What Is The Cost Of Cryptocurrency At The Exchanges?

How Does Cryptocurrency Exchanges Manage The Fees?

To trade Bitcoin, what does it cost? Each cryptocurrency exchange adds a fee for trading, as customers purchase and sell coins apart from the price of the Bitcoin itself. These fees include maker, (that which add to order book liquidity through limit orders), as well as taker (that which subtract liquidity from an order book through market orders) fees. Cryptocurrency traders in some cases incur maker as well as trader fees, in case the limit order is already present in the order book.  

Calculating the fees in two ways, cryptocurrency exchanges have a flat fee per trade or as a percentage of 30-day trading volume for an account. Adopting a tiered structure, in both cases, it depends on the amount being traded. 

Consider These Four Things While Trading On Cryptocurrency Exchanges 

While considering the purchase of cryptocurrencies the following four things are important.

1. Being unregulated in most jurisdictions, cryptocurrency exchanges in many countries around the world have taken a hands-off approach to cryptocurrency regulation in some of the biggest trading markets. As an example, these exchanges are governed by a patchwork of regulations in the United States which is one of the largest markets for cryptocurrency trading. In China, some type of cryptocurrency trading is banned that accounts for as much as 90% overall trading. Several prominent Chinese exchanges are still operational with having simply shifted base to Seychelles or Malta since the governmental crackdown. 

2. Designed to encourage frequent trading in large transaction amounts worth thousands of dollars, the fees schedule at cryptocurrency exchanges often decreases with an increase in the amount and frequency of trades. Small, infrequent orders are not cost-efficient at the exchanges. As an example, some exchanges charge no fee for trades worth $10,000,000 and over. 

3. Exchanges often encourage trading with coins. Depending upon the payment mode, fiat currencies generally incur deposit and withdrawal fees at exchanges. For the most part, purchasing cryptos with other coins is free. Whereas a small fee may be charged to set up a wallet for the required cryptocurrency in some cases. 

4. Most of the well-known cryptocurrency exchanges don’t offer access to all coins, as in many cases traders can transfer funds from one wallet to another funding their trading accounts using either fiat currencies or cryptocurrencies. As an example, traders wishing to buy Cardano, a top-15 cryptocurrency by market cap, are not currently able to do so directly on popular Coinbase exchange. To purchase Bitcoin at Coinbase however traders can use fiat currency. Another exchange that offers users the facility to import coins from other wallets is Binance. They can use it to buy ADA listed on the exchange once they have Bitcoin in their Binance account. It incurs small charges at each end with transfer between multiple wallets at different exchanges. 

The following is a brief comparison of trading fees for Bitcoin along with the current list of most popular exchanges decided by trade volume. It doesn’t take into account margin and leverage fees. 

HCoin

As the latest entrant into cryptocurrency exchange HCoin based in Seychelles offers customers an opportunity to trade in a list of cryptocurrencies and fiat currencies including those of Bitcoin, ether, XRP, litecoin, Bitcoin Cash, EOS, USDT and HKDT among others. 

Dependent on the base currency and volume HCoin’s fees are listed in a chart on the exchange’s website. It does not list any fees for funding an account through a transfer of digital assets from another wallet nor is it clear whether the transaction fees change depending upon the size of each trade 

Coinsbit

Coinsbit the Estonian platform focuses on security and innovative offerings such as InvestBox, which is a low cost, low-risk way for investors making exploratory transactions involving new altcoins. It charges a flat 0.2 % fee for trading when it comes to fees. With variable fees for deposit and withdrawal, the exchange depends upon the cryptocurrency with different minimums for each token as well. The fee to deposit USD was 0.8% and the fee to withdraw USD was 0.4 % while some of the cryptocurrencies are free to deposit as well as others are free to withdraw.  

The new accounts that are added to it are initially prohibited from making withdrawals and the basic accounts have a withdrawal limit of USD 500 or equivalent per 24-hour period, which enhances the accounts that withdraw up to USD 100,000 or an equivalent in a span of 24-hour. 

The Bottomline

While cryptocurrency exchanges charge nominal fees, they remain highly unregulated posing a risk factor for investors. This makes many investors doubtful of their credibility leading to a weak ecosystem. There are many exchanges based around the world that helps kick up new investment and attract more investors.