Hello steemit,
I hope you had a nice weekend. It’s monday, 29th of august, and only 3 days left until the start of the PermaCryptoFolio experiment. Today I want to post some thoughts about cryptocurrency-exchanges.
If you want to buy Cryptocurrencies like Bitcoin or Steem, you need to find someone who want’s to sell you that stuff. Usually you will not find such a seller in your neighborhood or among your friends. For this reason, mankind has invented exchanges where buyers meet sellers.
Size does matter!
Currently there are a lot of cryptocurrency exchanges running, a fact which many beginners confused. Personally I trade the most coins on the Poloniex exchange, because there you find often the highest trading volume for the most of the major Cryptocurrencies. I don’t want to promote poloniex here and I do not get money for this writing from poloniex, just please check the daily trading volume on the top-6 coins behind Bitcoin for yourself:
ETH - Ethereum
XRP - Ripple
LTC - Litecoin
XMR - Monero
STEEM
ETC Ethereum Classic
The high trading volume is an advantage for Poloniex, but there are also downsides.
- Poloniex has no gateway for US-Dollar and other fiat currencies. So you have to bring your cryptos to Poloniex, and you also can only withdraw cryptocurrencies, but no US-Dollar.
- Poloniex has listed dozens of Cryptocurrencies for trading, but some smaller ones are not listed there.
Besides Poloniex I have accounts at Kraken and Bittrex.
I signed up at Kraken for only one reason: they offered an Ether Presale File Upload tool, where noobs like the author of this article were able to send there presale Ether to the Kraken exchange without the need to install the Ethereum wallet. I tried the MIST wallet, but the official Ethereum Wallet was not able to open the official Ether presale file. In this moment I was close to a heart attack, but fortunately Kraken had the solution.
At Bittrex I also only signed up for one reason. I wanted to buy the Emercoin (EMC) Cryptocurrency but this token was not listed on poloniex.
Dory, Nemo and Flipper
In my last post I announced that I want to start 2 different portfolios for the PermaCryptoFolio experiment:
- a simple portfolio that only contains Bitcoin and US-Dollar
- the full PermaCryptoFolio, containing Bitcoin and the next 8 major coins as well as USD-Tether and Steem Dollar
I will start both portfolios with 1 Bitcoin each.
Because Kraken does not support Tether nor Steam Dollar, I will host the simple portfolio (Bitcoin and US-Dollar only) there. I call it „Dory“.
The full PermaCryptoFolio is called „Nemo“, I will start it on Bittrex and will deposit also 1 Bitcoin there.
For my personal use I will also run a full PermaCryptoFolio on Poloniex, but I will deposit more Bitcoin there. That’s why I call this the „Flipper“ depot.
For security reasons it’s recommended to withdraw the coins immediately after trading from the exchange to a wallet under own control. I will do this for the Flipper-depot, but not for Nemo and Dory. So I do not need to manage an additional excel sheet for comparison of the 2 depots in order to check if the addition of the major 8 altcoins to PermaCryptoFolio was a performance booster or not.
Never put all eggs into the same box
The following table shows advantages and disadvantages of the 3 mentioned cryptocurrency exchanges and shows what PermaCryptoFolio I will test on the exchanges.
| Exchange | Poloniex | Bittrex | Kraken |
|---|---|---|---|
| advantages | high trading volume | most coins listed | fiat-money-gateway |
| lots of coins listed | fiat-money-gateway | never been hacked | |
| disadvantages | no fiat-money-gateway | low trading volume on some markets | only some major coins listed |
| PermaCryptoFolio-Name | "Flipper" | "Nemo" | "Dory" |
| Initial Investment | 12 Bitcoin | 1 Bitcoin | 1 Bitcoin |
| Holdings | Bitcoin | Bitcoin | Bitcoin |
| next 8 major coins | next 8 major coins | - | |
| USD Tether | US Dollar | US Dollar | |
| Steem Dollar | Steem Dollar | - |
That's all for today. For tomorrows update I plan to share some social media contact details for twitter and facebook.
Thank you for reading!
Best regards,
twinner
Disclaimer
The author is already invested in all of the cryptocurrencies mentioned in this article.
NOTHING ON THIS POSTING IS TO BE TAKEN AS TRADING ADVICE.
Everything on this article, including but not limited to: suggested trades, trade setups, and posting of "real-time" trades of cryptocurrencies by the author is for educational purposes only. This article is not an investment advice nor should it be construed as such. I strive for accuracy of charts and information, but make no guarantee of such.
By accessing any information on this post, you acknowledge you have read, understand, and agree to this disclaimer. Past performance of any cryptocurrency, trading system or methodology is not indicative of future results. The contents of this article is neither a solicitation nor an offer to Buy/Sell any cryptocurrencies.
Trading cryptocurrencies carries a high level of risk, and may not be suitable for all investors. Before deciding to trade you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose.
I do not and have not received any compensation from any cryptocurrency or cryptocurrency exchange that appears in this article.
Its risky to store cryptocurrencies long-term on a cryptocurrency exchanges. In case of a hack or in case of the bankrupty of a cryptocurrency exchange you can lose a part or in worst case your total cryptocurrencies investment. Whenever possible, withdraw immediately your cryptocurrencies from an exchange to your cold storage wallet (your keys = your coins, not your keys = not your coins).
There may be tax consequences for profits or losses on cryptocurrencies trades. Please consult your local tax advisor for details on this if applicable.