. It is the ‘missing part’ or the private key for each input – if you know the blinding factor for a given output, you can spend it. By adding together all the blinding factors for every input in the transaction, you can prove you own all the inputs used in the transaction, but not share the private keys.

Reduced blockchain size and increased verification speed

MimbleWimble blocks are different from the blocks employed in other blockchains. Only unspent outputs and new currency generation are saved. The idea being that you don’t need to know about every transaction ever to verify a blockchain. All you need to know is where all the currency is now, and where it all came from.

Storing just that data increases fungibility, user privacy, and verification speed. Much like above, anyone looking to verify the blockchain simply needs to verify that the sum of the inputs subtracted from the sum of the outputs equal zero.

The downside of MimbleWimble

Unfortunately, with the security that MimbleWimble provides, you lose some of the tech Bitcoin has.

For example, in order for all transactions to be consolidated in blocks, they have to be very similar. And due to the requirement for said similarity, MimbleWimble does not have any sort of script system.

Otherwise, due to the consolidation of transactions, MimbleWimble has no transaction history. Meaning that an external auditor or similar would be unable to monitor transactions directly.

Conclusion

MimbleWimble is a fantastic step forward in privacy crypto. If the upcoming launch of its first implementation GRIN goes well, and no issues are found in the algorithm, MimbleWimble will be a serious competitor in the privacy coin market. My only concern is whether or not the inability for even the owners of the currency to audit where it came from using the blockchain itself will deter large scale users.

Sources and further reading:

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best cryptocurrency exchanges

Edit: This list of cryptocurrency exchanges was updated on January 16th to include new developments.

Welcome to the most comprehensive and detailed guide to the best cryptocurrency exchanges in 2019. Choosing the best cryptocurrency exchange is an important part of your crypto journey. It might be the first place you ever buy bitcoin. Or if you’re a seasoned trader, you might use a bitcoin exchange to trade hundreds of altcoins.

But how do you differentiate between the options? CoinMarketCap lists at least 100 crypto exchanges all over the world, each tracking cryptocurrency prices and each with varying cryptocurrency exchange rates.

Block Explorer took on the challenge of narrowing down the options and compiling as much information as possible to help you decide. First…

What is a cryptocurrency exchange?

In its simplest form, a crypto exchange is a place to buy and sell cryptocurrencies. However, crypto exchanges are not all equal. Some are designed for beginners, while others have complex features for pro traders.

Some exchanges accept fiat currency like dollars and euros, while others only exchange between cryptocurrencies themselves.

Many are actually “brokers.” In other words, you’re buying directly from the exchange company itself. Others facilitate a real peer-to-peer exchange between crypto users.

best cryptocurrency exchanges

How to choose the best cryptocurrency exchange

We began this task with the aim of ranking the best cryptocurrency exchanges. But we quickly realized this wasn’t possible. There isn’t necessarily a “best exchange,” only the best option for you.

While Coinbase might be the top exchange for beginners, it’s not the best option for a pro trader or someone looking to trade lots of altcoins.

And while the Kraken exchange might be the best option for experts, it’s a poor choice for beginners.

Instead, Block Explorer gathered as much (useful) information as possible taking the following points into consideration:

Beginners or advanced? – We’ve split the entire list into two parts: beginner and advanced. The beginner group includes simple exchanges with easy-to-use functionality. There’s little jargon, and setup times are quick. The second group is for intermediates or advanced users. These exchanges are more powerful and have advanced features, but require some knowledge and experience with crypto.

Security – Crypto exchanges are the single biggest target for hackers. $1 billion was hacked and stolen from cryptocurrency exchanges in 2018 alone. We highlight security features like 2FA, cold storage, and encrypted email options.

Hacked? – We also highlight whether an exchange has been hacked and, if so, how they responded to the hack. Did keep it quiet or immediately inform users? This information is essential in deciding whether to trust your money to an exchange.

Number of trading pairs – We highlight the number of trading pairs available on each exchange. For beginners, a small handful of trading pairs is sufficient (to buy or sell bitcoin, for example). Advanced users, however, may wish to trade between various altcoins.

Volume – Volume is the measure of how much cryptocurrency is trading on the platform on a daily basis. It’s a relatively good indicator of reputation and liquidity.

Important note: Research suggests that some cryptocurrency exchanges fake their own volume in a bid to appear bigger. Where appropriate, we have highlighted the known offenders.

Fees – You should always understand the fee structure before trusting an exchange. How much will each trade cost and how are the fees calculated? We outline the fee structure for each exchange.

Without further ado, here are the best cryptocurrency exchanges in 2019 and beyond.

Please note: Block Explorer has no affiliation with the exchanges listed below.

Best Beginner Exchanges

Beginner exchanges are exchanges that offer a simple way to buy bitcoin and other cryptocurrencies, with as little confusing jargon and setup time as possible.

Coinbase

Coinbase

Trading Type Fiat / Crypto
Number of Trading Pairs 4
Hacked before? No
Available Countries 33
Security Features Two Factor Authentication
30d Volume (Fiat) $82,496,871.00
30d Volume (BTC) $82,496,871.00
Fees Flat 0.5% + a fee based on location and amount

Coinbase is the best-known cryptocurrency exchange in the US. It is the simplest and easiest on-ramp for crypto beginners.

The user interface is intuitive, and the design is clean and simple. You can link up your bank account or pay with a card. There’s also a deep library of guides and explainers for newcomers.

