What is Bitcoin exchange

what is bitcoin exchange

Bitcoin exchanges allow you to transfer fiat currencies, such as the USD, into bitcoin or vice versa. Some platforms also allow bitcoin to be exchanged with other digital currencies. They are market makers that typically charge fees or take the bid/ask spreads as transaction commissions for their services

Bitcoins can be bought and sold with many different currencies from individuals and companies. Bitcoins may be purchased in person or at a bitcoin ATM in exchange for cash currency. Participants in online exchanges offer bitcoin buy and sell bids. Using an online exchange to obtain bitcoins entails some risk. Since bitcoin transactions are irreversible, sellers of bitcoins must take extra measures to ensure they have received traditional funds from the buyer.

Digital Currency Exchanges may be brick and mortar businesses, exchanging traditional payment methods and digital currencies, or strictly online businesses, exchanging electronically transferred money and digital currencies. Most digital currencies operate outside of Western countries, avoiding regulatory oversight and complicating prosecutions, but Digital Currency Exchanges often handle Western fiat currencies, sometimes maintaining bank accounts in several countries to facilitate deposits in various national currencies. They may accept credit card payments, wire transfers, postal money orders, or other forms of payment in exchange for digital currencies, and many can convert digital currency balances into anonymous prepaid cards which can be used to withdraw funds from ATMs worldwide. Some digital currencies are backed by real world commodities such as gold.

Creators of digital currencies are often independent of the exchanges that trade the currency. In one type of system, digital currency providers are businesses that keep and administer accounts for their customers, but generally do not issue digital currency to those customers directly. Customers buy or sell digital currency from Digital Currency Exchanges, who transfer the digital currency into or out of the customer’s DCP account. Some Digital Currency Exchanges are subsidiaries of DCP, but many are legally independent businesses. The denomination of funds kept in DCP accounts may be of a real or fictitious currency.

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