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.

Learned something new? Subscribe to the Block Explorer newsletter to get exclusive crypto insights before they appear on the site.

proof of keys

Proof of Keys is a new movement that encourages all crypto users to withdraw their funds from centralized exchanges like Coinbase, Gemini, and others.

Initiated by investor Trace Mayer, the first ever Proof of Keys event will take place on 3rd January 2019 – the anniversary of the bitcoin genesis block – with a view to establishing an annual tradition.

To participate in the Proof of Keys movement, you simply need to withdraw any crypto you hold on an exchange and store it safely in a personal crypto wallet where you control the private keys instead.

Why Does Proof of Keys matter?

There are two main reasons for removing your crypto from exchanges on Proof of Keys day:

  1. To ensure cryptocurrency exchanges actually have the funds they claim. If everyone withdraws their crypto funds on the same day, crypto exchanges will be forced to pay out. If they fail to do so, it’s a huge red flag for exchanges that claim to store your money safely.
  1. To take control of your own crypto. As Andreas Antonopoulos said: not your keys, not your bitcoin. If all your bitcoin is stored on a crypto exchange, you don’t actually own the private keys; the exchange does. That means you’re not in control of your bitcoin or other cryptocurrencies.

Protect Against Hacks and Centralization

If you leave your funds on a cryptocurrency exchange, it’s much more vulnerable to hacks. $1 billion in crypto was stolen in 2018; the vast majority from crypto exchanges.

Exchanges are huge targets for hackers because they store vast amounts of crypto in one place. Instead, move your crypto to a personal wallet where it is much less vulnerable.

As Block Explorer previously reported, at least 25% of all litecoin in circulation is held by Coinbase. That’s a dangerously large amount of litecoin stored in one place. Not only that, but Coinbase technically owns all that litecoin; not you the depositor.

Proof of Keys is a, therefore, a practical and philosophical movement.

How to move your funds off an exchange

To withdraw funds, you’ll first need a wallet and a corresponding address.

The safest option is a hardware wallet from Ledger, Trezor or KeepKey. These are similar to external hard drives designed specifically for crypto storage. Since they’re offline most of the time, they’re difficult to hack (known as “cold storage”).

There are other wallet options that give you full control of your private keys including software desktop wallets and simple paper wallets.

Want more information? 12 best bitcoin wallets for safe and secure crypto storage

Once you have your wallet address, simply withdraw funds from the exchange to the wallet address.

Be aware that there may be high transaction volume on January 3rd which may cause congestion. You should also test the wallet address by sending small amounts of crypto to the wallet first.

Crypto Curious? Subscribe to the Block Explorer newsletter to get exclusive crypto insights before they appear on the site.

what is tether logo

Stablecoin Tether is supposed to remain “pegged” to the dollar to provide traders a stable cryptocurrency. According to the company behind Tether, every token is backed by a real dollar, held in a bank account.

“Every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USD₮ is always equivalent to 1 USD.”

But Tether made headlines earlier this year when concerns arose over the legitimacy of these claims. Despite promising regular audits, no independent audit has been undertaken to prove the underlying funds. Researchers at Texas University looked into it and concluded that tether backing is “incomplete.”

Background reading: Everything you need to know about Tether (the controversial stablecoin)

“Bank statements reviewed by Bloomberg News suggest those fears may be unfounded.”

Bloomberg has reportedly seen statements spanning four separate months that confirm tether is fully backed. The documents were revealed by someone with access to company records, and confirmed by government officials. 

One statement confirmed that Tether held $2.2 million in its bank account at Puerto Rico’s Noble Bank Ltd. on January 31. At the time, there were 2.195 billion tether coins in circulation.

Statements in September and October also confirm that enough funds existed to back the circulation.

Not a complete account of Tether’s finances

Bloomberg admits the documents are not a complete account of Tether’s finances. For example, they don’t shine any light on where the funds originated from, only that they flow between Tether and crypto exchange Bitfinex. Tether and Bitfinex share an executive team.

Although the investigation may put some accusations to rest, Tether’s lack of transparency will continue to worry some traders.

Since the concerns dominated headlines this year, alternative stable coins have gained traction including Dai, Paxos Standard and Gemini Dollar.

