Bitfinex Exchange Review
Bitfinex has been ranked as the largest cryptocurrency exchange in terms of trading volume. While this designation fluctuates, it does consistently keep this exchange in the top three or so exchanges in the world. It is a well-known exchange which caters more to the experienced trader of digital assets. There are many trading pairs and coins to choose from at Bitfinex, and the company works hard to maintain a positive reputation.
The founder of Bitfinex is Raphael Nicolle. He created the exchange in 2012, making it one of the oldest cryptocurrency exchanges in existence today. The platform is owned by iFinex Inc. which also maintains its daily operations. It is one of the few exchanges which is based in Hong Kong. While the platform has become very popular in many parts of the world, it was recently decided that Bitfinex would no longer provide services to residents of the United States. One can presume that this is due to the strict financial regulations imposed by the US on such endeavors. Nevertheless, it remains a large platform with huge trading volumes and the participation of thousands of investors.
Almost $2 Billion USD is traded daily on Bitfinex. The trading volume for the BTC/USD pairing alone is around $600 million during a 24-hour period. This accounts for about 6% of the overall market. Those who use the exchange point to excellent customer service, coin selection, and an enhanced interface as the reasons they choose Bitfinex over other exchanges. Another benefit of the company is a low fee structure. Fiat deposits are also permitted, and this is a plus. About 72 market pairs are available for trading, and that makes this exchange one of the deepest in terms of trading options.
Despite the positives, there have been some issues with Bitfinex in the past. The exchange has been the target of a number of hacks and security seems to be an ongoing issue. The exchange is also closely linked to the Tether token, something that dissuades some investors from participation.
Among the advantages afforded by this exchange is the functionality of its trading platform. The interface is very modern and designed in such a way that it is very competitive with the most advanced fiat and stock trading platforms. Experienced investors will appreciate that they have access to a number of tools which include charts and graphs for research. On the primary dashboard there are a number of tabs which allow users easy access to order pages and tools. The downside of this is that a new trader can easily become overwhelmed with the platform. It does require a learning curve of those who have no previous trading experience. There is also a mobile app available for both Android and iOS devices.
The exchange has made some improvements to its security in the wake of previous hacks. This indicates that the company is serious about protecting traders. A majority of investor funds are placed in cold storage. Only 5% or so of crypto assets are maintained in wallets on the exchange. DDoS protection has also been implemented in addition to database encryption. These measures now closely resemble the security procedures that have been adopted by other successful exchanges. Advanced verification tools are in place, and accounts are monitored often for suspicious activity.
Support inquiries are typically handled via email. The company seems to do a good job of responding to trader requests, with most support tickets receiving a response within 12 hours. It is possible, however, for responses to take 24 hours or more depending upon the volume of requests. Some questions can be resolved by using the platform’s extensive knowledge base and FAQ. These areas of the site seem to be a little better presented than they are at some other exchanges.
A full complement of trading options is available at Bitfinex. Margin trading is available for seasoned investors, and individuals can place trailing stops and limit orders. The high liquidity of the exchange is also a plus, with about 6% of all cryptocurrency exchanges happening on the Bitfinex exchange. This gives users some confidence in the accuracy of coin prices.
Getting Started With Bitfinex
Those who choose to create an account with Bitfinex will be reminded that the platform is designed for those with trading experience. It will be difficult for the novice to navigate the exchange. Cryptocurrency trading carries a risk just like all other forms of investing. This risk can become more pronounced if a trader does not understand how to place orders and stops. New account holders will have to agree to a lengthy list of terms and conditions before they create an account. These appear in a pop-up box, and it would be wise to read them.
Because Bitfinex offers a professional trading platform, there is a minimum equity of $10,000 USD required before trading features are accessible. Those who create an account can make several deposits over time to reach this amount, but they will not be permitted to trade until the equity is reached. Those who wise to deposit and withdraw fiat currencies are also required to undergo a long verification process. The process can take as long as eight weeks. In the interim, crypto deposits and withdrawals are permitted.
At sign-up, the user is required to provide a username, password, and email address. They must also enter their timezone and complete a captcha before the form can be submitted. Other than this, the sign-up process is very simple. Once the account is set up, individuals may proceed to making a deposit with a crypto wallet. Again, fiat transfers require verification and will not be immediately available to new traders.
Bitfinex Fees and Limits
The fees that are charged by Bitfinex are complex. Thankfully, the exchange provides a detailed fee schedule which can be accessed via the website. Fees are generally determined by considering the trading volume of an individual over the past 30 days. Fees are also affected by what is known as “taker” or “maker” status. The concept is complicated for the inexperienced trader, but the basics are as follows:
Maker Fees: Triggered when trader places an order below the ticker price when buying, or above the ticker price when selling. These fees are 0.0%-0.1%.
