What you’ll learn
- What is a Cryptocurrency Exchange?
- Factors to consider in choosing an Exchange
- How an Exchange works
- Different Exchange models
If you’ve read the previous two articles in this section you’ll know what a crypto wallet is, how to set one up and send/receive cryptocurrency. In order to buy cryptocurrency – the next logical step – you’ll need to first create an account with a Cryptocurrency Exchange.
Introducing the Crypto Exchange
Buying cryptocurrency is just like buying foreign currency for a holiday. It is just an exchange of one currency for another at an agreed rate – e.g Euros for BTC (the currency symbol for bitcoin) – which is why the most common place to buy cryptocurrency is called an Exchange.
It might feel confusing when cryptocurrency like bitcoin is talked about as having a price, whereas for dollar, euro etc we are used to talking about an exchange rate.
These two terms – price/exchange rate – are interchangeable and simply reflect the fact that currency values – especially crypto – are constantly changing.
We dive into why that is in our section on Trading, but for this article,it is simply worth knowing that the price of cryptocurrencies like bitcoin doesn’t come from a single source.
The price simply reflects the interaction between buyers and sellers on each Exchange, which organically maintain parity with each other. (again explained in detail elsewhere). An overall representation of price can then be reached by aggregating the price from the main exchanges.
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