the most secure way to pay on  internet:
Bitcoin and Cryptocurrency

Before you can use cryptocurrency for a payment you must have an account or a wallet, but what is the difference between the two?

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The answer is very simple, when you open an account, for example with a bank, it is under the control of this establishment, with a right to supervise the funds and the operations which take place within it. ci by this establishment.

Conversely, when you create a portfolio, you have full control of your funds and the financial operations taking place there, no one has access to your data.

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From there, you have to choose which exchange platform to choose between the centralized and the decentralized one.

Centralized exchange platforms work according to the same model as those of banks, that is to say that you open an account with them with verification of your identity allowing you to link your bank account to this account.

Decentralized exchange platforms are based on the model of creating a portfolio with full control of your funds and operations taking place only on your part, no identity request is required since this portfolio is yours completely, l The supply of this wallet is then done by credit card from your bank account.

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Examples of the most important centralized platforms: Bithumb , Binance , Bitfinex , Bitstamp , Bittrex, Coinbase Exchange, Gemini, FTX , Huobi Global , Kraken , KuCoin

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Examples of decentralized exchange platforms: Coinomi, Lumi, to learn more see our Pack 1 to differentiate platforms offering only a crypto exchange and decentralized exchange platforms allowing bringing together the various functions of those centralized as the purchase by credit card and other services associated with cryptocurrencies.

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Once your account or wallet has been created and linked to your bank account and your first crypto purchase has been made, we need to analyze the security of these platforms and the payment process for the purchase of goods on the internet.

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Our review shows the different problems that these centralized exchange platforms have had in history, the best solution is certainly the decentralized ones, indeed the problem of piracy does not exist because you have total control of your funds.

If you want to know more about decentralized platforms, understand the difference between private and public key and how to know how to use them to their maximum potential, see our Crypto Pack 1

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SECURITY

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1- We will first see the security of centralized exchange platforms and their rankings according to their volumes of use with, the pros and cons of each of them.

 

2- In a second time, the explanation of the Blockchain based decentralized exchange platforms and why they are so secure.

 

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1- Review of centralized exchange platforms

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BINANCE

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Number 1 by volume, originating from Hong Kong, created in 2017 by Changpeng Zhao who created a high frequency trading software and attracted millions of users worldwide. Easy to use, offers the largest selection of cryptos and peers to trade, has its own BNB corner and allows you to get interest with this corner on your account and developed your own portfolio on the blokchain.

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 + : Easy to use, 0.1% trading fee, 250+ cryptocurrencies available, €, USD, SGD, AUD, GBP and UGX, integration in an ego including the block chain.

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 - : Recent investigation in the USA on non cooperation with local regulations

Not very responsive support

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BITFINEX

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Number 6 by volume.

Founded in 2012 in Italy by Giancarlo Devasini, it now has offices in Hong Kong, London and Taiwan, it is used worldwide and is very user friendly. The platform is nowadays perfectly secure by keeping the cryptocurrencies in an offline wallet since the second biggest hack in 2015. It is known for its stable crypto Theter backed by $USD.

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+ : Low trading fees, high liquidity of funds, easy to use mobile app, advanced trading features

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- :  Was hacked in 2015 but now the funds are kept offline and has not experienced any security issues since.

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BITHUMB

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Number 8 by volume.

Founded in 2014 by Javier Sim in South Korea in Seoul, widely used in Korea with over 100 cryptocurrencies available on the platform, many features are unfortunately in Korean.

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+ : Fees are 0.1%, !00 coins available

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- : Accounts not based in Korea can be closed, security is uncertain, many features in Korean and difficulties for the support service

 

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BITSTAMP 

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Number 10 by volume.

Founded in 2011 in Slovenia by Nejc Kodrič and Damijan Merlak, and now since 2016 in Luxembourg, having obtained a license as a payment institution and therefore is regulated at the European Union level.

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- : Accepts € and $, cost of deposit and withdrawal for BTC are free, fee of 0.25% but decreasing with the volume, easy to use by mobile application, first platform to use the 2FAI security code, offline wallet

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+ : Does not accept alternative cryptos, mainly for BTC, was hacked in 2015 hence the new platform since ultra secure

 

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BITTREX

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Number 14 by volume

Founded in 2013 in Seattle by three security managers at Amazon, Bill Shihara, Richie Lai, Rami Kawach, and Ryan Hentz, it is known for its 300+ crypto peers based on BTC, ETH, and USD, allows you to buy and trade shares of SP500 companies like Tesla using crypto-currencies, 0.25% fee

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+ : +300 crypto peers for trading, 80 cryptos removed from the platform to keep only the established ones, possibility to trade SP500 with cryptos, funds kept in an offline account

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 -: In 2017-18, the platform was not able to manage the influx of new customers and was forced to refuse customers, close accounts from certain countries and had a very bad support service hence its rank at level 14, now all the problems have been solved.

