The US-based Poloniex exchange is a digital asset trading platform that allows users around the world to trade different cryptocurrencies. Unlike many other exchanges, Poloniex is designed solely as a crypto-to-crypto exchange. This means users have to trade with crypto as fiat currencies are not accepted.
Therefore, users have to already own at least some quantity of digital currency in order to use the exchange. This may seem limiting, but the exchange is not low on customers thanks to the number of cryptocurrencies it offers.
Poloniex was created in 2014 and was recently acquired by Circle, the P2P payments technology company. This deal has been very beneficial for the exchange, as the payments company aims to make Poloniex the first fully regulated exchange by registering with the SEC as a broker. Circle also has plans to move the exchange into the Asian market, something which will bring about much more business for the company.
Even though the exchange is based in the United States, anyone in the world is able to use it as long as they are not based in a country with laws prohibiting the use of cryptocurrency exchanges. Countries that are ‘Bitcoin friendly’ include Canada, China, and Australia to name just a few.
However, there are some countries that restrict the use of Poloniex due to the exchange not accepting fiat currencies. If it were to accept fiat currencies, it would have to meet finance and banking regulations, something that often causes countries to put legal restrictions in place.
Why use Poloniex?
Poloniex is widely used by investors and traders as it has a lot to offer more advanced and avid crypto users. The exchange also offers the highest number of trading pairs. Currently, there are 97 trading pairs listed on the exchange. Even though the exchange only allows crypto-to-crypto trades, it does allow users to store the value of their deposit in USDT, the Tether stablecoin that is pegged to USD. With this, users have peace of mind when it comes to volatility, as 1 USDT should always be the same value as $1 USD.
It is also one of the best exchanges in the industry when it comes to deposits and withdrawals. This is because users will only ever pay the blockchain transaction fee, unlike other exchanges that make a profit when users withdraw their funds. Poloniex is therefore a cheaper option to competitors such as Coinbase. Poloniex charges 0-0.25% for every transaction, whereas Coinbase charges 1% as a fixed rate.
Government regulation is very strict in the United States, meaning Poloniex must make sure it makes every effort to keep its customers’ assets safe and crime free to avoid fines. This allows customers to have trust in the company.
Finally, another large advantage of the Poloniex exchange is that users do not need to verify their identity. The only time they will be asked to do this is if they are wanting to trade large amounts of money, for example over $2,000 a day. Anything less than this amount allows users to trade and buy anonymously.
Disadvantages of the exchange
Poloniex has many advantages, but alongside these, the exchange has also shown some downfalls since it was created in 2014. One of these downfalls is that the exchange does not allow for traditional payments. These payment methods include debit and credit cards or bank account transactions. This causes issues for users that want to make a deposit for the first time.
Another disadvantage of the Poloniex exchange is that security is still questionable. The exchange went through a major hack in 2014, where a massive 12.3% of the exchange’s total Bitcoin was stolen. The hacker found a bug in the system that meant they could withdraw more than an account’s actual balance. Even though the owner of Poloniex paid everyone back their stolen money, people are still doubtful of the exchange and worry whether it is secure enough.
On the other hand, since the major hack in 2014, the exchange has updated its security and it hasn’t been hacked since.
The Poloniex exchange is very popular and is known to be great for beginners. It is an industry leader for altcoins and has the advantage of providing the ability to trade more cryptocurrencies than any other exchange. Everyone has their own individual needs when it comes to exchanges, so choosing the best one for you is an important decision.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.