The approval of Bitcoin ETFs in the United States in 2024 marked a significant milestone, signaling that cryptocurrencies have become a recognized part of the global asset landscape. For individual investors, there are various ways to invest in cryptocurrencies, but the simplest method is through a "cryptocurrency exchange."
This article explains what a cryptocurrency exchange is, highlights popular exchanges used in Taiwan, ranks the largest global platforms, and discusses how to evaluate them. It also covers historical exchange failures and associated risks.
Understanding Cryptocurrency Exchanges
Traditional currencies like the New Taiwan Dollar, US Dollar, or Japanese Yen are known as "fiat currencies." In contrast, "virtual currencies" or more accurately, "cryptocurrencies," include assets like Bitcoin, Ethereum, and Tether.
With thousands of cryptocurrencies available, some are legitimate, while others may be scams. It's crucial to conduct thorough research and avoid trusting unverified online information.
To buy or sell any cryptocurrency, you need to use a "cryptocurrency exchange." These platforms function similarly to banks or stock brokerage firms, facilitating transactions.
Top Global Cryptocurrency Exchanges in 2024
Websites like Coinmarketcap and Coingecko provide real-time data on cryptocurrencies and exchanges, offering valuable insights for investors. However, it's important to note that being listed on these sites doesn't guarantee an exchange's safety. History has shown that even large platforms can fail.
Below is a list of the largest cryptocurrency exchanges based on Coinmarketcap data (as of June 10, 2024):
Reviews of Major Global Cryptocurrency Exchanges
The cryptocurrency exchange landscape is dynamic, with platforms occasionally facing security breaches or bankruptcy. Therefore, investing in cryptocurrencies is inherently high-risk, and over-relying on any exchange is not advisable.
Here are brief reviews of some larger exchanges, including those popular among Taiwanese users.
Binance: The World's Largest Exchange
Founded in 2017, Binance is currently the world's largest cryptocurrency exchange by trading volume and user base. Despite its founder, Changpeng Zhao (CZ), serving a prison sentence in the US, the platform continues to dominate the market. According to Coinmarketcap, Binance's spot trading volume is about eight times that of its closest competitor, Coinbase, and its derivatives volume is four times that of Bybit. It supports trading for over 415 cryptocurrencies.
On forums like PTT and Dcard, Binance is often recommended as a starting point for beginners.
Coinbase Exchange: The US-Listed Giant
Established in 2012, Coinbase is the largest cryptocurrency exchange in the United States. It went public on the Nasdaq in 2021, becoming the first major crypto company to do so (stock ticker: COIN). As a regulated US entity, it offers fewer services—like restricted access to derivative trading—compared to international exchanges. Consequently, its user base outside the US is relatively small.
OKX: A Globally Expanding Platform
OKX, originally known as OKEx, was founded by Star Xu in 2017. Initially based in Beijing, it relocated its headquarters to Seychelles due to China's crackdown on crypto trading. It now has offices in Dubai, Turkey, Hong Kong, and other global hubs. The exchange has been actively expanding in Taiwan and focuses on spot trading, derivatives, and decentralized wallet products.
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ByBit: A Leader in Derivatives Trading
Headquartered in Dubai, ByBit was founded in 2018 and has significant volume in derivatives trading. Similar to Binance, it offers wealth management products, contracts, new coin mining, and lending services. It also features unique tools like pre-market trading, arbitrage orders, and options. ByBit ranks as the second-largest derivatives exchange globally.
Upbit: South Korea's Premier Exchange
Launched in 2017, Upbit is a major South Korean exchange. It primarily serves users in South Korea, though it also offers services in Singapore, Indonesia, and Thailand. It is not widely used in Taiwan.
Kraken: The Established US Player
Kraken was founded in 2011 and is based in the United States. As a US-based exchange, it operates under regulatory oversight, which influences its available services.
Gate.io: The Altcoin Hub
Commonly known as "Open Sesame," Gate.io was established in 2013. Its standout feature is the vast number of trading pairs it supports—over 2,153 cryptocurrencies as of 2024. However, a large selection isn't always better; quality and liquidity matter more.
