6 cryptocurrency exchange hacks to get the best rates and profits | Digital Asia
Depending on the state of the market, there are times when you will love crypto, and times when you’ll despise it.
The benefits concerning cost and speed for processing payments can be attractive. But for those who are starting out, one thing you need to understand about cryptocurrencies is that they’re volatile and can experience severe fluctuations. When keeping your assets on an exchange, it’s not just the transaction fees you need to be cautious of; you should check the exchanges’ conversion rates also.
Many exchanges and wallets market their services as “free.” But of course, there’s no way their business can survive unless there’s revenue being generated. So, if they’re not charging for the use of their wallets or transfers, then where are they getting the money to keep their lights on?
How cryptocurrency wallets and exchanges earn money
Given the fact that you’re using cryptocurrencies for the transfer, you would assume the fees would be far lower than banks’ or remittance centers’. But you might be unpleasantly surprised; sometimes these conversions can end up costing you far more money than if you had opted for a traditional wire transfer, PayPal, or maybe even a local remittance service.
That’s because the selling and buying rates differ between different exchanges and wallets. So the trading value you see on CoinMarketCap is probably not what you’re going to get. In fact, in countries where the demand is high, some cryptocurrencies are sold at premiums. For example, South Korean exchanges have been known for their predatory pricing. At one point, they were selling Bitcoin for almost $7,000 higher than the going rate on most exchanges. This went on for quite some time and led CoinMarketCap to delist several South Korean exchanges, because they were messing up the overall market values.
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Cryptocurrency wallets usually generate revenue from the conversion rates between crypto to fiat or crypto to crypto. Similar to how foreign exchange kiosks make revenue from the differences between the price at which they buy foreign currency and the price at which they sell them, cryptocurrency wallets and exchanges generate revenue every time a user converts from one cryptocurrency to another, or from fiat to crypto, and vice versa.
While user-friendly cryptocurrency-based wallet and remittance services are easy to use and easy to learn even without prior experience, sometimes the costs of using their services can be steep.
For merchants, finding the most cost-efficient ways to move funds around is a priority. Particularly for a business whose operations involve sending and receiving funds regularly and in large volumes, the money lost to conversion rates can be significant. In such cases, “easy” may not exactly be the best choice. You might have to do a little tech digging and a few practice runs to find the best solution for your business.
The same is true for remote employees being paid monthly through BTC or any other cryptocurrency. Before you start giving the same wallet address over and over, consider making the computations to ensure you’re losing as little of your funds to conversions and fees as possible.
The cryptocurrency space is not a place to be passive when it comes to your funds. Some exchanges and wallets–especially in Asia–have been known to impose premiums on conversion rates and cryptocurrency purchases. Therefore, token holders have to actively weigh their options. After all, Asia is home to several blockchain companies and continues to spawn even more exchanges looking to cater to the demands of its rapidly growing market base.
So how can you be active when it comes to your best interest regarding your funds on an exchange? It’s tricky since it depends on what country you’re transacting from, but it is possible. To make sure you don’t fall prey to predatory exchanges, try the following:
1. Check different cryptocurrency wallets and compare their buy and sell rates
You don’t have to be logged in to see these rates. They are usually displayed upfront on the homepage.
2. Check out new exchanges
Most people would argue against using any exchange other than the ones that are already well-known to avoid the risk of losing your money. But the downside to this is that you’re effectively giving away control in terms of market prices. Whatever price the exchange dictates, that will be the price you take it. If you’re okay with the losses, that’s fine. But if you want to get crafty and find the cheapest way to transact, you can usually get better rates at different exchanges.
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Some exchanges can offer far better rates than big names like Binance, Bithumb, or Kraken. New cryptocurrency exchanges like Robinhood emerged with catchy marketing stunts like 0% commission. And similar to Robinhood, there are even lesser known exchanges–usually from Asia–like BitAsset. BitAsset supports spot trading and is working on building ETF index funds. The company is backed by Wall Street veterans and is working on developing even more financial products that should be available soon.
3. Check trading platforms
This may require a little more patience and scrutiny. You look through the buy and sell orders on the platform and see if the rates are good enough. The orders you see are from people looking to buy or sell, but trading platforms usually take a certain percentage of the total transaction (tx) as a tx fee. You should punch the numbers into a calculator before you transact to see how much you’re profiting in the end.
4. Check out these lesser-known wallets, and less popular cryptocurrencies
For those who are a little bit more technologically adept, finding lesser-known wallets and testing out less popular cryptocurrencies can be a good choice. It may involve a little bit of a headache at first, but it can be worth it. If your firm has developers who are familiar with cryptocurrency wallets and exchanges, then it’s not a bad idea at all. If they can develop a way to integrate applications into your system, that could cut down on processes, too.
5. Check cryptocurrency marketplaces
These are not automated trading platforms but rather marketplaces where you find a buyer or a seller, and make an agreement to trade using an Escrow service; this ensures no one gets scammed while at the same time, giving you the best possible rates—better than exchanges. You will be matched with individuals in the marketplace and will be dealing with them directly, so it’s more like an eBay for cryptocurrency trading minus the scams. Examples are Paxful.com, Buybitcoin.org, and Glyde.com.
It’s a little more old school, but it has its benefits. As Glyde says on their website: “Buy for less. Sell for more.”
6. Do the math
This is one of the most important steps to make sure you’re getting the best rates. For exchanges, you multiply the number of tokens or funds you have with the price at which they are being bought or sold. Then, factor in transaction fees–which shouldn’t be too high depending on which cryptocurrency you’re working with. But always do your research and make sure you only deal with legitimate platforms.
The world of cryptocurrencies is a huge one and is growing as we speak. The downside is it can get quite confusing. But the upside is that there is always competition that drives fees down and gives users better offers for their money. It’s up to you to find the best routes to keep your assets as valuable as possible.
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