Financial currency exchange operations are a type of transaction for selling or buying the monetary units of one country for the funds of another country at a certain price. The currency exchange process itself, as a rule, takes place through banks, ATMs or exchange offices and involves the bank or exchange office earning a profit due to the difference in exchange rates. The exchange rate is not a constant value and can depend both on economic factors and on psychological ones, when the rate changes not because of a change in the country's economic situation, but, for example, due to a panic mood among the population or increased demand created by speculative hype from some players in the country's currency market, mainly precisely – to earn from this. Moreover, you can earn on the exchange rate difference not only within your own country but also beyond its borders – for example, over the internet on Forex, where anyone who wishes can earn.
With the arrival of the cryptocurrency era, the concepts of "currency exchange" and "earning on currency exchange" have expanded. Cryptocurrencies are not only gaining popularity and confidently holding their positions in the market, but also boldly conquering new ones. For example, in the USA Bitcoin has the official status of a monetary asset. All operations related to the purchase and sale of Bitcoin are subject to taxation. Switzerland, in turn, is rightfully considered the most favorable state for the development of startups related to cryptocurrency. Companies that have received less than 1 million US dollars per year from their users will be exempt from the need to obtain a business license.
Digital money, the issuance of which takes place on the internet, has allowed even those who had never thought about it before to earn. That is why earning on cryptocurrency attracts many people today. What cryptocurrency earning options there are has already been covered in one of the previous articles. In this article we will consider how to earn on cryptocurrency through exchanging it. All the more so since earning on the exchange rate difference is considered one of the most profitable types of earning on cryptocurrency.
The main principle of earning on cryptocurrency exchange is speculation. That is, having decided on a cryptocurrency, you buy it at one price and sell it when its value rises. When choosing a cryptocurrency for earning on exchange, attention is paid to its volatility – an indicator of a digital currency that shows the level of its variability over a certain period. To make a profit from exchanging cryptocurrencies you can use exchangers and cryptocurrency exchanges. Moreover, it is recommended not to stop at any one site, but to choose two or three of the ones you like best.
As is already clear from the name, cryptocurrency exchangers are services that allow you to exchange cryptocurrencies. You can exchange some cryptocurrencies for others (for example, ETH for XRP) or for fiat money (for example, ETH for USD or vice versa). To make a purchase/sale of cryptocurrency through an exchanger, you need to choose two currencies – the one you want to give and the one you want to acquire in return, specify the amount, create and pay for the request — and the exchange will be carried out. And now let us examine the features of cryptocurrency exchangers.
Types of cryptocurrency exchangers :
Type 1. Offline. Needed for exchanging cryptocurrency for cash. For example, you want to exchange your bitcoins for dollars. You submit the exchange request on the exchanger's website, and you collect the cash at a physical branch (office, cash desk and so on). The downside of such exchangers is that there are very few of them. And, as statistics show, they are not particularly popular.
Type 2. Online. An online exchanger is a website on which you can, in online mode, buy or sell the cryptocurrency you are interested in at the rate set by the system. All electronic exchangers such as Obmenka, Exchanger and so on work on this principle. Usually, in cryptocurrency exchangers, in addition to fiat and electronic money, bitcoins, ether and other altcoins are also available.
The exchanger's mechanism is very simple. You submit an exchange request, the system checks whether you have the specified amount for the exchange and, if there are enough funds in your account, carries out the transaction. But note that transactions can be processed in different modes:
1) Manual – each time you re-enter your data, the exchanger's operator checks it manually, you pay for the exchange through the chosen service (for example, you make a payment from a WebMoney wallet), the operator checks the payment and transfers to you the funds specified in the exchange. The whole procedure can take several days.
2) Semi-automatic – as in the previous point, you pay for the transaction yourself, and the operator checks the payment, but the system does everything else automatically. You will have to wait from 10-15 minutes to several hours, depending on the technical capabilities and the current workload of the exchanger.
3) Automatic – you create templates for the exchange, and the system itself does everything else, no operator participation is required. The exchange happens almost instantly.
As a result, let us highlight some advantages and disadvantages of exchangers.
Advantages of exchangers :
- ease of use.
- some exchangers do not require registration.
- you do not need to pay a fee for depositing and withdrawing funds — a fee is charged only for carrying out the exchange itself.
Disadvantages of exchangers :
- the exchange takes quite a lot of time (from 5 to 20 minutes). In many exchangers, operations are performed manually, there is no automatic mode.
- high fee.
- a limited set of cryptocurrencies available for exchange.
A cryptocurrency exchange can also be used for earning on cryptocurrency exchange. An exchange provides a platform for trading and acts as an intermediary between buyers and sellers. Using a cryptocurrency exchange, you deal with private asset owners, that is, with the same kind of traders as you. Cryptocurrency exchanges offer a wider set of functions compared to simple exchangers. Through exchanges you can not only buy and sell cryptocurrency, but also store it there in special wallets. But as with exchangers, cryptocurrency exchanges have their own advantages and disadvantages.
Advantages of cryptocurrency exchanges :
- automatic mode and high exchange speed — operations are carried out instantly, which is a big plus, considering the high volatility of cryptocurrencies.
- low fee.
- higher levels of reliability and security compared to exchangers.
Disadvantages of cryptocurrency exchanges :
- high fee for depositing and withdrawing funds.
- a more complex mechanism for managing your funds compared to exchangers.
- to pay with funds from a bank card or online banking, you will need to undergo verification (the procedure can take several days).
We will examine earning on cryptocurrency using cryptocurrency exchanges in more detail in an upcoming article. However, even now it can be said that technically an exchanger is completely unlike a cryptocurrency exchange with its orders, order books and a personal account with a bunch of sections and settings. But for an investor, the differences in the organization of trading and price formation are much more important. In this regard, the platforms differ even more. That is, exchangers are more suitable for those who want to earn on exchanging cryptocurrencies while quickly buying/selling cryptocurrency, but do not intend to do this too often. Cryptocurrency exchanges are more suitable for advanced users — those who plan to exchange cryptocurrency frequently and rarely deposit and withdraw funds from the exchange. However, if your main goal is to make good profit on rate jumps, it is better to choose cryptocurrency exchanges.
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