Bitcoin, Crypto Exchange

How bitcoin exchange works – Everything Explained

Wondering how bitcoin exchange works? If your answer is yes, then I am here to help you out. Bitcoin exchanges are one of the most important parts of the whole cryptocurrency concept. Without using a bitcoin exchange, you will not be able to buy, trade, or sell your cryptocurrencies.

However, there are not so many people who know the science behind this platform. And if you belong to the same club. Then let me just answer the question for you. But first, let’s just know what a bitcoin exchange is.


What is Bitcoin Exchange?

In simple words, you can say that a bitcoin exchange is a digital marketplace where the traders can buy and sell bitcoins using different flat currencies or altcoins. A bitcoin exchange is an online platform that works as an intermediary between buyers and sellers of the cryptocurrency. And the whole operation is pretty much like the stock market. Where you have a limited number of stocks, or you can say bitcoins. And you are free to invest as much cash you would like to, and in return, you get bitcoins worth of your money.

How bitcoin exchange works?

In simple words, you can say that Bitcoin exchange platforms work in the same manner as a bank does. The bitcoin exchanges set the rate of the crypto coin in both terms coins and tokens. Also, the cryptocurrency rate usually depends on the actions of sellers and buyers. However, there are a bunch of other factors too that decides the price of a crypto coin.

Also, different crypto exchanges have different options and functions. Some of them are made for the traders. There are exchanges that simply allows you to buy and sell crypto coins. Some are designed to allow users to buy crypto and sell them with lower commission fees than on crypto-to-fiat exchanges. Also, trading platforms charge fees for withdrawing money from the account.

In other words, you can also say that they work pretty similarly to the stock exchanges. The difference is that on a stock exchange, traders buy and sell assets like shares or derivatives and make a profit out of it. And on a crypto exchange, traders trade in cryptocurrency and get profit out of.

You complete the exchange by placing a buy order, and by placing a sell order, you sell your cryptocurrencies. As well, as while buying or selling bitcoin, you have other options too like stop loss. 

Final Words:

So that was the answer to your question that says how bitcoin exchange works. I hope this has cleared all your doubts about bitcoin exchanges. However, I would recommend you to go ahead and sign up on a bitcoin exchange like Bittrex to figure out how the whole thing actually works.

Also, if you have any more questions to ask, then do feel free to comment below. And I will surely help you out with your query.  

Author Since: Dec 04, 2019

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