Coinbase has a limited choice of cryptocurrency options to keep things simple. However, they considering the addition of more altcoins.

As for security, Coinbase stores 98% of customer funds in cold storage, in safe deposit boxes and vaults around the world, making it relatively secure. The remaining 2% is insured in case of hacks. 

Lastly, there’s a handy mobile app to buy and sell cryptocurrency on the go.

Get started on Coinbase.

ShapeShift

ShapeShift crypto exchange

Trading Type Crypto / Crypto
Trading Pairs 940+ (Total unknown – each crypto can be traded with any other)
Hacked before? Yes, see below for transparency.
Available Countries Available to all countries
Security Features Two Factor Authentication
24h Volume (Fiat) No USD Trade
24h Volume (BTC) 34.12
Fees No fees applied, profit is made similar to how day trading is profitable.

Shapeshift is a crypto only exchange, which means you can’t buy cryptocurrency with dollars or euros. You can only trade between cryptocurrencies. However, due to its simplicity, we still recommend it for beginners. 

ShapeShift allows you to transfer currency between addresses of your choosing, rather than between accounts on its platform. It means ShapeShift doesn’t hold any customer deposits, making it relatively safe. 

ShapeShift has been hacked three times, which all occurred in the same month due to internal sabotage. The exchange was extremely transparent in what happened over the hack, with the CEO going so far as to write a blow-by-blow explanation of what exactly happened.

Get started on ShapeShift.

Gemini

Gemini bitcoin exchange

Trading Type Both Crypto / Crypto and Fiat / Crypto
Trading Pairs 9
Hacked before? No
Available Countries 15
Security Features Two Factor Authentication, withdrawal address whitelisting
30d Volume (Fiat) $19,134,737.00
30d Volume (BTC) 4,887.00
Fees Maker / Taker: Minimum 0.0% / 0.05%, Maximum 1.0% / 1.0%. Calculated on a 30-day rolling window

Gemini was founded by the Winklevoss Twins. It’s a US-based exchange noted for being a licensed platform (Regulated by NYSDFS). Gemini gained headlines earlier this year by announcing full insurance coverage for funds on its exchange and in custody.

Gemini and the Winklevoss Twins pride themselves on being fully compliant and working within existing regulations. As such, there’s a decent amount of safety from fraud and insurance coverage on this exchange. Of course, that comes at a cost: handing over a lot of personal information.

Gemini offers a decent chunk of volume, though few trading pairs compared to other exchanges. Security wise, aside from the standard 2FA, withdrawal address whitelisting is a welcome sight.

The Gemini app is also slick and easy-to-use for beginners.

Get started on Gemini.

Changelly

Changelly bitcoin exchange

Trading Type Both Crypto / Crypto and Crypto / Fiat
Trading Pairs 200+ (Total unknown)
Hacked before? No
Available Countries All countries accepted for Crypto / Crypto trades
Security Features Two Factor Authentication
30d Volume (Fiat) Not Published
30d Volume (BTC) Not Published
Fees Flat 0.5% fee

Changelly is a crypto exchange similar to ShapeShift. It is address-to-address so Changelly never holds your funds.

There’s a simple frontend for buying bitcoin and converting it to whatever cryptocurrency you would like. Much like ShapeShift, changelly transfers happen between addresses you own, rather than between accounts that the exchange controls.

It’s super fast and efficient. There’s a mobile app too for making transactions on the go.

Get started on Changelly.

Luno

Luno buy bitcoin exchange

Trading Type Fiat / Crypto
Trading Pairs 5
Hacked before? No
Available Countries 40
Security Features Two Factor Authentication
30d Volume (Fiat) $3,140,452.00
30d Volume (BTC) 805.06
Fees Maker / Taker. Makers are a flat 0% and takers range from 0.20% to 1.0%

Luno offers a great platform for African and European traders looking to get started. Alongside their exchange, Luno offers a wallet service with a companion mobile app. The exchange has been around since 2013 and has never been hacked, giving it a fairly solid reputation for security.

It’s designed to be as simple as possible, including an “instant buy” feature.

Get started on Luno.

Coinmama

Coinmama bitcoin exchange

Trading Type Fiat / Crypto
Trading Pairs 16
Hacked before? No
Available Countries 226
Security Features Two Factor Authentication
30d Volume (Fiat) Not Published
30d Volume (BTC) Not Published
Fees 5.9% flat fee with an additional 5% for credit card purchases

Coinmama is a good choice for those looking to buy crypto using a credit card or other fiat sources. Coinmama is a broker so you’re buying directly from the company itself which makes transactions fast.

However, there are some things to be aware of. Coinmama is “buy only” so you cannot sell cryptocurrencies on the platform. There is also no wallet feature on the exchange, so you need to withdraw directly to a wallet. This is no bad thing as keeping your funds on an exchange is risky, but you will need a wallet set up first.

Unfortunately, Coinmama’s simplicity is offset by the incredibly high fees charged for every transaction – 5.9% flat fee and an additional 5% for credit card purchases.

Get started on Coinmama.

Best Intermediate-Advanced Crypto Exchanges

Advanced exchanges offer a lot more information and power to the trader. Unlike simpler exchanges that give you a set price, advanced exchanges allow you to control your buy and sell orders. Meaning that you can choose to create orders at whatever price you want.