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COINBASE

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Number 2 by volume.

Founded in 2012 in San Francisco by Brian Armstrong, an engineer from Airbnb, it is one of the first to offer a broker service to buy crypto-currencies, BTC, ETH and LTC the only ones available at the beginning. Coinbase is regulated as a bank applying all the rules of the same, anti-money laundering and other regulations of the USA with total transparency with the government, at the same time the slowness of the processes is the same.

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 + : Easy purchase by credit card, immediate or bank transfer taking 1 to 3 days, creation of Coinbase Pro for trading, Coinbase Commerce for Ecommerce based on a decentralized wallet, creation of Multisig vault which is a little equivalent to a decentralized account with control of funds because linked to a password that only you know.

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 - : Is known to trace the use of BTC that can be made, not recommended to keep its funds on the platform unless you opt for Multisigvault

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GEMINI

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Number 12 by volume.

Founded in 2014 in New York, it was originally a trust company regulated by the NY fe finance department and in 2016 became the first regulated exchange platform. Founded by the two Winklevoss brothers Tyler and Camron, who sued Zuckerberg for stealing the idea of a social network and won in court with a compensation of $65 million, which were invested to buy 1% of the BTC created, which they managed to complete allowing them to found Gemini and become a billionaire.

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 + : Fully regulated platform, $US are kept offline in a bank in New York, easy to use with a mobile application allowing to buy crypto currencies immediately updated with new crypto trends, based on $US it is also based on the country's fiduciary currency allowing to link its bank account and buy via immediate transfer, available in North America Hong Kong, Singapore, South Korea and England. It also has a trading platform with significantly lower commissions that decrease with volume.

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 -: High commission on the mobile application, the € is not available

 

 

FTX

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Number 5 by volume

Created in 2017 by Sam Bankman-Fried a Wall Street finance specialist and registered in Antigua and Barbuda but is based in Hong Kong and managed by Alameda Resarch which is a renowned trading firm . It is a platform that includes all the instruments of Wall Street finance applied to the cryptocurrency market, if you like leverage, option trading, future, move contract, spot trading, this is definitely the platform made for you.

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 + : Excellent security, finance products applied to crypto currencies, available in €, $usd $sgd....., commission that can be decreased by using the native crypto FTX

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- : For those who like trading with all the features of Wall Street finance but definitely for beginners.

 

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HUOBI GLOBAL

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Number 3 by volume.

Founded in China in Beijing in 2013 by Leon Li, it quickly expanded to Hong Kong, South Korea, Japan and USA. It has become one of the leading platforms for digital currency with the creation of Huobi Global in Seychelles with offices in Singapore, England in addition to those previously mentioned.

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+ : Used in more than 130 countries, it is an easy to use platform to buy cryptocurrencies, mobile application very simple to use.

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 - : The purchase is only done by credit card and not by transfer where a high cost, otherwise by a transfer of cryptocurrency on the platform.

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KRAKEN 

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Number 4 by its volume

Created in 2011 in San Francisco USA by Jesse Powell, a specialist in digital currency, it is one of the first platforms to have been created, it is number 1 for the € market. It is present in Europe, Japan and North America.

It is oriented for professional trading with leverage and at the same time for beginners with its mobile application very easy to use allowing to buy immediately. The purchase is done by credit card or bank transfer, the cost being zero. 

New crypto currencies are added regularly and a constant improvement of the interface is made, possibility to trade fiat currency against crypto.

Security is excellent, Kraken has never been pyrated and is the only one to have received certification for proof of funds available from Japan and Germany.

The commission costs are very affordable and decrease with volume.

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+: Easy to use for beginners and pros, mobile application, regular addition of new crypto currencies offering a wide choice, €, Yen, $cad available with a fast SEPA super fast transfer, commission decreasing with volume

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- : The verification of your documents before opening an account is not very fast, the interface of the Pro version is not made for beginners.

