How do you invest in cryptocurrency?

How do you invest in cryptocurrency?

That’s an excellent question. The first step in starting is choosing a good exchange to cooperate with. You will want to choose an exchange that runs fast and cares about its customers.

Most big exchanges have been involved in a scandal or two, including poorly handling recovery from hacks (and imposing unfair recovery programs), unresponsive or slow customer service, shutting down accounts without adequate notice, insider trading and market manipulation, flash crashes, scalability issues and website malfunction when market prices are at their highest, and so on.

The platform you should use also depends on your needs. There are exchanges that serve different purposes:

• Entry-level exchanges
• Alternative coin exchanges
• Over the counter (OTC) marketplaces

Entry-level exchanges
Depends where you are located and what currency you’re operating in. In Thailand it’s BX, in Canada it’s Quadrigacx, in Europe the trusted and reliable exchange is Bitstamp which is also one of the first large exchanges that adopted the Segregated Witness (SegWit) .

If you’re wondering why Segwit is important, this soft fork of Bitcoin that increased the block size and would significantly reduce transaction fees and also make the network a lot faster. Coinbase and Binance are the only big exchanges left that are not ready to deploy SegWit which has been ready since end of August, although Coinbase has said they have plans to do so.

Question is, how come Bitstamp was able to get on the wagon quite quickly with other exchanges following in suit. Rumors on the web posit Coinbase doesn’t want lower fees as Bitcoin’s high fees form a significant part of its revenue.

We have experienced slow transactions and high fees during the last month and it makes you wonder how much better things could have been handled on Coinbase, an exchange that is one of the few gateways to Bitcoin for Americans, if the exchange had deployed the soft fork and speed up the jump to SegWit.

What is SegWit soft fork and the Lightning Network?

Alternative coin exchanges

The choice for altcoin trading platforms is quite narrow. But there is a small exchange called KuCoin that is making strides and winning traders over across the globe. I want to make a special stop at KuCoin in this answer, because I am one of them.

Amongst what caught my attention in KuCoin, are the following:

Ethical track record

I think it’s very important that we, the consumers, lead the industry with our choices. I just finished an answer on Quora here on Coinbase and Bitcoin Cash, that spurred a lot of conversation in the comments section about Bitcoin, exchange ethics and consumer choice.

While it is completely possible that, as KuCoin grows and matures, the exchange will befall problems of its own, for me they have already built a reputation for being trustworthy and caring of their users in the short time they have been functioning.

KuCoin’s motto is that they’re the People’s Exchange. And this seems to be the case. Consider how satisfactorily they settled the Confido ‘exit scam’ for their users in November, which really set them apart from other exchanges. KuCoin was one of the exchanges that had listed Confido for trading and it took everyone by surprise when Confido pulled their exit scam. But instead of pointing fingers, KuCoin acted quickly and produced a compensation plan from their own pocket for all traders that lost from Confido. This is noteworthy (here’s a counterexample).

Confido has, in the meantime, reemerged and created their own compensation for investors. KuCoin is acting as the intermediary for this settlement, but even though they paid out of their own pocket just after the incident, they will pass the recovery payments on to anyone that owns Confido on their platform in full.

Liquidity

There are currently massive liquidity problems in cryptocurrency exchanges. Withdrawals of fiat currency can take weeks to accomplish. Many say that it is made worse due to the introduction of Tether, a cryptocurrency managed by Bitfinex that is pegged to the US dollar and used on exchanges to trade instead of USD. There is a promise that each Tether is backed by actual USD, but rumours circulating the net are that there’s a lot more Tether than actual reserves. A rather obscure statement came from Bitfinex a few days ago as pressure from investors grew from this and also their Tether hack earlier this month to reveal managers and company assets to the public.

KuCoin, formerly Kubi, is well funded. The liquidity of KuCoin is solid after it’s ICO where they raised millions of USD worth of capital. In addition to that, the ICO website, is available for audit, where it states that KuCoin has 10 million in registered capital for company operations, is included in the National Business Register and the ICP Record of the Ministry of Industry and Information Technology. So it’s therefore a legally filed blockchain asset investment trading platform (feel free to fix my translation, if I misunderstood anything).

The company is small and growing fast and hopefully, as they grow, they continue to maintain this.

Benefits of KuCoin shares, native token of the platform

Lastly, I’d like to bring out that KuCoin’s native token KCS brings one of the best rewards programs to users in cryptocurrency.

If you own KuCoin, you own shares in the company, as stated in the ICO. So everyone that owns KCS is entitled to trading fee discounts (keep an eye on their Telegram for specifics) and a portion of the revenue that the exchange makes from trading fees. The revenue divided between KuCoin holders is set at 50% of the fees, making it the most benevolent in the industry.

Compare that to Binance coin that gives you excellent discount on trading fees, but which is set to reduce over the years and doesn’t benefit you in any other way besides its market value, if you’re not a day trader.

KuCoin shares have already attracted quite a lot of attention and price today was slightly over 1 USD. But compare that to from Binance’s BNB token, for which you would have to spend a whopping 6 USD to get just one.

OTC Marketplace

OTC marketplaces are a valued gateway to buying Bitcoins. LocalBitcoins, one of the oldest Bitcoin marketplaces in the industry, operates globally (Coinbase supports only 32 countries to date).

LocalBitcoins uses Escrow to securely release the buyer’s money to the seller once the Bitcoins have been delivered to the buyer’s Bitcoin wallet. Transactions are relatively quick, depending on the payment method used of course - of which there are also many, ranging from bank transfer to face to face cash payment.

Disclaimer: a full inventory of scandals major cryptocurrency exchanges have been involved in is out of the scope of this answer and there have been many. I brought attention to some of these that I consider important and relevant to 2017. I encourage everyone to do more research on the exchanges that you plan to use or use already - the information and user experiences are well documented around the web.

Exchanges that have problematic reputation : Coinbase, GDAX, Binance, Bitfinex, Bittrex, Kraken, Poloniex

Exchanges that have a good reputation : Bitstamp, KuCoin, LocalBitcoins