Some advanced crypto exchanges also offer pro features like margin and leveraged trading. Some allow you to bet against crypto prices by “shorting” an asset, and most have expert charting tools. Most allow you to trade between cryptocurrencies, where many of the beginner exchanges do not.

Binance

binance crypto exchange

Trading Type Crypto / Crypto
Trading Pairs 100+
Hacked before? No
Available Countries Any not on UN sanction lists
Security Features Two Factor Authentication, client-side account freezing
30d Volume (Fiat) $695,837,008.00
30d Volume (BTC) 180,701.00
Fees 0.1% flat fee

Launched in 2017, Binance quickly grew to become one of the largest cryptocurrency exchanges on the planet.

Binance offers hundreds of crypto trading pairs so it’s perfect if you’re looking to get into some of the more obscure altcoins out there. It is crypto-to-crypto only, so you’ll have to load up your account with bitcoin or ethereum to get started; there’s no fiat currency option.

Edit: On January 16th, Binance launched Binance Jersey – a fiat-to-crypto exchange which allows buyers in the UK and Europe to trade with pounds and euros. 

There’s a “basic” exchange mode and an “advanced” mode, although even the basic mode requires some understanding of trading screens and cryptocurrency. Originally based in China, Binance has relocated to Malta after crypto crackdowns in China and Japan.

The 0.1% flat fee makes Binance a very competitive option.

Get started on Binance.

Kraken

Kraken exchange

Trading Type Both Fiat / Crypto and Crypto / Crypto
Trading Pairs 72
Hacked before? No
Available Countries All but 7 countries
Security Features Two Factor Authentication, with the option for an additional recovery factor, PGP based email encryption and verification
30d Volume (Fiat) $92,208,762.00
30d Volume (BTC) 23,568.00
Fees Per currency Maker / Taker, low end around 0.0% / 0.25%

Based in the US and operating in Canada, Kraken is a large scale cryptocurrency exchange that serves almost the entire planet.

The Kraken exchange was recently crowned the most secure cryptocurrency exchange by cyber-security firm Group-IB. Kraken was the only exchange in the report’s top-tier group, essentially putting it in a security league of its own.

The report cited Kraken’s proof of reserves audits, private key storage, protection of customer data, and technical security details as key reasons for the ranking.

Among Kraken’s security features is the ability to have a second 2FA set up for account recovery, and the ability to use PGP to encrypt and verify email communication.

In terms of trading, Kraken offers 72 trading pairs and leveraged margin trading on bitcoin.

Get started on Kraken.

Coinbase Pro

CoinbasePro crypto exchange

Trading Type Both Fiat / Crypto and Crypto / Crypto
Trading Pairs 25
Hacked before? No
Available Countries 31
Security Features Two Factor Authentication
30d Volume (Fiat) $93,599,262.00
30d Volume (BTC) 23,904.00
Fees Maker / Taker based on the last 30 days in a rolling window. Maker fee is always 0%, taker goes from 0.30% to 0.10%

Coinbase Pro is Coinbase’s bigger (but younger) sibling. It was recently known as GDAX until it changed to Coinbase Pro. The platform offers some very competitive low-end fees, meaning that if you expect to move a lot of crypto they are a good choice.

It comes with all the reputational clout of Coinbase, with its FDIC insurance and regulatory checklist. Coinbase Pro also features additional trading pairs not currently available on the basic Coinbase platform.

Coins like Golem (GNT), Decentraland (MANA), 0x (ZRX), and Basic Attention Token (BAT) are all available on Coinbase Pro, but not Coinbase.

Get started on Coinbase Pro.

Poloniex

Poloniex cryptocurrency exchange

Trading Type Both Crypto / Crypto and Fiat / Crypto
Trading Pairs 116
Hacked before? Yes, see below
Available Countries All but three countries and a few US states
Security Features Two Factor Authentication
30d Volume (Fiat) $27,719,009.00
30d Volume (BTC) 7,764.00
Fees Maker / Taker. Minimum 0.0% / 0.1%, Maximum 0.1%, 0.2%

Poloniex is a relatively large cryptocurrency exchange based in the USA. Poloniex offers a pretty large amount of volume on its platform and backs it up with competitive fees. A good choice for any trader looking to move mid-to-large amounts of crypto.

Poloniex’s backend has been hacked once. After it happened the then-CEO was transparent, and promised that Poloniex would cover any losses, and discussed exactly how the hack took place.

The vast majority of funds are kept in “air-gapped cold storage” and suspicious activity is monitored closely.

As for trading, Poloniex offers one of the most advanced suite of trading tools and technical indicators. It was the first exchange to offer pre-fork trading on the two Bitcoin Cash protocols, providing a crucial gauge of investor support.

Get started on Poloniex.

Bittrex

Bittrex cryptocurrency exchange

Trading Type Both Crypto / Crypto and Fiat / Crypto
Trading Pairs 288
Hacked before? No
Available Countries Almost all
Security Features Two Factor Authentication, IP and cryptocurrency address whitelisting, and client-side account freezing
30d Volume (Fiat) $42,818,083.00
30d Volume (BTC) 11,080.00
Fees 0.25% flat fee on all trades

Bittrex is a crypto exchange with decent volume, a good number of trading pairs, and above average security options. Specifically, the ability to whitelist IPs that can access your account and addresses you can withdraw to is very handy.

The exchange has never been hacked, which is the least you should expect from an exchange founded by three cybersecurity engineers! The vast majority of funds are stored in safe cold storage wallets.