HTX (Formerly Huobi): The Rebranded Exchange
HTX, originally called Huobi, was founded in China in 2013 and listed on the Hong Kong Stock Exchange in 2018 (stock code: 1611). In October 2022, it underwent ownership changes led by Justin Sun and was rebranded to HTX.
Bitfinex: The Lending Specialist
Bitfinex, often called "Green Leaf Exchange," was established in 2012 and is registered in the British Virgin Islands. It started as a platform for financing, leveraged margin trading, and lending before adding cryptocurrency services. In Taiwan, it is primarily used for lending fiat currencies to leverage traders to earn interest.
KuCoin: The All-Rounder
KuCoin was founded in 2017 and supports spot trading along with derivatives like options.
These rankings are based on trading volume and credibility, not endorsements. Even top-tier exchanges carry risks, so selecting a large and trustworthy platform is essential.
Local Cryptocurrency Exchanges in Taiwan
Taiwan has several local exchanges, such as MAX, ACE, BitoPro, and XREX. These platforms are smaller in scale but allow direct transactions with New Taiwan Dollars, offering convenience for local users.
Notable Cryptocurrency Exchange Failures
Several major exchanges have collapsed over the years, including Mt. Gox, QuadrigaCX, and FTX. These cases highlight that even prominent platforms are not immune to failure.
Mt. Gox: The Colossal Collapse
Mt. Gox, launched in 2010, was once the world's largest Bitcoin exchange. It started as a trading platform for Magic: The Gathering cards. In 2014, its CEO announced bankruptcy, revealing the loss of 100,000 of its Bitcoins and 750,000 user Bitcoins—worth approximately $60 billion at current values.
QuadrigaCX: The Mystery Documentary Case
Canada's QuadrigaCX shut down after its founder, Gerald Cotten, died under suspicious circumstances, locking users out of their funds. The Netflix documentary Trust No One: The Hunt for the Crypto King explored the event, suggesting the possibility of a staged death and exit scam.
FTX: The Recent Spectacular Implosion
FTX, a US-based exchange, was once led by Sam Bankman-Fried (SBF), a financier featured on the cover of Forbes. In November 2022, reports of financial mismanagement led to a bank run, and FTX declared bankruptcy within weeks. Termed one of the largest financial frauds in US history, the case resulted in SBF's imprisonment.
Key Considerations When Choosing an Exchange
Selecting a cryptocurrency exchange requires careful evaluation. Opt for larger, well-established platforms and avoid storing excessive funds on any single exchange. Using cold wallets for storage can mitigate risks. Be skeptical of online recommendations and always do your due diligence.
Remember, the largest exchange isn’t risk-free. History is filled with examples of exchange failures. Cryptocurrency investing is high-risk, and exchanges are no exception. Beginners should start with major exchanges but diversify their holdings. Local Taiwanese exchanges are useful for fiat conversions but not ideal for storing large amounts. Always choose wisely.
Frequently Asked Questions
What is a cryptocurrency exchange?
A cryptocurrency exchange is a digital platform where you can buy, sell, or trade cryptocurrencies for other assets, like fiat money or different digital currencies.
How do I choose a safe cryptocurrency exchange?
Look for exchanges with high trading volumes, strong security measures, regulatory compliance, and positive user reviews. Avoid platforms with a history of security breaches or operational issues.
Can cryptocurrency exchanges go bankrupt?
Yes. Several major exchanges, including Mt. Gox and FTX, have filed for bankruptcy. It's crucial to use reputable exchanges and avoid storing large sums on them.
What is a cold wallet, and why is it recommended?
A cold wallet is an offline device used to store cryptocurrencies securely. It reduces the risk of hacking compared to keeping funds on an exchange.
Are local exchanges in Taiwan safe to use?
Local exchanges like MAX or ACE offer convenience for NT Dollar transactions but may have lower liquidity and higher risks than global giants. Use them for small trades and rely on established platforms for larger holdings.
How can I start investing in cryptocurrencies?
Begin by researching reputable exchanges, creating an account, completing verification, and making a small initial investment. 👉 Get started with secure trading methods to explore further.