Further reading: What are stablecoins? And how can we make them more… stable?

stablecoins

Cryptocurrencies are notoriously volatile, with falls of 20% in a day not uncommon. It’s one of the reasons why some people are nervous about entering the market. 

Stablecoins, however, aim to bring stability to a hot market by acting as an anchor.

Stablecoins are designed to hold their value, even when the rest of the market is swinging wildly.

But they don’t always work…

The stablecoin debate was ignited recently by Tether (USDT). The world’s largest stablecoin, which is supposed to remain at $1, lost more than 15% of its value in a day, falling off its crucial $1 peg.

So what is a stablecoin? And how can we make them more secure and trustworthy?

Stablecoins Are “Pegged” to a Stable Asset

As we’ll see in this article, there are many different ways to keep a cryptocurrency stable, but it usually involves fixing the price to something else.

stablecoin pegged to the dollar
Credit: MakerDAO

Stablecoins fall into four different categories depending on how they are backed:

1.  Fiat-backed stablecoins – pegged to a fiat currency, like the dollar. This is the most common form of stablecoin.

2. Crypto-backed stablecoins – backed by another cryptocurrency, but “over-collateralized” to absorb the bigger swings in value.

3. Non-backed stablecoins – pegged to nothing, but regulated by an automated central bank system. This is much like how normal currencies work.

4. Asset-backed stablecoins – pegged to an asset like gold, oil, or diamonds.

Let’s look at each one in more detail. 

1. Fiat-Backed Stablecoins

Examples: Tether, Circle, True USD, Gemini Dollar, Paxos Standard

Coins backed by fiat currencies are certainly the most popular stable cryptocurrencies. The US Dollar is the most common fiat currency used as a collateral. 

In this method, every token is backed on a 1:1 basis against real USD deposited in a bank account. If a stablecoin holder wants to liquidate his position, the coins will be destroyed and the deposited USD will be paid out. 

what is tether logo

However, as recent developments of Tether have shown, it is often not as simple as it seems.

Read more: What is Tether? The Controversial Stablecoin

To build trust in the coin, we need to know it really is backed by dollars on a 1:1 basis. 

Tether claims its reserves are 100% backed by real dollars. But a major issue is the auditing aspect – an independent review to confirm the claims. If the issuer does not provide public audits on a regular basis, people quickly assume the tokens are created out of thin air.

That’s exactly what happened to Tether when it crashed well below its $1 peg.

But Fiat is Flawed…

Then there’s the debate around fiat currencies in general. Since the abolishment of the gold standard in 1971, fiat currencies are constantly losing value through inflation. 

As a consequence of the economic crisis in 2008, Satoshi Nakamoto invented bitcoin as a hedge against the current monetary system. With that in mind, it appears quite ironic that bitcoin supporters are now using fiat-backed cryptocurrencies.

Tether Alternatives

Gemini dollar

If you still want to use a fiat-backed stablecoin, you might want to take a look at the alternatives of the notorious Tether. Three emerging stars in the stablecoin sectors are the True USD, the Gemini Dollar, and the Paxos Standard Token. 

The companies behind those tokens claim that they are fully regulated under US law and aim to provide audits on a monthly basis. 

Coinbase has also added support for a stablecoin issued by Circle, USDC. In addition, we might see a coin that is backed by Swiss Francs in the near future.

2. Crypto-Backed Stablecoins

Examples: DAI

A promising alternative to fiat-backed coins is tokens that are collateralized with volatile cryptocurrencies. 

In order to maintain price stability, the tokens need to be over-collateralized by 50 to 100%. 

Assuming you want to buy $1,000 worth of stablecoins, you will need to deposit crypto assets worth at least $1,500. This over-collateralization will be used to absorb the volatility of the underlying asset. If the price of the assets drop by 25%, the stablecoin will still be able to maintain its value.

DAI stablecoin

Threat of a Falling Market

However, in the world of cryptocurrencies, where assets previously dropped by 90% and more, it could make sense to deposit 100% or even more of the initial value. If your collateral is in danger, due to plummeting prices, you immediately need to increase your position. Otherwise, it will be liquidated. 

Experts frequently warned of a so-called “black swan event”, wherein a crypto-backed stablecoin would lose its value in case of a heavy market crash.