Bittrex is designed for experienced traders, built with a scalable trading engine which executes orders in seconds. The flat 0.25% fee means you always know where you stand, too.

Get started on Bittrex.

Bitfinex

Bitfinex cryptocurrency exchange

Trading Type Both Crypto / Crypto and Fiat / Crypto
Trading Pairs 100
Hacked before? Yes – Not that much response from Bitfinex
Security Features Almost all, none that are listed on UN sanctions
Available Security Two Factor Authentication or Universal Second Factor (Yubikey or similar), IP whitelist for accounts, PGP encrypted email
30d Volume (Fiat) 311
30d Volume (BTC) $311,032,908.00
Fees Maker / Taker based on your last 30 days volume. Maximum 0.1% / 0.2%, Minimum 0.0% / 0.055%

Bitfinex is a Hong Kong-based cryptocurrency exchange with expert-level features like spot trading and leveraged margin trading. You can leverage up to 3.3x (effectively borrowing money to increase your position). 

The charts on Bitfinex are particularly great, allowing to set your own patterns and set price alerts. The exchange also has high liquidity and large volume, meaning you can buy and sell without lag time.

Bitfinex was hacked in 2016 with $72 million worth of bitcoin stolen, but the exchange now has above-average security options. Specifically, the inclusion of U2F and PGP encryption for email is a welcome sight.

One thing we should note is that Bitfinex has been accused of artificially pumping bitcoin prices during the 2017 bull run.

Get started on Bitfinex.

Bitstamp

Bitstamp bitcoin exchange

Trading Type Both, though mostly Fiat / Crypto
Trading Pairs 14
Hacked before? Yes, employees’ credentials compromised. Bitstamp released an incident report, but it is no longer available.
Available Countries 56 for MasterCard transactions, no information otherwise.
Security Features Two Factor Authentication, a PGP key is offered for email encryption and email-based withdrawal confirmations.
30d Volume (Fiat) $93,538,791.00
30d Volume (BTC) 24,205.00
Fees Based on your last 30-day volume in USD. Ranges from 0.25% to 0.10%

Bitstamp started out in a garage, with $1,000 and two laptops in 2011. Fast forward to today, and it’s one of the largest cryptocurrency exchanges in the world.

Based in London, it’s an ideal option for British crypto traders. Bitstamp was one of the first fully-licensed digital cryptocurrency exchanges. That didn’t stop hackers in 2015 stealing $5 million from the exchange. The company did release an incident report to explain the situation, but it is no longer available.

Since then, it has implemented some strong security features. Namely, PGP encrypted communication and email based withdrawal confirmations stand out here. PGP is a must to verify the identity of who you are communicating with.

Get started on Bistamp.

Bithumb

bithumb cryptocurrency exchange

Trading Type Fiat / Crypto (specifically Korean won)
Trading Pairs 66
Hacked before? Yes
Available Countries All countries, though still only in KRW
Security Features Two Factor Authentication
30d Volume (Fiat) $1,419,838,544.00
30d Volume (BTC) 367.00
Fees Flat 0.15% fee

Caution: A recent report found evidence of wash trading on Bithumb – a manipulative practice to exaggerate its volume figures.

According to CoinMarketCap, Bithumb is the largest exchange by reported volume (at the time of writing). But there’s a catch – the only fiat option available is Korean won (KRW).  

Bithumb is open to all countries, but traders without a connection to South Korea will struggle to trade, as it is notoriously difficult to buy and sell KRW for other fiat currencies. Though this does leave an opening to buy KRW with crypto, assuming you have the crypto-side capital for it.

Bithumb has been hacked at least twice – first in June 2017 hitting 3% of all Bithumb users. And secondly, in June 2018, when $31 million was stolen from the exchange.

Get started on Bithumb.

CEX.io

Cex.io bitcoin exchange

Trading Type Both Crypto / Crypto and Crypto / Fiat
Trading Pairs 28
Hacked before? No
Available Countries All countries aside from 24 small countries and 27 States
Security Features Two Factor Authentication
30d Volume (Fiat) $7,056,167.00
30d Volume (BTC) 1,827.00
Fees Maker / Taker based on your last 30 days volume in BTC. Maximum fee of 0.16% / 0.25%, minimum fee of 0.0% / 0.1%

CEX.io is a UK based cryptocurrency exchange that sports a low but respectable volume and very competitive fees.

It offers an impressive dashboard for expert traders with margin trading, order-matching algorithms, and high-frequency trading for scalp traders.

It’s a good choice assuming what you are looking to trade is available in their somewhat small pool of trading pairs. 

Get started on CEX.io.

Bitpanda

bitpanda crypto exchange

Trading Type Fiat / Crypto
Trading Pairs 80
Hacked before? No
Available Countries All for buy / sell via Neteller, otherwise EU only
Security Features Two Factor Authentication, email confirmation for most account actions
30d Volume (Fiat) Not Reported
30d Volume (BTC) Not Reported
Fees Change often – Between 1% and 3%

Bitpanda is an Austrian cryptocurrency exchange and one of the most accessible options for traders in Europe. Bitpanda acts as a broker, meaning you’re purchasing the cryptocurrency from Bitpanda itself, rather than exchanging it with other users.

Bitpanda accepts euros, British pounds, Swiss francs, and US dollars and offers a decent array of cryptocurrencies. It has a slick user interface that is welcoming and relatively intuitive for users.

The only downside here is that their fees are somewhat high and they don’t report volume.

