ShapeShift Exchange Review
ShapeShift belongs to the group of exchanges which are known for instant transactions of cryptocurrency. Along with Changelly, this service lets individuals purchase or exchange digital tokens without the need to participate in a full-service exchange. As such, ShapeShift is not designed for active traders. It is meant for those who want to exchange one digital asset for another. Unlike Changelly, ShapeShift does not allow first-time buyers to use fiat currencies and a debit or credit card to make purchases.
Erik Voorhees founded ShapeShift in 2013, but the exchange has only been offering its services since 2015. The company is based in Switzerland. The goal of Voorhees was to create a platform where individuals could quickly exchange one cryptocurrency for another. Investors can use the exchange to expand their existing portfolio by purchasing new tokens with others they may own. This is particularly useful for those who want to participate in Initial Coin Offerings for new tokens. Most ICOs are conducted in exchange for Bitcoin or Ethereum.
This exchange does provide a certain amount of anonymity because it does not require an email address. Nor are users required to create an account, although doing so may grant access to higher transaction limits. ShapeShift is available to individuals in most every part of the world. This is possible because ShapeShift does not trade in fiat currencies. They do not have to maintain bank accounts to store fiat like the USD or EUR, and no deposits are made. ShapeShift also doesn’t hold cryptocurrencies for users in wallets like a centralized exchange would. These elements lend some additional security to the platform.
ShapeShift does provide some useful APIs for developers that would like to integrate the acceptance of cryptocurrency into an existing business. The interface for the exchange is also very simple and straightforward. Using an instant exchange is preferable for newcomers to the world of crypto because the process is more seamless and simple than it can be at a trading exchange. All one has to do is enter the proper wallet addresses to make an exchange. About 50 different tokens are now supported by ShapeShift.
One positive about this exchange is that it does offer a mobile platform in addition to its web interface. This is useful for individuals who want to make cryptocurrency transfers from their phone or tablet. ShapeShift is also somewhat unique in that it does not retain or collect personal information. Still, there is a process for creating an account which will confer some advantages. One of these advantages is that a refund can be requested for a transfer that did not complete. Users have 90 days to initiate a refund claim. After that time, any funds that were transferred become the property of ShapeShift.
ShapeShift gained some credibility at the outset by attracting the interest of well-known cryptocurrency experts. Among these individuals was Roger Ver. Along with Barry Silbert, Ver invested $525,000 in the company in 2015. Other capital groups have helped to fund the exchange, with the company ultimately raising over $14 million in seed funds.
ShapeShift received media attention not long after it debuted in 2015 when it was announced that residents of New York would be excluded from using the exchange. This was done because New York had imposed new regulation measures for digital currency exchanges. The exchange argued that compliance with the regulations would result in personal data being accessible to computer hackers and data thieves. Of course, it has been very easy for individuals in New York to circumvent these restrictions. Since no personal information is required to sign up, all that a user must do is use a VPN to access the platform and disguise their geographical location. The transaction can then proceed with a measure of anonymity.
Since it was launched, ShapeShift has suffered three significant security breaches. The first of these involved the theft of 469 BTC. Subsequent thefts resulted in losses of 1,900 LTC and 5,800 ETH. The exchange was taken offline for a period of time to allow developers to work on fixing security issues. As of 2018, the overall security of the exchange seems to be much improved. Although ShapeShift claims that it does not retain personal data on its users, it has clearly stated that any data which is maintained is fully transparent. The company will comply with reasonable requests made by law enforcement organizations to provide information.
Getting Started With ShapeShift
Very little experience is required to use the ShapeShift platform. One simply visits the website or downloads the mobile app to begin. The user will need to have an existing cryptocurrency wallet that has funds available, and they will also need a wallet address to receive any token that they are buying.
Once on the platform, menus are provided that allow the individual to select which currency they want to exchange. Once the base currency has been selected, the individual can then proceed to choose which coin they want to receive in return. At the time of this review, some 50 tokens are available. These include Bitcoin, Ethereum, and many altcoins.
Rates are Shapeshift are determined from aggregating the rates of other popular exchanges. The actual rate may differ slightly between the time a user initiates a transfer and the time the transfer is completed. The difference, if there is one, is typically minimal. Although it is called an instant exchange, transfers from ShapeShift do take some time to process. In most cases, users can expect the funds in their wallet in 15 minutes or less.
As stated earlier, there is no option to purchase cryptocurrency with fiat. All transfers must be conducted with cryptocurrency. Individuals may not use a credit or debit card to make purchases.
ShapeShift Fees and Limits
ShapeShift does not technically charge any fees for using its service. Instead, it claims to charge only the miner fee for an associate coin. This results in a fee schedule that is somewhat complex, and it can change. The only way to determine the precise fee for a transaction is to note it on the website or mobile platform at the time the transaction is completed.
Examples of past fees include 0.0025 BTC for Bitcoin transfers and 0.001 ETH for Ethereum transfers. Overall, ShapeShift has a reasonable fee schedule. It will typically cost less to use this exchange than it will to use Changelly.
Limits are determined at the discretion of the exchange. In general, users are not restricted in the amount of cryptocurrency they can exchange on a daily basis. However, some users have reported that transfers have been canceled at the discretion of the exchange. It is assumed that the reason for this is that ShapeShift imposed some type of limit.
Popular Opinion of ShapeShift
It is an unfortunate reality that ShapeShift has received a fair amount of complaints online. Most users report that they have seen their funds disappear and transactions fail to complete. There are enough of these reports out there to breed some serious concern.
It has also been reported by some users that the exchange has employed hidden fees. On the positive side, there are many reviews which praise the ability of the exchange to deliver instant transfers. Users also seem to appreciate the number of digital tokens supported by the platform.
Rapid exchange of cryptocurrency
No personal information required
Mobile and web platforms that are easy to use
Some users report hidden fees
Poor online reputation
Non-existent customer service
Our Opinion of ShapeShift
ShapeShift offers a much-needed service. A big barrier to many individuals who want to become involved with cryptocurrency is the difficulty of purchasing tokens. This platform makes it easy for someone to diversify their holdings and exchange for coins that may increase in value. It is also nice that this exchange provides more anonymity than most.
The biggest concern is that there are simply too many complaints to be found online. Where there is smoke, there is usually fire. Too many customers have reported that their funds disappeared after a transfer was initiated. We recommend caution when using this service.
We award ShapeShift 3 out of 5 stars on our cryptocurrency instant exchange rating scale.