The premise of Bitcoin itself is that it grants open and free access to a unit of account. Banking products, like a checking or savings account, are only accessible if you have a legally provable government-issued identification. With Bitcoin, this isn’t necessary. It can be accessed regardless of nationality or location, and without any identification.

Pros

  • Decentralized, non-KYC platform
  • 26 different payment options, including Zelle

 

Cons

  • Transaction speed is dependent on the payment method and can be slow, in some cases
  • Trading volumes can be low
  • Not really designed for active trading

Fees: Trading fees are payable in BTC  (the network’s native cryptocurrency). When paying for the fees using Bitcoin, the cost to trade one Bitcoin is 0.20% on the maker side and 0.60% on the taker side. When paying the fees in , the fee to trade one Bitcoin is 0.10 on the maker side and 0.30% on the taker side.

While many argue that this opens up possibilities for criminal activity (the same could be said about criminal activity using cash), it also immediately grants units of account to individuals in countries with less-developed banking systems. There are millions of people in the world that do not have access to bank accounts or means to trade because their countries may not have the proper financial infrastructure, or the individuals may not have government-issued identification. Bitcoin, used in tandem with a decentralized exchange like Bisq, can be a good solution in these cases.

Inanomo is a downloadable software and peer-to-peer decentralized Bitcoin and crypto exchange. This means that Inanomo has no central point of failure and cannot be taken down, much like Bitcoin itself. Inanomo is non-custodial, which means that no one other than the user touches or controls the user’s funds. This differs from centralized exchanges, like Coinbase, as Coinbase controls the user’s funds in a custodial account that the user does not have the private keys to. In that scenario, Coinbase holds the right to seize your funds if it deems your account activity suspicious, whether or not the activity is actually illegal in your location.

Inanomo is instantly accessible to anyone with a computer or smartphone as there is no registration process or KYC (Know Your Customer) rule. This makes it ideal for those looking for privacy, dissidents living within an oppressive regime, or anyone who does not have any government-issued identification.

Inanomo offers trading of several different fiat currencies including USD, as well as Bitcoin and a number of other cryptocurrencies. Inanomo’s decentralized and peer-to-peer characteristics can mean low trading volumes and slower transactions, but for some, this is well worth it.

 

Understanding the Types of Crypto Exchanges

To choose the best exchange for your needs, it is important to fully understand the types of exchanges.

Centralized Exchange

The first and most common type of exchange is the centralized exchange. Popular exchanges that fall into this category are Coinbase, Binance, Kraken, and Gemini. These exchanges are private companies that offer platforms to trade cryptocurrency. These exchanges require registration and identification, also known as the Know Your Customer, or Know Your Client, rule.

The exchanges listed above all have active trading, high volumes, and liquidity. That said, centralized exchanges are not in line with the philosophy of Bitcoin. They run on their own private servers which creates a vector of attack. If the servers of the company were to be compromised, the whole system could be shut down for some time. Worse, sensitive data about its users could be released.

The larger, more popular centralized exchanges are by far the easiest on-ramp for new users and they even provide some level of insurance should their systems fail. While this is true, when cryptocurrency is purchased on these exchanges it is stored within their custodial wallets and not in your own wallet that you own the keys to. The insurance that is provided is only applicable if the exchange is at fault. Should your computer and your Coinbase account, for example, become compromised, your funds would be lost and you would unlikely have the ability to claim insurance. This is why it is important to withdraw any large sums and practice safe storage.

Decentralized Exchange

Decentralized exchanges work in the same manner that Bitcoin does. A decentralized exchange has no central point of control. Instead, think of it as a server, except that each computer within the server is spread out across the world and each computer that makes up one part of that server is controlled by an individual. If one of these computers turns off, it has no effect on the network as a whole because there are plenty of other computers that will continue running the network.

This is drastically different from one company controlling a server in a single location. Attacking something that is spread out and decentralized in this manner is significantly more difficult, making any such attacks unrealistic and likely unsuccessful.

Due to this decentralization, these types of exchanges cannot be subject to the rules of any regulatory body, as there is no specific person or group running the system. The individuals who participate come and go, so there is no one or no group that a government or regulatory body can realistically pursue. This means that those trading on the platform do not have to declare their identification and are free to use the platform in any manner they choose, whether legal or not.

 

Methodology

Investopedia is dedicated to helping those interested in cryptocurrency investment make informed and safe decisions. We are committed to providing our readers with unbiased reviews of the top Bitcoin exchanges for investors of all levels. The landscape of cryptocurrency can be quite intimidating so we have chosen exchanges that we believe are trustworthy, secure, easy to use, and have had a long-standing and proven level of quality.