Like buying a car or a home computer, the best Bitcoin exchange for you depends on your individual needs and expectations.
According to CoinMarketCap.com, there are now about 150 cryptocurrency exchanges in operation today. But choosing one isn't as daunting as that sounds.
Some Bitcoin exchanges are designed for simplicity, while other Bitcoin exchanges are designed to give customers a wide variety of trading features. Still others cater to particular nations.
Bitcoin users without ready access to U.S. dollars or euros - the two currencies most commonly used on Bitcoin exchanges - are better off with an exchange focused on their native currency.
That's because the first challenge to trading Bitcoin is buying some with fiat currency. You also want to have a way to sell Bitcoin for fiat should the need arise (although many Bitcoin owners follow a "buy-and-hold" strategy.)
For instance, South Korea-based Bithumb, one of the largest cryptocurrency exchanges in the world, offers Bitcoin, Ethereum, Litecoin, Ripple, and Dash, but only in trades with the South Korean won. South Koreans actually have several large Bitcoin exchanges to choose from.
Those buying with U.S. dollars or euros have even more options...
What Kind of Bitcoin Trader Are You?
One of the first decisions you need to make is whether you want a plain and easy buying experience or the features of a full exchange.
Those new to cryptocurrency trading may be surprised to learn that many of the busiest Bitcoin exchanges offer features you'd associate with stock brokerages.
You can see the details of the order book, place limit orders, conduct margin trades, and set stop-loss orders. But that level of complexity isn't necessarily for everyone.
Beginners who just want to get started with a few Bitcoins can just use a service like Coinbase.
With Coinbase, you can pay by linking a bank account or credit card. You can buy Bitcoin, Ethereum, or Litecoin, but purchases are immediate and at market prices.
One thing Coinbase offers that most exchanges don't is the ability to set up recurring buys. With this feature, you can dollar-cost average your way into the cryptocurrency universe.
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If you already own Bitcoin and simply want to swap it for other cryptocurrencies, you might consider the ShapeShift website. No account is required. You simply input the addresses of the two cryptocurrencies you wish to exchange, then transmit the amount to an address the website generates.
Now, before we get the list of top Bitcoin exchanges, one more thing needs to be said...
A Word of Caution About Bitcoin Exchanges
Trading with Bitcoin exchanges does carry an element of risk. Many of the black marks on Bitcoin's reputation are Bitcoin exchanges that were hacked with customer funds stolen. The most infamous of these was the Mt. Gox collapse in early 2014. Just last month, Bithumb was hacked.
It's important to keep in mind that the hacking of these Bitcoin exchanges isn't a reflection on the Bitcoin software. Each was caused by a vulnerability in the hacked exchange.
The good news is that the highly publicized hacks have made all Bitcoin exchanges more acutely aware of security.
Related: What's the Best Cryptocurrency to Invest in Today?
Today's top Bitcoin exchanges are generally safe to use, but veteran Bitcoin traders recommend that users not store their bitcoins on the exchanges. They recommend keeping long-term holdings in a personal Bitcoin wallet on your PC, or on a "cold storage" wallet like those made by Trezor, which connects to your computer via USB.
And one more thing: Never invest any money in Bitcoin or any other cryptocurrency that you can't afford to lose.
Now, here's our list of the best Bitcoin exchanges along with what each has to offer, so you can choose which one most suits your needs...
The 7 Best Bitcoin Exchanges
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- Bitfinex
Where based: Hong Kong
Year launched: 2012
Offers limit orders: Yes
Offers stop-loss orders: Yes
Offers margin trading: Yes
Can deposit/withdraw U.S. dollars: No
Cryptocurrencies traded: 14
The skinny: Bitfinex gained popularity among traders by allowing peer-to-peer margin trading - the funds are provided by fellow traders. But the platform has suffered periodic outages and other glitches. The worst was when it was hacked in August 2016, with $72 million of customer funds stolen. To its credit, Bitfinex did reimburse its customers, completing the payout in April.
Ironically, days later, Wells Fargo & Co. (NYSE: WFC) stopped processing transfers from the exchange's Taiwan-based banks. Bitfinex customers have been unable to deposit U.S. dollars since, and withdrawals are long and difficult.
Still, Bitfinex remains the fourth-largest Bitcoin exchange in the world thanks to its popular peer-to-peer margin trading feature. [Update: Bitfinex announced Aug. 11 that it plans to discontinue serving U.S. customers.]
- Poloniex
Where based: Wilmington, Del.
