Bitcoin Exchanges

 

            There is no shortage of Bitcoin exchanges. They can also vary in the services they provide.  You can purchase your bitcoins with cash, bank/wire transfers, money grams, and now by credit card.  Other services include transfers via OKPal, PayPal, and Dwolla .  Through an exchange, you can trade your bitcoins with people around the world.  Exchanges also allow you to trade your bitcoin for other currencies. 

 

 

Methods For Buying and Selling

 

            The process of buying and selling bitcoins costs money – that’s the incentive for exchanges to operate as a business.  However, unlike buying a stock or bond, Bitcoin exchanges are in the practice of charging a percentage. This is in contrast to discount brokerages commonly used by investors in the US that charge a flat rate fee.  Because of the percentage model, buying and selling bitcoins over time can get very expensive.1

 

            The least expensive methods for buying bitcoins involve transferring funds using a bank wire, bank transfer (ACH, EUR / SEPA).  Some exchanges use fixed rates with or without exchange fees.  While others allow bulk direct buys with a minimum $1000 USD. 

 

            You are advised to do some homework prior to choosing a Bitcoin exchange.  Exchanges experience delays with deposits and withdrawals.  It varies from one exchange to another and depends on the entity completing the transaction for the exchange.  Some banks are known to put a 7-10 day hold on the funds before a transfer back to the exchange’s account.  The exchanges with the most volume have the most liquidity, allowing them to sell without the price being significantly affected.  Below is the 30 day volume for the top exchanges on June 11, 2013.

 

Exchange 30 Day Volume

 

Mtgox USD                1,209,589

bitstampUSD                           257,123

mtgoxEUR                   149,444

btceUSD                      143,780

btcnCNY                      118,710

 

            MtGox is the largest exchange for Bitcoin and offers the highest selling price.  They have experienced problems.  Most say it is due to growing pains and adjusting to the influx of increased volume over time.  Recent changes should improve their process.  Their service has moved from being externally hosted to self hosted.  They are in the process of forming relationships with new partners and banks. 2

Listing of Bitcoin exchanges and rates: https://en.bitcoin.it/wiki/Buying_bitcoins

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