Poloniex Exchange Review
Poloniex has definitely had its share of controversy since making its debut as a cryptocurrency exchange in 2014. Nevertheless, this US-based exchange has overcome multiple hurdles to become one of the most popular exchanges in the world. A sophisticated trading platform and impressive security are just two of the reason cryptocurrency exchange traders choose Poloniex.
Tristan D’Agosta established Poloniex in January of 2014. The company was registered in Wilmington, Delaware, making it one of the few exchanges at that time to be based in the United States. Just two months later, on March 4, the exchange was targeted by hackers. The crypto thieves made away with more than 12% of the Bitcoin being held by the exchange.
To his credit, D’Agosta acted quickly to reimburse those investors who lost Bitcoin in the attack. Within a few months, investors had been repaid and the exchange began to shore up its security to prevent future attacks. Nevertheless, the hack revealed how vulnerable new exchanges can be to hackers. It also put in motion a series of events that led to Poloniex being acquired by a mobile payments company that has strong ties to Goldman Sachs, one of the largest financial institutions in the United States.
This move brought its own controversy. Goldman Sachs was linked to the massive bank failures and bailouts that occurred in the US several years ago. On the positive side, the firm is a company that has vast reserves. It is fully capable of keeping an exchange running should security breaches occur.
Another advantage of the Goldman Sachs involvement is that Poloniex has made strides toward mainstream legitimacy that other exchanges have not. The exchange has taken measures to become fully regulated by the SEC and FINRA in the US and recognized as a broker. Many investors take comfort in the willingness of this exchange to work with financial regulators, and most consider this to aid in transparency.
There have been plans for some time to expand Poloniex into the Asian market, but the Chinese ban on cryptocurrency has slowed progress in this regard. At the present time, Poloniex continues to be a force in the world of cryptocurrency trading, and it has been named the 25th largest exchange in the world by trading volume.
This exchange is definitely geared toward the investor who has some form of cryptocurrency experience. The newcomer may find some of its features to be complex and intimidating.
Getting Started With Poloniex
It is relatively simple for investors to create an account with Poloniex. There aren’t quite as many hoops to jump through because Poloniex only deals in cryptocurrency and does not offer the use of fiat currency. This means there are less regulations to follow, and users can create an account more easily. On the negative side, it also means that investors cannot purchase digital tokens with fiat. Most beginners will not like this aspect of the platform.
Creating an account requires supplying some basic information such as a name and an email address. An email verification will be required before users are allowed to log into their account and make trades. A word of advice is to make cryptocurrency purchases in advance so that the tokens can be transferred to the Poloniex account for trading.
There are three different levels of verification at Poloniex. The first level is very basic but has some limitations. Users are only required to provide a name, email address, and country of residence. With this basic account the user can make cryptocurrency trades, lend tokens, and make exchanges. The primary restriction of the lowest level account is that users are limited to withdrawals of $2,000 per day.
Level two verification adds some requirements such as a physical address and date of birth. Users will also be required to provide photo identification in addition to a utility bill to verify their address. A phone number is also required. The ID and bill scans can be submitted electronically. Once this level of verification is complete, the user will be allowed to make $25,000 in deposits or withdrawals per day. This is obviously well within the range of most cryptocurrency traders.
Yet, there is a third level of verification available for account holders. The requirements for this level are determined on a case-by-case basis. Account holders must contact the exchange in order to discuss their trading plans and what will be required to obtain a higher deposit/withdrawal limit.
Once all the requirements have been met for the user’s desired level of verification, all that remains is to make a deposit of cryptocurrency and begin making trades.
Poloniex Fees and Limits
Any exchange must charge some fees in order to make a profit. On exchanges that offer margin trading, the difference between the bid and ask price is known as the spread. The spread is where exchanges make a profit on trades. However, there are also other basic fees that must be accounted for.
Poloniex uses a Maker-Taker model to determine its exchange fees. Makers create an order in the order book before a trade is executed. Takers place an order that matches the order of makers in the order book. This may sound complicated, but all you really need to know is that makers create liquidity for the market. Takers remove that liquidity. Here is an example of the Poloniex fee schedule based on market volume:
Trading Volume of <600 BTC—Maker 0.15%, Taker 0.25%
600 BTC — Maker 0.14%, Taker 0.24%
Trading Volume of ≥ 1,200 BTC – Maker 0.12%, Taker 0.22%
This fee schedule proceeds upward on a sliding scale, with the lowest fees being encountered during high market volume. When the market volume exceeds 24,000 BTC, makers will pay zero fees while takers have fees of 0.10%.
As you can see, this is one of the reasons that Poloniex is geared for the active, experienced trader. It is an exchange that will benefit the trader that is dealing in a lot of market volume on a daily basis.
Limits at Poloniex are confined to those mentioned above according to verification level. Typically, users will be limited to either $2,000 or $25,000 in daily deposits and withdrawals.
Trading Cryptocurrencies at Poloniex
Actual trading at Poloniex is very simple compared to some other popular exchanges. It doesn’t require a lot of experience because the platform is so user-friendly. The first step will be to deposit enough cryptocurrency in the account to make the desired trades. Some digital tokens will require a minimum deposit before one can begin to trade.
On the main screen of the exchange interface is a series of tabs that allows a user to select which cryptocurrency will serve as their base coin. The next step is to choose which coin one wants to trade against. Anyone that is familiar with stock trading or Forex trading will have no problem understanding this platform.
You would next decide whether you wished to buy or sell the coin you have chosen to trade. You can manually enter an amount you are willing to pay, choose the current lowest price, or select an order from the order book and become a taker. Features such as stop-limits and other trading tools are available to the trader.
One of the most popular aspects of this exchange is that it permits users to participate in margin trading. This is a popular approach of day traders. Margin trading carries significant risk and is not recommended for the beginner.
Popular Opinion of Poloniex
The truth is that the online reviews one will find about Poloniex are a mixed bag. Some traders have nothing but praise to offer while others have voiced concerns about security and other issues. Some have also claimed that customer service by the company is lacking.
Most of the complaints about Poloniex involve a long wait time for withdrawals to process. Others seem to dislike that there is no option to withdraw fiat currency. Regardless of the complaints, this exchange continues to be one of the best in the market when it comes to the availability of trading pairs, margin trading, and tools for traders.
Margin trading available
Large number of pairs to trade
Fees are low compared to other exchanges
Has made improvements to security
Customer service is iffy
No fiat deposits or withdrawals
No mobile app trading
Difficult for beginning traders
Our Opinion of Poloniex
Even though Poloniex got off to a rough start with a serious data breach, the company took immediate measures to correct the problem. We like that the company is now associated with Goldman Sachs. It would be very difficult for this exchange to fail given the importance of Goldman Sachs to all US financial markets. That does not mean it couldn’t fail or suffer another hack. It just means that these things are unlikely.
It would make us happier if the exchange had better customer service to offer. The length of time it takes to approve a withdrawal can also be frustrating on many levels.
We award Poloniex 4.25 out of 5 stars on our cryptocurrency exchange rating scale.