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KUCOIN

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Number 7 by volume

Founded in 2017 by Michael Gan and six other co-founders in Singapore. It is not regulated and even though it is new, there does not seem to be a liquidity problem for cryptocurrencies.

Fiduciary currency is not accepted but only digital currency, so buying crypto by credit card or bank transfer is not possible. There is no professional trading available. This is a good platform to simply buy crypto by using other cryptos.

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+: Easy to use with charts to track changes, large selection of crypto currencies, good platform support, promotions, low commission costs 0.1%. 

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 - : Hacking in 2020 but the problem has been solved since and seems to be secure now, cash and credit card not available

 

 

2-Blockchain and decentralized exchange platforms

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In order to understand the security of decentralized exchange platforms, we need to understand the basics of how they work, which is the Blockchain, this will lead us to the explanation of the speed of transactions in part three.

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 Blockchain

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The Blockchain is an open book like an accounting book where everyone can see what is happening but no one can change it, in return each participant can add a transaction enriching the Blockchain.

 

The basic principle is very simple and can be summarized in a few points:

 

 

- A transaction between 2 entities or between two portfolios, the sender and the receiver wanting to make a transaction.

 

- This transaction must be validated by the decentralized network, i.e. by a set of computers around the world, hence the name decentralized platform, by verifying that the sender has sufficient funds for the transaction and that the receiver is the holder of a valid address, this is done by solving an unfalsifiable mathematical problem.

 

- Once the transaction is validated by the decentralized network, it is added to a block of the blockchain with other transactions, forming a chain of blocks or a series that follows each other without stopping.

 

- The transaction can then take place between the two parties and the funds can be sent and received by the receiver, this transaction is then public and added to the accounting ledger that is the Blockchain.

 

The security is thus through the decentralized network validating a transaction, this one cannot be hacked and verifying two wallets before sending the funds and in addition you can verify by yourself the transaction on the Blockchain live.

 

 

 Decentralized exchange platforms

 

- The basis of their operation is based on the Blockchain, that is to say that the operation is decentralized with the same security and validation processes before sending funds to a wallet. The problem with centralized exchange platforms is that funds are accessible from a centralized source and can therefore be hacked.

 

- The second big difference is the creation of a wallet with the holding of private and public keys see pack 1 to understand this and the consequences on your funds, giving total control of your funds based on the Blockchain.

The difference is that centralized exchange platforms require you to open an account with the fact that the private key of your wallet is kept by the centralized platform hence the possibility to hack and steal your funds.

 

This brings us to the speed of transactions.

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Speed

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We need to differentiate again between centralized exchange platforms and decentralized ones for cryptocurrencies.

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1-Centralized exchange platforms for cryptos

 

The purchase of cryptocurrencies on centralized platforms is done either by using credit cards or by bank transfer, the third possibility is a deposit of cryptos in your account. The speed of the transaction depends on the payment method.

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-Credit card:

The transaction is immediate after approval of the bank, this is the normal process of buying on the internet by using a bank card. The cryptocurrency chosen for purchase is then credited to your account and you can proceed with your purchase on the internet using your crypto.

 

-Bank transfer:

The speed depends on your bank, it can be an immediate transfer if your bank allows it or a normal transfer which normally takes one to two days.

 

-Cryptocurrency deposit:

The transfer can take up to 30 minutes depending on the verification procedures of the platforms

 

Buying on the internet using cryptos or Bitcoin with centralized exchange platforms is quite fast but depends on the platform. The platform must authorize the transaction and only then does the transaction go through the blockchain process we saw above. The time can be from a few minutes to 30 minutes depending on these two steps.

The result is to see the funds credited immediately to the account of the merchant validating the transaction.

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2-Decentralized exchange platforms

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The purchase is done by two ways

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-Credit card: 

The process is the same as previously seen since the medium is the bank card.

 

-Deposit of cryptocurrencies:

The process is faster since this time there is no intermediary, the centralized exchange platform, to authorize the sending of funds. Everything is done on the Blockchain, you have the possibility to accelerate the transaction by increasing the Gas or the fee for the validation of your transaction, so the payment can be almost immediate.

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In any case, the security is present when you are on the Blockchain with the different steps of validation and the sending of the funds immediately to the merchant validating the transaction. Thus, there can be no dispute that the money has been sent but has not yet arrived since the transaction can be monitored live on the Blockchain.