Thus, it is only fair that we put the spotlight on platforms that allow the trading of cryptocurrencies, particularly those that facilitate crypto-to-fiat exchanges and vice versa. In this guide, we will outline the workings of crypto-to-fiat exchanges, highlight some distinguishing factors, and introduce you to some of the top-performing websites that fall under this niche.
What Are BTC-To-USD Exchanges?
Bitcoin is a digital asset with loads of amazing functionalities that have aided its emergence as a viable means of payment and store of value. However, like every other asset, you would only access crypto when you find a platform or individual that is willing to exchange bitcoins to fiat currencies or popular altcoins for fiat. With this, you get to trade traditional money for virtual currencies in a process that might entail that you meet sellers physically or one that would only require an online exchange.
Regardless of the business framework found on these exchanges, their core function is to facilitate Bitcoin to fiat trades.
What Are the Types Of BTC-To-USD Exchanges?
BTC-to-USD platforms, also known as Cryptocurrency to USD exchanges, majorly implement two types of business frameworks. They either run a fully centralized platform or facilitate a peer-to-peer network for the exchange of fiat to cryptocurrency.
Fully Centralized Fiat to Cryptocurrency Platforms
This class of crypto exchanges focuses on providing the appropriate tools for users to trade fiat for cryptocurrencies. In some cases, they act as intermediaries between buyers and sellers to ensure that transactions are fast and secure. On the other hand, some adopt a business model, which has them acquiring crypto or seeking out sellers with a stash of cryptocurrency and retailing to interested buyers. As you would expect, both frameworks have their unique strengths and flaws.
For one, the intermediate exchange model attracts lots of traders. Therefore, you might not need to wait for too long before the platform executes your order. However, note that this assertion only applies to exchanges with a high volume of trades. As for the second set of fully-centralized platforms, they almost always dictate the price of cryptocurrencies and charge exorbitant fees for every purchase made, depending on the buyer’s preferred payment option.
P2P Exchange Network
Unlike the fully centralized counterpart, the p2p model utilizes a hands-off approach, which allows sellers and buyers to communicate and negotiate directly. Also, this class has two subclasses – the semi-centralized networks and the fully-decentralized exchanges. The former builds a network of buyers and sellers and mandates that crypto is locked in an escrow until the seller meets the requirements of the exchange and avails a proof of payment. And so, this model, to an extent, eliminates disputes and scams.
The second p2p framework establishes decentralization at its purest form, as it does away with any form of intermediate processes neither does it hold users’ funds. Instead, the system relies on blockchain technology, as well as smart contracts, that would ensure that both the seller and the buyer meet the conditions for a successful exchange before authorizing the transfer of crypto.
Like the previous class of crypto-to-fiat exchanges, the p2p network models have their unique pros and cons. The fully decentralized exchanges often charge negligible transaction fees and do not record security issues that plague other models. However, a majority of exchanges that fall under this category do not have the level of liquidity and trading volume that equate to instant trades.
For the semi-decentralized p2p exchange networks, the transaction fee is not as high as the charges on fully centralized platforms. Moreover, being that buyers and sellers can negotiate directly, it is, therefore, possible to access competitive prices on p2p networks.
What Are the Factors That You Should Consider Before Choosing A BTC To USD Exchange?
There are lots of platforms offering services bordering on exchanging fiat currencies for digital assets. And as it is with everything crypto, you have to consider a myriad of factors before opting for a crypto exchange platform. Doing this will ensure that you are not susceptible to scams. Also, once you go the extra mile to verify the viability of BTC to USD exchanges, you can ascertain that all of the features and services accessible on the website are topnotch. Without further ado, here are some recommendations that you should consider while research BTC to USD exchanges.
The Exchange Model That Is at Work on The Platform
Earlier in this guide, we dissected the various types of cryptocurrency to fiat exchanges as well as some of the strengths and weaknesses of each. From our explanation, you will agree that understanding the model at work at an exchange beforehand will save you lots of headaches. Hence, you need to understand the type of customers the exchange is tailored to cater to, outline your own needs, and see if the business framework of the platform is appropriate for you. For example, if competitive prices are what you seek, then p2p networks are the right platforms for you.
Also, for those looking to have their orders processed almost instantly, then opting for a centralized crypto-to-fiat exchange is the obvious choice.
The Legality of The Exchange
Cryptocurrency is still a touchy subject in some countries. In essence, some countries have gone all out to ban Bitcoin-related activities, while others have either enacted strict laws to govern the operations of crypto firms or have incorporated a friendlier approach to crypto regulation. Hence, you ought to figure out the standpoint of your home country to cryptocurrency and verify that trading Bitcoin is legal. Furthermore, you should verify that the exchange complies with the requirements for running a legitimate crypto business in your location. Note that crypto regulations vary from one nation to another. This assertion is more pronounced in the USA, where state regulators have the legal backing to enact regulations for crypto exchanges operating within their jurisdictions. Hence, it is crucial to ensure that the so-called crypto-to-fiat exchange platforms, which claim to cater to a global market, have fulfilled all of their legal responsibilities, as stated by law.