Using Crypto-Backed Stablecoins to Speculate

The main incentive for locking assets that actually carry a greater value is the fact that you can use the stablecoins as leverage (i.e. bet on an asset with more money than you actually have). 

If you think the price of a particular altcoin will rise in the future, you can easily use you stablecoins to buy even more altcoins.

A well-known project is called MakerDAO with its stablecoin DAI. In order to mint new DAI tokens, which are pegged to the US Dollar, investors need to deposit a premium amount of ether. 

The platform uses smart contracts in order to keep the price stable. In the future, MakerDAO plans on allowing other cryptocurrencies as well as tokenized real-world assets, like gold or stocks.

3. Non-Backed Stablecoins

Examples: bitUSD, Basis

basis stablecoin

After two methods backed by collateralized assets, it’s time to take a look at a radically different approach: a stablecoin that isn’t backed by anything at all. 

While it might sound like a bizarre idea at first, it’s exactly how the dollar works.

Since 1971 when the dollar moved away from the gold standard, it is solely backed by the belief that one unit will have the same buying power on the next day. So why shouldn’t this work in the cryptocurrency world as well?

Examples include bitUSD, which was founded by EOS, BitShares and Steemit inventor, Daniel Larimer. BitUSD was one of the first non-collateralized stablecoins on the market. 

Since late 2014, the price managed to stay more or less around the one dollar range. Its market capitalization is not as high as with other stablecoins, at only around $10 million. 

A very promising candidate for becoming a way bigger non-backed stablecoin is a cryptocurrency called Basis. The company raised $133 million in a private placement through various venture capitalists in 2018.  

An Automated Central Bank?

Basis works by expanding on an idea by macroeconomist Robert Sams. It means the blockchain acts like an automated, or algorithmic, central bank.

It’s actually a very simple idea. If the price of one coin rises above one dollar, the blockchain will issue and sell new coins to the market until the price falls down to one dollar again (it uses a smart contract to do so). 

During this stage, the smart contract generates profit by selling new coins. These will be kept as a reserve.

If the price falls below the value of one dollar, the smart contract will use the reserves to buy back coins from the market.

4. Asset-Backed Stablecoins

Examples: DigixDao’s Gold Token, Diamcoin, Petro

Cryptocurrencies backed by real-world assets are the latest members of the stablecoin family. But this type of stablecoin tries a completely different approach than its relatives. 

In these cases, the price of the stablecoin is defined by its underlying asset whether it’s diamonds, oil, gold, or something else entirely.

Perhaps the most high-profile case is petro – a cryptocurrency created by the Venezuelan government. Its value is backed by the price of an oil barrel. The petro, however, has been wrapped up in controversy since its launch. 

Read more: Everything You Need to Know About Venezuela’s National Cryptocurrency

The UK Royal Mint was also planning a digital gold token, but it has since suspended the project. 

We’ve also seen the launch of gold-backed coins. The DigixDao’s Gold Token is the best known. Although the value of gold generally increases in the long term, its price still fluctuates quite a lot on a typical day. This means it might not be the best candidate for a stable currency in the short run, but rather as a safe investment for the future. 

Stablecoins “Necessary to Replace Payment Systems”?

Sir Christopher Pissarides, Economic Nobel Prize winner of 2010, concludes that asset-backed stablecoins might have a great impact on the adoption of digital currencies. 

According to Pissarides, who is involved in a diamond-backed cryptocurrency called DiamCoin:

“Blockchain technology has the potential to disrupt the current financial system, but it is still mainly used for speculation. If we can eliminate the volatility and bring in stability, we now have the financial tool necessary to replace the archaic payment systems in place today.”

 

Whether a stablecoin is backed by real-world assets, fiat, crypto, or nothing, we probably need to wait a few more years until we can really see which stablecoin class proves to be the least volatile cryptocurrency.

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nouriel roubini

Welcome to the weekend, folks. Grab a coffee and let’s recap the biggest news stories of the week in cryptocurrency and blockchain.

“The Mother and Father of All Bubbles”

“Dr. Doom” Nouriel Roubini is a New York economist who famously predicted the 2008 financial crisis.

Now he’s turning his attention to cryptocurrency, calling it the “mother and father of all scams and bubbles” in a statement made to US Congress.