Year launched: 2014
Offers limit orders: Yes
Offers stop-loss orders: Yes
Offers margin trading: Yes
Can deposit/withdraw U.S. dollars: No
Cryptocurrencies traded: Over 60
The skinny: While Poloniex doesn't allow deposits or withdrawals of fiat currencies, it has gained attention for the variety of currency pairs that can be traded on its platform. Customers can trade more than 60 cryptocurrencies in 90 currency pairs. Market makers pay much lower fees than market takers, and the percentages decline with the volume of your trading. Poloniex is a strong choice for those serious about cryptocurrency trading.
- Bittrex
Where based: Las Vegas, Nev.
Year launched: 2014
Offers limit orders: Yes
Offers stop-loss orders: Yes
Offers margin trading: Planned
Can deposit/withdraw U.S. dollars: Yes, but only deposits in amounts of $10,000 or more
Cryptocurrencies traded: 200
The skinny: Bittrex offers even more cryptocurrencies than Poloniex. There are 200 trading pairs with Bitcoin and 51 with Ethereum. But while Bittrex offers limit and stop-loss orders (in the form of "conditional" trades), it hasn't yet given margin trading the green light. With the high limit on U.S. dollar deposits, Bittrex, like Poloniex, is best suited for cross-cryptocurrency trading. If you want access to the maximum number of cryptocurrency trading pairs, Bittrex is your exchange.
- GDAX
Where based: San Francisco, Calif.
Year launched: 2015
Offers limit orders: Yes
Offers stop-loss orders: Yes
Offers margin trading: Yes
Can deposit/withdraw U.S. dollars: Yes, with a $10,000 per day limit on withdrawals
Cryptocurrencies traded: Bitcoin, Ethereum, Litecoin
The skinny: Coinbase created GDAX in 2015 as a full-featured Bitcoin exchange that can be linked to your Coinbase wallet. For that reason, U.S.-dollar deposits and withdrawals are much easier than on most Bitcoin exchanges. Fees are zero for market makers; fees for market takers vary by a customer's trading volume. Cryptocurrency stored at the GDAX exchange is covered by Coinbase's insurance. The company also holds a Bitlicense from the New York State Department of Financial Services. GDAX is for those who want peace of mind and only need access to the "big three" cryptocurrencies.
- Kraken
Where based: San Francisco, Calif.
Year launched: 2011
Offers limit orders: Yes
Offers stop-loss orders: Yes
Offers margin trading: Yes, with a 28-day limit
Can deposit/withdraw U.S. dollars: Yes
Cryptocurrencies traded: 16
The skinny: Kraken is one of the most fiat-friendly Bitcoin exchanges, allowing deposits and withdrawals of not just U.S. dollars but euros, Canadian dollars, British pounds, and Japanese yen. As one of the oldest exchanges, Kraken has also built a solid reputation. It's so trusted that the Japanese trustee in charge of the Mt. Gox bankruptcy chose Kraken as the entity to be in charge of any claims payout that may take place. One drawback: Kraken's fees tend to be higher than average. Although it has no particular advantage, Kraken is a solid choice.
- Gemini
Where based: New York City, N.Y.
Year launched: 2015
Offers limit orders: Yes
Offers stop-loss orders: Yes
Offers margin trading: No
Can deposit/withdraw U.S. dollars: Yes, with daily limits
Cryptocurrencies traded: Bitcoin, Ethereum
The skinny: The Gemini Bitcoin exchange is a project of Cameron and Tyler Winklevoss. They have taken pains to make it as compliant with all existing state and federal regulations. Gemini operates in 46 of the 50 U.S. states as well as the UK, Canada, Singapore, South Korea, and Hong Kong. Gemini also has a dynamic fee scale that favors market makers. Its biggest advantage is that it allows bank transfers of U.S. dollars to be tradable the same day, though it takes four to five days for the funds to fully clear the system. Just about every other exchange makes you wait anywhere between two and seven days. Obviously, this is an invaluable feature for those who want to buy on sudden dips in the Bitcoin price.
- Bitstamp
Where based: Luxembourg
Year launched: 2011
Offers limit orders: Yes
Offers stop-loss orders: Yes
Offers margin trading: Currently in beta testing
Can deposit/withdraw U.S. dollars: Yes
Cryptocurrencies traded: Bitcoin, Ripple, Litecoin, Ethereum (as of Aug. 17)
The skinny: Bitstamp is one of the oldest Bitcoin exchanges, so it scores points for longevity in a very volatile business. It has a global customer base but is a particular favorite of European Bitcoiners. Veteran Bitcoin investors often use Bitstamp for larger purchases because of its relatively low fees.
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About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.