The KYC And AML Processes of The Platform
Regulators have noticed Bitcoin’s slow but steady push for mainstream acceptance. As such, they have begun to push for market standards, as Know Your Customer and Anti-Money Laundering requirements have emerged as standard practices for centralized crypto exchanges. Note that centralized crypto-to-fiat exchanges, which do not comply with this standard, are likely running an illegal business. Therefore, the onus falls on you to ascertain that the exchange under review avails KYC and AML processes. However, regardless of the importance of this exercise, it shouldn’t take an awful lot of time to verify your identity. The KYC procedures in some platforms are too long and stressful, which sometimes deter users from completing the steps.
Besides, we advise that people, who are skeptical about submitting their private information on crypto exchanges, should opt for p2p crypto-to-fiat networks that partly or fully bypass KYC and AML procedures.
The Security Measures Incorporated on The Platform
Security is a recurring issue in the crypto space, especially now that exchanges have become the primary target of attackers. Considering the number of security breaches recorded in the last couple of years, it is safe to say that you ought to take the time to assess the safety of crypto-to-fiat exchanges before adopting one. The first thing to check is the authorization system of the website. Ensure that there is another layer of protection supporting the commonly used password and username verification system. Here, it is crucial to only choose exchanges with multi-factor authentication models that would require that you input a temporary OTP code sent to your mobile device. In most sophisticated platforms, they encourage their users to activate biometrics as their second layer of protection.
Another important detail that should feature in your research is the viability of the exchange’s wallet and its capacity to withstand attacks. This assertion applies to fully-centralized crypto-to-fiat trading platforms, which offer custodial services to their users. You should note that this class of exchanges are prone to attacks. Therefore, they must take security seriously, starting from adopting multisig wallets. Exchanges with multisig wallets can't come out one day and announce that it cannot access users’ digital assets because the CEO lost the wallet’s password or died.
Also, distributing assets to more than one wallet is a simple way of minimizing risks, as hacks would only expose a fraction of the exchange’s holdings. Furthermore, the custodial service enlisted to boost the safety of crypto assets should interest you. Note that crypto custodial platforms are fast becoming the ultimate security solution for enterprises. And so, we advise that you go for crypto-to-fiat exchanges that are aware of the importance of this paradigm shift.
The Customer Support Culture of The Crypto-To-Fiat Exchange
The quality of the feedback mechanism incorporated on the exchange under review would determine how effortless it is to lodge complaints and receive quick responses. Platforms with a wide array of communicating channels would engage with their customers regularly, which, in turn, helps them tailor their services and policies to their customers. Also, it becomes easier for you to make inquiries and communicate your plight when the exchange’s customer support is available in your language.
The number of payment options, transaction fees cryptocurrencies, and fiat currencies available on the site
A majority of crypto-to-fiat exchanges fixate on BTC to USD trading pairs. While this is a given, it is imperative to check out that there are other trading options, especially if you are looking to purchase altcoins, or if you would prefer to carry out the exchange directly with your local currency.
While analyzing this factor, you shouldn’t forget to check the payment options available on the site, the transaction fees associated with each, and how long it takes the platform to process payments.
The Trading Volume and Liquidity
Exchanges with a high volume of trades and liquidity can execute your orders fast and are always the best place to buy bitcoin instantly. The advantage of opting for platforms with high liquidity is that you get to circumvent volatility, which often causes the price of crypto to fluctuate at an unprecedented rate. And so, you cannot guarantee that the price you ordered crypto would still be valid at the point of execution. Hence, exchanges, which can fill orders almost instantly, provides stability, as users can rest assured that volatility would have little to no effect on their trades.
User Experience and Mobile-Friendliness
We at Cryptolinks are particular about the user experience of crypto exchange websites because it determines how easy and fast it is for users to find their way through the cluster of features and tools made available to help them trade crypto efficiently. And so, we advise that you tour the website under review, explore its design and layout, and determine whether it is aesthetic, responsive, and simple. It is when the platform meets these requirements that you can guarantee that you will have an enjoyable experience utilizing the exchange’s services.
Also, you should check to see that the design is mobile-friendly. It is a plus If the exchange is thoughtful enough to provide a mobile app. With this, you can access the platform on the go.
How Did Cryptolinks Compile Its List of Top Cryptocurrency to Fiat Exchanges?
Cryptolinks have adopted an organic approach to reviewing crypto websites, which is evident in its crypto-to-fiat exchanges review that encapsulate all of the recommendations highlighted in this article. As such, we have examined the legal standings of exchanges facilitating crypto to fiat trades. We went the extra mile to assess the security systems implemented on each platform, and we compared them to the standards outlined earlier in this guide.
Next, we examined their customer support systems, as well as the number of support channels available to users, and we reviewed how these platforms sidestep language barriers. Afterward, we evaluated the capacity of the exchanges to offer services to a larger demographic by providing more payment options, more trading pairs, and supporting other fiat currencies other than the USD, not forgetting the fees that the exchange charges for fiat transactions. Also, trading volumes and liquidity feature in our rigorous research process, as it helped us gauge how much time it would take each exchange to execute an order.
At the end of this review, we found 15 crypto-to-fiat exchanges that deserved a mention on our review website. We advise that you explore the strengths and weaknesses of each before opting for one.