His meandering statement also takes on blockchain, referring to it as a “glorified spreadsheet.”

Nouriel Roubini’s soundbites are damning and headline-grabbing. But they often ring hollow when we investigate it further. Here are some of the things he got wrong:

1. “Paying $55 dollars of transaction costs to buy a $2 coffee cup is obviously never going to lead Bitcoin to become a transaction currency.”

Roubini is referring to December 22nd, 2017 when the bitcoin transaction cost briefly hit $55. However, this was the peak of bitcoin mania. To use this as a broad statement on transaction fees is misleading.

In the last three months, the bitcoin transaction price has barely peaked above a dollar. And we recently saw one investor move 29,999 bitcoins (worth $194 million) with a transaction fee of just $0.1.

bitcoin transaction fees

Congestion and scalability is, undoubtedly, bitcoin’s largest challenge, but Roubini is sensationalizing the facts based on one day in bitcoin’s ten-year history.

2. Blockchain is “no better than a spreadsheet or database”

Actually, it’s significantly, objectively better.

A spreadsheet or database is almost always controlled by one person or entity. It can be manipulated and falsified. It can be easily hacked or stolen because there is usually one point of failure.

A blockchain is a spreadsheet that lives on thousands of computers all at once. It’s updated in real-time. It’s not owned or controlled by any one person, which means it can’t be hacked or manipulated (because the entire community would see it happen and refuse to accept it).

I say it’s objectively better because the bitcoin blockchain has never been hacked. (Only things built to interact with it, like exchanges, have been compromised).

3. Bitcoin has “now gone bust”

Actually, bitcoin has suffered much larger percentage drops in price and survived.

The first bitcoin crash in 2011 wiped out 93% of value. The second took 70% off the price. The third took 83%.

bitcoin-selloff-crashes

2018’s 65% decline might have involved a much higher market capitalization, but big percentage falls in bitcoin is nothing we haven’t seen before. 

Bitcoin recovered from every previous crash without “going bust.” To say bitcoin has gone bust this time around is to underestimate the strength of the community, not to mention all the institutional support slowly building around it.

4. Bitcoin’s “only real use has been to facilitate illegal activities such as drug transactions, tax evasion, avoidance of capital controls, or money laundering”

What about the people in Venezuela using bitcoin to free themselves from 1,000,000% inflation in fiat currency?

How about the Cypriots that used bitcoin when the government confiscated the money in their bank accounts?

Of course, bitcoin has been used for drugs and money laundering. But bitcoin has also empowered people, which is perhaps its most important use-case so far.

Bitcoin’s Spike, Tether’s Decline

Bitcoin recorded a rapid 10% spike on Monday. At the same time, the world’s largest stablecoin, Tether, fell from its $1 peg to as low as $0.85.

Tether is under renewed criticism that its tokens are not fully backed by real dollar reserves. The skepticism intensified on Monday after crypto exchange Bitfinex was rumored to be on thin ice financially.

Both Tether and Bitfinex are run by the same CEO, so concerns about Bitfinex lead to worries over Tether’s solvency.

Read more: What is Tether? The Controversial Stablecoin?

0x Listed on Coinbase, Price Soars 70%

0x (ZRX) became the first ERC-20 token to be listed on Coinbase this week. 0x is a promising decentralized exchange platform that powers the exchange of tokens, loans, gaming items, and just about anything else.

0x coinbase

ZRX is available to those using Coinbase’s premium service, Coinbase Pro.

The price of ZRX soared 70% on the news but fell back 15% later in the week. The project’s founder and CEO urged caution on the price, saying: “This is probably a good time to remind everyone that 0x is a highly experimental technology that is built on top of another piece of highly experimental technology.”

0x founder tweet

Weekend Reading

Ethereum eBook – We released our second deep-dive eBook this week: Absolutely Everything You Need To Know About Ethereum. It’s completely free to download (no email address required).

8 Cryptocurrency Best Practices – From safe storage to backups, this guide teaches you how to keep your crypto safe.

Do You Need Cryptocurrency Insurance? – If you own crypto, it’s probably not insured. Crypto exchange Gemini is trying to change that, but what else can you do to stay safe?

That’s all for this weekend. We’ll see you back here bright and early on Monday morning.

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