Bitcoin is the first-ever digital cryptocurrency that came into existence in 2009. Satoshi Nakamoto is known to be the creator of this digital coin, but nobody knows his whereabouts. In Nov 2021, the price of Bitcoin reached anall-time high of $68,000. Then from Feb-March 2022, the price has been falling due to the ongoing Russia-Ukraine war. To know more about Bitcoin, you can certainly browse bitcodes-ai Official Website.
How does Bitcoin Exchange work?
The transactions of Bitcoin are controlled through a peer-to-peer network. You can use Bitcoin to make a payment, buy an item, or avail of some services. Everything is in the digital realm. You are allowed to trade or independently transact Bitcoin without the involvement of any intermediaries like payment apps or banks, or financial organizations. It means Bitcoin has no control over any authority or governing body. This digital currency is considered completely decentralized.
More on the Bitcoin exchange
A Bitcoin exchange is nothing but a service that matches purchasers or buyers of bitcoin with the sellers. The main job of a Bitcoin Exchange is to make this digital coin a liquid asset for the traders to trade. As compared to fiat currencies, cryptocurrency like Bitcoin is known to be far less liquid. If you have a Bitcoin, you cannot just use it anywhere and everywhere. You either have to sell it to the sellers, or you can use it to buy some products or services.
Bitcoin exchanges are nothing but virtual places where sellers meet buyers, and Bitcoin trading happens. In this regard, there are several popular Bitcoin exchanges like Binance, Kraken, and Coinbase. These digital platforms are simple apps where you can buy or sell Bitcoins per your preference and needs. Along with Bitcoin, you can also trade other cryptocurrencies. Hence, if you are looking forward to buying or selling Bitcoin, you should use a specific Bitcoin exchange as per your preference.
It can be said that a centralized Bitcoin or cryptocurrency exchange basically takes custody of your Bitcoins or other digital currency. The security and privacy of your Bitcoin trading are properly maintained in this regard.
How centralized Bitcoin exchange works?
From a trader’s or user’s point of view, in the following way, an exchanged bitcoin exchange works. At first, the user is supposed to sign up with the exchange while providing necessary identity documents for authentication. The next step is to fun the nearly created account of the user with Bitcoin or another cryptocurrency. Then the trader or user is supposed to make some trade by setting ‘buy order’ or ‘sell order’.
The sell and buy orders are generally aggregated in the order book that is properly maintained by the Bitcoin exchange. This is done to automatically and efficiently match sellers and buyers. This makes the whole thing very easy and effective, to say the least. If you decide to place a buy order, then you also need to specify as to how much Bitcoin you wish to buy. After this, the exchange will likely match you with a seller offering the lowest price. Such exchanges are similar to stock exchange where you can buy and sell your stocks. But, stock exchange has an official hour and you cannot use your exchange account 24×7. In the case of bitcoin exchange, you can use such platform to trade crypto 24×7 and you can access your trading platform from anywhere of the world.
The whole trading is done within moments on the Bitcoin exchange. It means the moment you put a buy order, and you get the Bitcoin purchased in your exchange wallet. The selling is also done in this same manner. Once the order is complete, you will get to see your Bitcoin in your wallet (concerning buy orders).
Conclusion
The Bitcoin Exchange is nothing but a virtual place where the buyers and sellers of Bitcoin gather virtually to make the trade happen. The whole buying and selling happen very fast. Security and privacy are duly maintained for obvious reasons. Hence, you can open an account on an exchange to trade BTC. You need to verify your KYC to activate your account and you can submit your ID proof for the same.