Get started on Bitpanda.

Coinsquare

Coinsquare crypto exchange

Trading Type Fiat / Crypto (Specifically CAD)
Trading Pairs 9
Hacked before? No
Available Countries 1 – Canada only
Security Features Two Factor Authentication
30d Volume (Fiat) $7,058,585.00
30d Volume (BTC) 1,804.00
Fees Flat fee for makers and takers, 0.10% and 0.20% respectively

Coinsquare is the largest cryptocurrency exchange in Canada, built to cater directly to Canadian traders, meaning that external traders will find themselves falling flat. Security, however, is a high priority. Coinsquare has never been hacked and 95% of all funds are held in cold storage. 

Its trading functionality is somewhat basic, so experts will probably look elsewhere for superior features. 

Get started on Coinsquare.

HitBTC

HitBTC cryptocurrency exchange

Trading Type Crypto / Crypto
Trading Pairs 803
Hacked before? No
Available Countries Almost all
Security Features Two Factor Authentication
30d Volume (Fiat) $222,941,259.00
30d Volume (BTC) 57,732.00
Fees Flat Maker / Taker fee structure: -0.01% / 0.1%

Caution: A recent report found some evidence of wash trading on HitBTC – a manipulative practice to exaggerate its volume figures. If correct, only 25% of reported trading volume on HitBTC is real.

HitBTC is a Chile-based cryptocurrency exchange that calls itself “the most advanced bitcoin exchange.” HitBTC offers incredibly competitive fees, a high amount of volume, and a good number of trading pairs. 

Unlike most other cryptocurrency exchanges, HitBTC offers a rebate for makers in their fee structure, meaning that makers receive 0.01% of the trade amount as a credit when a trade is made.

In terms of security, HitBTC offers 2-factor authentication, encryption technology, and cold storage. A 24-hour support team is also a nice touch.

However, the reports of manipulative wash trading should be taken into account before trading here.

Get started on HitBTC.

OKEx

OXEx crypto exchange

Trading Type Crypto / Crypto
Trading Pairs 412
Hacked before? No
Available Countries Accepts all countries
Security Features Two Factor Authentication
30d Volume (Fiat) $567,722,732.00
30d Volume (BTC) 146,920.00
Fees Complex Maker / Taker scheme

Caution: A recent report found evidence of wash trading on OKEx – a manipulative practice to exaggerate its volume figures. If correct, only 11% of reported trading volume on OXEx is real.

OKEx is a Hong Kong-based cryptocurrency exchange that offers a massive number of trading pairs with an equally large amount of liquidity to back it up.

OKEx was rated Crypto Exchange of the Year at last year’s Malta Blockchain Awards.

However, in a recent investigation, OKEx was considered “completely uninsurable” and ranked in the lowest bracket for security. Additionally, OKEx was singled out for manipulating its volume. A recent report found evidence of wash trading on at least 30 of its trading pairs.

Another downside here is a complex fee structure.

Get started on OKEx.

Conclusion

There are lots of factors to consider when picking the right crypto exchange: ease of use, security features, reputation, trading pairs and trading tools. Remember, when signing up to an exchange, you are trusting them with your funds. Always do your due diligence before you transfer any money.

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Mining crypto currency. Farm for mining bitcoins. Vector flat illustration
  • Proof of Work is the algorithm that powers various blockchains, like Bitcoin, Ethereum, Litecoin, and Monero.
  • Miners solve complex mathematical puzzles using computer power to produce a “block” of transactions.
  • When a block is produced, the miner is rewarded with the native cryptocurrency: bitcoin, ether, or litecoin, for example.
  • Proof of work ensures that blocks are produced at a stable rate and are accurately verified.

Cryptocurrencies work on the principle of a blockchain, where blocks containing transactions are added to the chain to make transactions happen. 

The issue is, the speed and validity of blocks must be kept in check. Proof of Work solves this issue, let’s check out how.

The Problem

Blocks on the blockchain are quite powerful as they confirm the transaction of money between addresses. They also distribute new currency by issuing rewards to the block creator. 

For these reasons, there are two important rules for block production.

  • Blocks need to be verified some way, so that we know what order transactions happened, among other things.
  • We need to control the speed at which blocks are added. If the speed is not controlled, block rewards are added to the network quickly and the worth of the currency plummets.

Bitcoin, for example, has a target block time of ten minutes. If blocks are created too fast, too much bitcoin will be given out to miners, thus flooding the market. Something has to keep that block time regulated.

Enter Proof Of Work

Proof of work solves both of our issues. It’s based on the idea that we include some data in the block that is hard to calculate, but easy to verify. 

In most proof of work cryptocurrencies, this comes in the form of a cryptographic hash.

What is a Hash Function?

A hash function takes a message or piece of data and scrambles it into a long cryptographic, alphanumeric code. 

But the smallest change to the message or data creates huge changes in the code. 

For example:

The SHA1 hash of “Armin Davis” is: 397d23a20e7cf5065238d7cdda5430d62a68445b

But change the capital letters to lower-case…

The SHA1 hash of “armin davis” is: b1371918c95f4693273757a2bc51514dcdfd1697

The hashes are completely different and seemingly random.

But it’s not random. The same input data will always return the same hash. Meaning that we can easily verify that a given hash is right for a given block easily. 

And, if we include the hash of the previous block in ours, we can prove order too.

