Function and Features of Bitcoin Exchange

Function and Features of Bitcoin Exchange

Similar to stock exchanges, you can trade bitcoin through bitcoin exchanges. When it comes to buying and selling bitcoin,the use of an exchange platform come into the picture. You need to register yourself on an exchange platform and add funds to your account to do the buying and selling of bitcoins or other forms of cryptocurrencies. Bitcoin mining exchanges are known as trading platforms from where you can trade bitcoin at less commission fee. To know more, you can click here.

Features of Bitcoin Exchanges

It is hard to choose a reliable exchange for bitcoin trading because you can find an ample number of platforms available online. To choose an exchange, you need to check their features and security measures. Here, you can find some features that you need to check before you open an account on an exchange:

  • Choose an exchange with a wallet facility: You should not leave your coins in your exchange account as such exchanges are vulnerable to being hacked and you must use a wallet to store your bitcoins. Almost all exchanges have this facility and you can find a few exchanges that offer hot and cold wallet facilities. If you are a long-term investor, then choosing a hardware-based wallet is what you consider using. Make sure, you must choose an exchange that offers wallet facilities to store different types of cryptos. You can use their single wallet to store your coins and tokens, and you do not need to struggle with different accounts and wallets to diversify your portfolio. You can also choose a digital wallet where you can keep your private keys offline and it can prevent hacking activity to keep your coins safe.
  • Easy to navigate: There are some exchanges available that have a complicated interface and you cannot understand their features at a first glance. You need to choose an exchange that has an easy interface. Even, you can find a few exchanges that have expert mode and test mode, and you can use their test mode to start your trading journey. Make sure, you must practice your trading activities with a demo account, as most of these crypto exchanges offer demo accounts free of cost.
  • Check liquidity: You must choose an exchange that offers liquidity. It means, if you leave your bitcoins in your exchange account then you can earn interest on your funds. In the case of bitcoin exchanges, liquidity measures are different. Here, liquidity means the selling limit of an investor. For example, you cannot sell your coins to an infinite level and you can sell a limited number of coins in a day. So, if you want to hold more coins for a longer period then you must choose an exchange with a high liquidity rate.
  • Trading engine: It is a unique feature in that you can find some advanced bitcoin exchanges. It is a robot that can generate valuable information about bitcoin trading such as live charts, analytical tools and index indicators. You can use such tools to predict the price of bitcoin, and it can also assist you to measure the growth of your funds.

Functioning of Bitcoin Exchanges: A Beginner’s Guide

The main function of bitcoin exchanges is to facilitate their users to buy and sell bitcoins from their platform. Along with that, exchanges must provide the easy cash-withdraw facility. It means, you can sell your coins through your exchange and your amount will be credited to your bank account linked with your crypto account. Here, you can find different types of exchanges available online:

  • Centralized: Bitcoin exchanges are mostly decentralized, but you can find some platforms run by third-party services and you need to pay a transaction fee if you use such centralized exchanges.
  • Decentralized: Decentralized changes are based on P2P technology, and it is not possible to control or monitor such exchanges by any government or bank. People can transfer funds through these exchanges and they can send their bitcoin to another user directly from their crypto account. These exchanges are more secured than centralized exchanges.
  • Hybrid: You can find some exchanges that run on decentralized and centralized models, and you can use any mode to make a transaction with bitcoin.


At the end of the day, when you are choosing an exchange platform, ensure  checking the reviews so that you can end up choosing the right one for your needs.