Taker Fees: Triggered when traders remove liquidity from the order book by filling an existing order. These fees range from 0.1% to 0.2%.
All fees charged by Bitfinex are delivered on a sliding scale. Those who trade up to $500,000 per month will qualify for the highest fees. It requires a trading volume of $30 million USD to receive the lowest fees offered by the exchange. As you can see, this is one reason that the platform is only recommended for serious investors. Most of the individuals who trade with Bitfinex are major players who derive the majority of their income from trading.
There is no charge for cryptocurrency deposits. Fiat deposits will incur a fee of 0.1%. Withdrawals can also include fees which are dependent upon the type of cryptocurrency that is withdrawn. Again, a fee schedule is provided to all those who create a new account. It is recommended that users take time to view this fee schedule before beginning trading activities.
Trading Cryptocurrencies at Bitfinex
One of the things that serious traders will love about Bitfinex is the number of trading options it affords. The orders which can be placed include:
Trailing Stop Orders
Those who have traded stocks or traded on the Forex market will be familiar with all the types of orders available. Bitfinex seeks to bring all the traditional trading tools to the realm of cryptocurrency. These tools provide more leverage and can contribute to the success of the trader.
Because there is such a high volume of trading conducted at Bitfinex, the platform offers real-time resolution of bid/ask and order count. This is useful for traders who place an emphasis on timing and when to enter or close a trade.
Trading view charts are integrated with the platform. This makes it easy for investors to access a large number of trading tools without needing a third-party charting application. There are 72 market pairs available for trading. These are linked to the USD, EUR, BTC, and ETH as base currencies. Bitfinex is one of the few platforms which will permit the purchase and trading of the IOTA token.
Popular Opinion of Bitfinex
Those who are heavy traders generally tend to have a high opinion of Bitfinex. They consider it to be one of the most legitimate cryptocurrency exchanges. The individuals who tend to have a poor opinion of the exchange are generally those who do not qualify for a trading account based on their ability to invest. With that being said, a few words must be used to address the security issues that have plagued the exchange in the past.
Bitfinex is one of the oldest cryptocurrency exchanges. As such, it is not surprising that the exchange has been the target of hackers. The success of these attacks has been significant. The first major one took place in May of 2015. It resulted in the theft of 1,500 Bitcoin tokens which were maintained in a hot wallet on the exchange. The company addressed the issue and returned the stolen tokens. A subsequent attack was far more severe and could have crippled the entire operation. Almost 120,000 Bitcoin tokens were stolen. At the time the theft occurred, the tokens were worth approximately $72 million USD.
Bitfinex came up with a novel and controversial way to replace the stolen tokens. They created the BFX token specifically for those who had lost funds. A condition of the token was that it could not be redeemed immediately but had to be redeemed at a later date. With little choice, investors were forced to accept the deal. This did not necessarily help the public opinion of Bitfinex.
What can be said is that the company has worked to improve its security in the interim. Many changes have been made to the encryption of the the platform, and now a majority of investor funds are placed in cold storage offline. It would be impossible today for a hacker to steal more than a very small amount of the funds that are maintained by the exchange on any given day.
Another concern that is often voiced by the public is the relationship of the exchange to Tether. Tether is a cryptocurrency that is “tethered” to the USD. All Tether tokens are supposed to be backed by a 1-1 USD ratio. There are now more than a billion Tether in circulation, and some have speculated that the USD reserves are not there to back the token. The concern in regards to Bitfinex is that the same executives play a role in both operations. For its part, Bitfinex has agreed to an audit in the near future to prove that the tokens are indeed backed by fiat.
Fees for the exchange are low
Large trading volume
Many order options
Advanced trading interface
Only suitable for advanced traders
High equity requirements
Multiple security breaches in the past
Our Opinion of Bitfinex
There are many things which are impressive about Bitfinex. Chief among these is the fact that it is a serious platform for advanced traders. This gives it some legitimacy. In fact, it may be the only logical choice for those who trade a massive volume on a monthly basis. The tools and depth of trading pairs offer all the versatility a trader could want.
The problem with the platform is that it has had too many security breaches in the past. This is an ongoing concern despite the fact that the exchange has taken measures to make improvements in site security. Another concern is the connection to Tether. Until an audit is performed to guarantee the reserves of the USD which are purported to back the token, questions will remain. It might be wise for the leaders of Bitfinex to divest themselves of a relationship to Tether for the time being until things can be sorted out.
We award Bitfinex 4 out of 5 stars on our cryptocurrency exchange rating scale.