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proof of work
Proof of work compared against alternative algorithm “proof of stake” Credit: CryptoTechies

What About the Timing Issue?

Hash algorithms are perfect for our verification problem but don’t fix the issue of timing on their own. 

Hashes are designed to be fast to compute, very fast in fact. The time it took to calculate the above two hashes was less than one-hundredth of a second.

But we need to regulate the time, so blocks aren’t produced too quickly.

We have a simple solution to this: network difficulty. 

Simply put, you can change how long it takes to create a block by making it harder to solve the cryptographic puzzle.

bitcoin difficulty chart
As more and more miners devote hash power to the Bitcoin network, the “difficulty” has increased dramatically to keep block production in check. Source: Bitinfocharts

Usually, that means including a constraint that the hash must be below a specific number. And that that number is calculated at specific intervals. 

Now miners have to hash their blocks many times, with each one taking up some time and lots of computer power. In order for the block creator to change the hash of their block, an additional bit of information is added to the block called the nonce. 

A nonce is simply a number that can be modified as the block creator sees fit to change the output hash.

Each time a hash is calculated and does not meet the requirements of the network at that time, the nonce is incremented or otherwise changed and the hash re-calculated.

Often a miner will try a very large number of different nonces before they find one that will be accepted by the network. The total time all miners take to find a block should be somewhere around the block time (ten minutes for Bitcoin). 

And if not, the difficulty is adjusted to keep the timing in line.

Not all Proof of Work Algorithms are the Same…

The hashing algorithm a cryptocurrency uses directly affects how difficulty will work, and what hardware you can run the mining software on. 

To use Bitcoin as an example again; Bitcoin uses the algorithm SHA-256, which is an industry standard hashing algorithm used in many places. 

If you’ve saved a password on a website, odds are it was hashed with Secure Hash Algorithm (SHA)-256 before it was stored. Using industry standard hashing algorithms means they are proven secure and worked on by massive communities.

However, using industry-standard algorithms is both a blessing and a curse. 

A blessing because most hardware will be able to run your software. But a curse (depending on how you look at it) due to one word: ASICs.

ASIC (Application Specific Integrated Circuits) are mining hardware that gives your network a massive amount of mining power. That increases centralization due to price and power demands. The more ASICs you own or control, the more of the network you command.

Some other cryptocurrencies, like Monero, use their own hashing algorithm specifically designed for use in proof of work systems. These have the advantage that developers have complete control over what hardware the algorithm works on best.

Downsides to Proof of Work

There are a few downsides to Proof of Work when compared to other solutions.

First, Proof of Work requires a lot of computing power. And, the more mining power on the network, the higher the difficulty. Meaning that you very quickly run into a situation where those with the cash to buy hardware do. And when you have a lot of hardware, you tend to store all their hardware in one place, leading to centralization.

At worst, this could lead to a 51% attack, whereby one actor, or group of actors, control more than half of the network. If that happens, they could theoretically “double spend” the cryptocurrency on the network.

And second, that computing power needs a lot of electricity to run, and at the high end, miners go looking for the cheapest power possible. This means that miners start to congregate in cities or countries where the power is cheap, again leading to centralization.

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Monero cryptocurrency best privacy coin

Privacy is a topic that doesn’t come up as often as it should in the cryptocurrency world, which is funny, considering their cryptographic background. 

Cryptocurrencies like bitcoin have a reputation for anonymity, but they are not as private as you think. Most don’t offer any explicit or built-in privacy features. 

Take Bitcoin, for example. Every transaction is recorded in an open and public place – the blockchain. Due to this, a malicious actor can see every transaction ever made with a simple search. They can see every public address and potentially link it to a person’s true identity.

Your transactions can be traced in much the same way a bank can trace your transactions as they move through its system.

What Features Should a Privacy Cryptocurrency Have?

Now that we know why privacy is a good idea, let’s put together a wishlist of what we’d want in the perfect privacy cryptocurrency.

a. Opaque Transactions

Opaque transactions are those that do not show the sender’s address, the receiver’s address or the amount transferred. 

The rationale behind wanting opaque transactions is very simple, why should everyone be able to know who you are transacting with?

If a malicious actor knows who you are transacting with, they may be able to use that information to pressure you. Or, a malicious actor can figure out which addresses are worth attacking by looking at the amount being transferred in and out.

b. Provable Transactions

Opaque transactions are wonderful but sometimes you need to be able to prove to someone that the transaction was sent. For example, to prove that a donation took place, prove that you actually paid a vendor for goods or to prove a transfer to an escrow took place.

c. Default On Privacy

Having private transactions is great, but the next problem is getting people to use them. 

Only one privacy coin is automatically private right now. All others offer an option between a standard transfer and a private transfer.

If your privacy system requires extra steps to use, most users will end up taking the easier, less-private approach. 

Having some transactions be private and others not private simply draws attention to the ones made private. All transactions being the same makes the attacker’s job a lot harder, as there’s nothing drawing attention to itself.

default on privacy

d. Trustless

“Trustless” means not having a third-party store data or make the transaction. The current banking system, for example, is not trustless, because you must trust the bank to verify your funds and make the transaction on your behalf.

It’s a pretty standard request for any cryptocurrency, but more so for privacy cryptocurrencies due to the fact that any hole in the armor makes the entire cryptocurrency weakened at best. 

Any privacy cryptocurrency that requires a trusted setup should be considered very carefully.

e. Obfuscated IPs

One issue that doesn’t come up as often as it should, even some of the most private cryptocurrencies, is that your IP address is exposed to the network when you broadcast transactions. 

