Looking to get the best possible deal whenever you buy Bitcoin and other currencies? Of course you are.
If you’re new to Bitcoin, you may be unaware that prices can vary wildly between exchanges. Here’s what you need to know about crypto exchange rates and how Wirex ensures you always get a good deal.
How do cryptocurrency exchanges work?
Having a basic understanding of how exchanges work can be extremely helpful when it comes to choosing one. So here’s an overview of how they typically work.
Exchanges exist to match people who want to buy Bitcoin with those who want to sell. A buyer will make a ‘bid’, offering to exchange fiat currency (pounds, euros, dollars etc) for Bitcoin at a certain price. A seller will make an ‘ask’ to indicate they are willing to sell a certain amount of Bitcoin, provided it is above a minimum price.
The exchange matches a buyer with a seller whose ask is lower than their bid. Once the transaction is verified, the buyer receives Bitcoin and the seller receives fiat. Foreign currency exchanges and stock exchanges work in much the same way.
Greater liquidity = Less volatility
In theory, it’s simple. But you can probably see the problem already. What if there are more people looking to buy than to sell? Or vice versa?
Bitcoin’s volatility can in part be blamed on the fact that most exchanges lack liquidity. If one bit of scary news spooks an investor with a lot of Bitcoin into selling, the price can drop suddenly. The same goes for large purchases. Because there’s only a small pool of Bitcoin available at any one time, the slightest shift in demand can cause fluctuations in price.
This is why the price varies between different exchanges. It’s also why you can easily end up paying more than expected. If there’s no seller offering Bitcoin at the price you ask for, you’ll end up paying more or waiting a while.
Limited liquidity also leaves exchanges vulnerable to price manipulation. For example, let’s say an investor holds a position in a currency and wishes to increase the price. By placing a buy order that is too large for the exchange to fulfil, they can push the price up. Other investors will inevitably see this, mistake it for an upwards trend and take an interest. But the first investor can then sell their currency at the new, higher price.
Wirex has a private order book which makes buying crypto simpler, faster and cheaper for you.
An order book records ongoing bids and asks that haven’t yet matched. The order book lists the prices people are willing to sell their assets for and the prices people are willing to pay.
Get a fair exchange rate with Wirex
At Wirex, we believe that fair exchange prices and greater liquidity are an important part of Bitcoin’s future.
Wirex has a large pool of liquidity providers – large enough to ensure a healthy amount of price competition. And as everyone knows, competition is essential for keeping prices low in any sort of market.
Our liquidity provider ensures there’s always plenty of Bitcoin available for you to buy. By comparison, many major crypto exchanges are open exchanges and do not have a private order book. Open exchanges can be riskier and more complicated to use.
Taking advantage of Wirex’s exchange prices requires absolutely no technical knowledge. It’s easy for even the newest user to navigate.
Simply log into your verified Wirex account and decide which currencies you want to exchange and how much.
Don’t have an account yet? You’ll want to head here to get started.