This means that someone listening very carefully can figure out where in the world a transaction came from, and potentially which transactions belong to you. From there they may or may not be able to find out further information about the addresses involved, and how much was transferred. In general, it’s a good idea to look as uninteresting as possible.

Keeping your IP to yourself, or using some sort of anonymization layer (like Tor, or I2P) is a good idea. For a privacy coin, having first-party support for such anonymization layers is definitely a plus.

Monero vs Zcash: Best Privacy-Oriented Cryptocurrencies

Now that we have some grounding in what it means for a cryptocurrency to be private and why privacy is a good thing. Let’s take a look at the two best-known privacy cryptocurrencies, Monero and Zcash, to see how they stack up against our wishlist.

Monero

Monero tends to be the flagship privacy cryptocurrency. It offers various features and covers our wishlist well.

Monero infographic

a. Does Monero Use Opaque Transactions? ✔

Monero’s transactions are opaque. They make use of a technology called Ring Signatures (and, more recently, Bullet Proofs) to hide the sender and amount transferred in a transaction. It does this by mixing various transactions together, creating “decoys” that are difficult, if not impossible, to trace back to a specific person

A one-time-use stealth address is also used for receivers so you can’t be linked to multiple transactions.

monero-ring-signature
Credit: BitcoinKeskus

b. Does Monero Offer Provable Transactions?  ✔

You can prove a transaction occurred on the Monero network by use of a view key, which can be created for both a single transaction and an address.

c. Is Monero Private by Default? ✔

Monero’s privacy model does not allow for non-private transactions to occur on the blockchain. No matter what, your transaction will be private, though you can share a key with others to allow them to look at your transactions in the same way your wallet does.

d. Is Monero Trustless? ✔

Monero’s entire network requires no external trust to use, assuming you are running your own node, anyway. Like with most cryptocurrencies using an external node for your transactions carries some risks around logging. Though even if your transactions are logged, they will remain private.

e. Does Monero Obfuscate IPs? ✘

Monero does not currently have any sort of built-in IP obfuscation. Meaning that your IP can be logged by other nodes when broadcasting transactions. 

Though there are some plans for this in Monero’s future, namely, a technology called Kovri which will route and encrypt transactions through I2P Invisible Internet Project nodes. 

For the moment, if it is required, IP obfuscation can be achieved via third-party anonymization tools like Tor and I2P.

Zcash

Zcash offers both private and transparent transactions. A few of the boxes in our wishlist are checked by Zcash, but unfortunately, some of the more major ones are not.

zcash transaction types

a. Does Zcash Use Opaque Transactions? ✔

ZCASH offers a completely private transaction, known as a “shielded” transaction. With a shielded transaction, neither the addresses or amounts involved are visible on the blockchain. To achieve this, Zcash uses a cryptographic technique called “zero-knowledge proofs.”

Monero also uses a version of zero-knowledge proofs, but Zcash’s system is different in that it requires a small level of trust in its setup. We discuss this in the fourth section below.

b. Does Zcash Offer Provable Transactions? ✔

When the private transaction type is used, those on the secure side can disclose information via an experimental system. It allows you to prove a transaction was made without revealing information about the sender. However, it’s not a simple process.

c. Is Zcash Private By Default? ✘

ZCASH’s privacy scheme is not on by default, meaning that some effort is required for its users to send private transactions. There are four different possible ways for a transaction to occur. Only one of which is completely private for both parties. The other three are sender private, receiver private, and completely public.

A private transaction takes longer and costs more in fees. However, a recent Zcash upgrade aims to reduce the friction and move Zcash to a privacy-by-default system.

d. Is Zcash Trustless? ✘

ZCASH’s zero-knowledge proofs, known as zk-SNARKs, do require trust of third parties. Specifically, some parameters need to be generated and the source material destroyed. The issue with this is that if the source material for the parameters is not destroyed, those that have it can use it to create verified transactions.

The risk is mitigated somewhat by making the source material distributed. That way any one person that helped generate the data can destroy their source material and render the rest useless. Though that does not make the fact that a trusted setup is required, which, in the world of cryptocurrency, is a bad idea.

e. Does Zcash Obfuscate IPs? ✘

Much like Monero, ZCASH does not currently support any built-in IP anonymization technologies. Though running a ZCASH node over Tor does work. So if you do need the additional privacy you have the option of using Tor.

Monero vs Zcash: Which is Better?

While Monero and Zcash have their merits, Monero takes the crown for privacy, checking all but one of the items off our list. But Zcash has more control over how your transactions are done, at the cost of always-on privacy. Zcash’s trusted setup is also questionable, but unlikely to cause an issue in all but the most extreme case.

Bottom line, It’s up to you as the user to decide what cryptocurrency to use. And to weigh pros and cons against your use case. If you want absolute privacy, Monero is your go to, there is nothing quite like it currently. Otherwise, if you want to be able to send both private and transparent transactions, consider Zcash.

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51% attack cryptocurrency hacker

51% attacks. Merely mentioning them makes crypto traders a little fidgety, and with good reason. 

A successful 51% attack against a cryptocurrency would, at best, take a big chunk out of that cryptocurrency’s price. And, at worst, could end use of the cryptocurrency altogether. 

When you look at it that way, a 51% attack sounds terrifying. Let’s look at how they happen, and how blockchain projects keep them safe.

51% Attacks, Explained in Simple Terms

Put simply, a 51% attack could occur when a malicious actor (or group of actors) commands more than half the mining or hashing power on a blockchain.

As you can see in the chart below, many different mining pools are at work on the Bitcoin blockchain. If one of those pools reached a 51% majority, they could, hypothetically, initiate a 51% attack.

51% attack bitcoin mining pools
The proportional makeup of bitcoin miners of the network. Credit: CoinDance

But What Does a 51% Attack Do?

A 51% attack, also known as a “double-spend attack”, allows the attacker to rewrite history on a blockchain. 

In practical terms, it means the attacker can spend that particular cryptocurrency twice. 

As an attacker, I would buy something with bitcoin, then initiate a 51% attack to create a new version of the blockchain – one that doesn’t include my transaction.

Sounds pretty scary when you put it like that. That said, it is rather difficult to actually pull off a 51% attack on an established network. Bitcoin, for example, has never been hit by a 51% attack. Most large cryptocurrencies are safe, software bugs notwithstanding. 

And, even if you can pull one off, you only become a time traveler. You do not have the ability to break the rules of the network, steal cryptocurrency from others, or create new currency out of thin air.

To understand more, let’s go over how we might perform a 51% attack (hypothetically, of course).

A 51% Attack Requires a New Blockchain “Fork”

To initiate a 51% attack, we need to “fork” the blockchain, which means splitting it in two. Then we need to convince the network that our malicious forked blockchain is the real one.

Background reading: What is a hard fork in cryptocurrency?

But there’s a problem:

Cryptocurrencies need to have a way of knowing which blockchain is the ‘real’ one. 

Working this out is very simple – the longest one wins. By going with the longest blockchain on the network, the network can always be sure that the current blockchain is what the majority of the mining power wants. 

The longest blockchain being the ‘real’ one has some other benefits too. 

For example, cryptocurrencies are often community driven. If the community does not like a particular update, miners won’t switch to the new software. If miners don’t switch to the new software, the old chain continues and remains the ‘real’ blockchain for the network.

Making Our Malicious Forked Chain the Dominant One

Essentially, to perform a 51% attack, we need to keep our fork secret. 

We can keep our fork either secret to one computer, or let it go between the nodes we control. Once we have our fork, we need to keep it up to date with the rest of the network.

Essentially we create a mirror image of the original blockchain.

51% attack fork
Credit: CoinMonks

You can think of our secret blockchain as a reset button. Once we have it, we can do something on the live blockchain and not copy it into our secret one. 

Then, we can mine a bit harder on our secret blockchain and have it be a little longer than the real one. That’s why we need 51% of the hashing power on the network.

Nodes in a cryptocurrency network always follow the longest chain, as it usually indicates what the network at large wants to do. Once we release our secret blockchain to the network, all the nodes grab it and see it as the real one, as it’s the longest. 

And once our blockchain is the real one, whatever we did before is undone.

How Double Spending Comes In

Often the thing undone in 51% attacks is a transaction. We can pay for something and then switch out the old blockchain with our secret one where the cryptocurrency is instead transferred to a different address. 

This is referred to as a double spend. The network will reject the original transaction, as it will occur after the new transaction from the perspective of the new blockchain.

What a 51% Attack Can and Can’t Do

As mentioned above, the attack does not give us the power to do whatever we want. 

We must still follow the rules on the network. If we don’t follow the rules, our new blockchain is rejected by the network, and the attack fails. The requirement to following rules makes for an interesting combination of what we can and can’t do during the attack.

What the Attacker Can Do

Cause double spends

This is one of the main reasons to perform a 51% attack. It allows us to spend currency twice, essentially stealing it back from the first address it is sent to. Note that this cannot occur without cooperation from whoever owns the currency in the double spend.

Collect block rewards and cause other miners to have invalid blocks

As the attackers, we are mining all the blocks on our malicious blockchain and therefore get to select where the rewards for mining those blocks go. Depending on the price of the cryptocurrency in question, this may provide a nice counterbalance to the inevitable price-collapse of the cryptocurrency when the attack is revealed. 

Other than some counterbalance, the block rewards are unlikely to completely negate the cost. For this reason, an attack is unlikely to take place solely for the reason of collecting block rewards.

Stop transactions for a time, or remove confirmations from being added to the blockchain

As we control all the blocks in our chain, we can choose what transactions go into those blocks, much in the same way regular miners can. We simply instruct our miners to not include a specific transaction in their blocks. 

The transactions that are kept out of blocks will remain in the transaction pool. After the attack, any miner can pick up the transaction and include it in a block. This means we can delay a transaction for as long as we are in control.

What the Attacker Can Not Do

Steal cryptocurrency from others

As an attacker, we may control the blockchain itself during the time in the attack, but we do not control wallets we don’t own. Having control over the blockchain does not magically give us the private keys required to spend currency we don’t own.

Create cryptocurrency out of nothing

As mentioned above, we must still follow the rules of the network. That means mining blocks and receiving rewards as normal. We can’t magically create non-existent transactions or create cryptocurrency out of nothing.

Completely stop a transaction from occurring

We can keep a given transaction out of the blocks on our chain. But, this does not mean the transaction no longer exists, it simply means it remains in the transaction pool as an unconfirmed transaction. As soon as the attack stops, other miners may pick up the transaction and include it in their next block. Assuming it’s not a double spend transaction at that point.