Bitfinex consistently ranks among the top exchanges in terms of daily trading volumes and is one of the most well known cryptocurrency trading platforms in operation today.
The exchange caters to more intermediate and advanced traders as well as institutions and offers a wide selection of coins, trading pairings and trading options. Bitfinex aims to be the premiere destination for seasoned cryptocurrency traders across the globe.
Bitfinex is a Hong Kong based trading platform that was founded in 2012 by Raphael Nicolle. The exchange is both owned and operated by iFinex, Inc. and has managed to work its way to the top of the charts in terms of trading volumes and user activity on the platform.
Bitfinex is one of the largest cryptocurrency trading platforms, and is generally popular with traders across the globe, however, the team behind the exchange recently decided to discontinue providing their services to U.S. customers and focus on their users based in other parts of the world.
The exchange currently handles approximately $2B worth of trades a day, and records 24 hour trading volumes worth around $600m for its BTC/USD pairing, and this represents around 6.27% of the total market.
These high trading volumes are a result of the team behind the exchange focusing on providing a high level of service for traders by utilizing a wide coin selection, low fees, and a comprehensive interface.
The exchange also allows fiat deposits and houses a variety of cryptocurrencies with approximately 72 market pairs active on the platform.
Bitfinex also attracts institutional investors and operates an OTC desk for high value over the counter trades. Despite its success, Bitfinex has also attracted a fair amount of controversy as a result of suffering a number of hacks, and being closely linked to the Tether stablecoin.
Bitfinex Key Features
Functionality – Bitfinex operates a robust, comprehensive, and highly customizable platform interface that is both modern and well designed but generally suited to more experienced users. The main dashboard presents users with a number or tabs and different options whilst a selection of advanced charting tools are also made available. The platform also incorporates Trading View charts and provides a mobile app that is available to both Android and iOS users.
Security – Due to its past experience with hacks, Bitfinex place a priority on security and employs many of the security techniques employed by today’s leading exchanges. The vast majority of funds are placed in cold storage with approximately only 0.5% of crypto assets being accessible in hot wallets. The site also utilises database encryption and duplication in addition to DDoS protection to ensure that trading cannot be halted by an external influence. Customer accounts are also reinforced via the use of 2FA, PGP encryption and a host of advanced verification tools designed to monitor changes in account activity.
Customer Support – Users are currently served by a support team that is available via email 24/7. The team aims to answer queries within 12 hours, but responses can take much longer. In addition to this, there’s a knowledge base section that covers the most pressing issues alongside other question and answer pages available on the site.
Trading Options – A host of trading options are available on the platform including margin trading as Bitfinex allows its users to trade with a leverage of up to 3.3x by using their peer to peer margin funding facility. On top of this, traders have access to a number of different order types such as limit, market, and stop orders. Whilst trailing stop, fill or kill, iceberg, OCO, and post only orders are also available.
High Liquidity – Bitfinex continues to rank at the top of BTC/USD trading markets and it currently accounts for approximately 6% of all daily trades with 24 hour trading volumes worth around $600m. Combined trading activity on the platform amounts to approximately $2B worth of trades a day and this high level of liquidity helps its users to trade with confidence in the price stability of coins on the platform.
Approximately 72 market pairs linked to the four base currencies of USD, EUR, BTC, and ETH are currently available on the site.
In addition to allowing fiat purchases of the two major cryptocurrencies, a number of other currencies are also available to be traded and these include Litecoin (LTC), Bitcoin Cash (BCH), Ethereum Classic (ETC), Dash (DASH), Ripple (XRP), Monero (XMR), EOS (EOS), OmiseGO (OMG), NEO (NEO), Zcash (ZEC), and 0x (ZRX).
USDT Tether is also available on the platform, while Bitfinex is one of a few exchanges that allow their users to purchase IOTA (MIOTA).
The Bitfinex team are constantly looking to increase the number of coins available on the site and new additions often make their way onto the platform.
As a result, an overview of each coin that’s available on the exchange is readily available and it’s a good idea to regularly check the site to see what has been added.
Bitfinex Signup and Login
Before you create an account, the team behind Bitfinex like to remind new users that their service is aimed at more professional traders and comes with certain specifications.
As a result it’s necessary to read the pop up box that appears and agree to the terms and conditions. These currently include a temporary minimum account equity of 10,000 USD and new accounts are not able to trade or perform any platform function until they reach this amount.
Also, in order to gain access to fiat deposits and withdrawals, users must agree to undergo a verification process that may take up to 6-8 weeks to complete.
Once you have ticked all the necessary boxes, you can move onto creating an account.
Creating Your Account
You can open an account by following the signup process and entering your username, email address, and password. It’s also necessary to enter your time zone and a unique captcha text.
Making a Deposit
Once this is done, you can begin to fund your account by firstly locating the “Deposit” button in the upper right-hand corner.
Clicking this button takes you to the deposit page and here you can choose Us Dollar, Tether or from a list of cryptocurrencies in order to deposit.
Making a Trade
Once your account has been funded, it’s possible to click on the ‘Trading’ button and select the pairing that you prefer.
From here you can determine the quantity, price and type of order that you would like to execute.
As one of the older exchanges in operation today, Bitfinex has experienced a number of hacks with the first major hack taking place in May, 2015.
On this occasion a hacker was able to obtain 1500 Bitcoin from a hot wallet controlled by the exchange, the lost funds were quickly reimbursed by the exchange. However, a later attack proved to be more problematic as a hacker was able to circumvent security on the platform and access up to 119,756 Bitcoin, which were worth an approximate $72m at the time.
The hacker was able exploit a vulnerability in the multi signature system Bitfinex employed alongside Bitcoin wallet provider Bitgo and in response to the theft, the exchange chose to issue BFX tokens which were to be redeemed by its customers at a later date.
Each BFX token was worth $1 and was awarded in the same amount lost by each investor. Since issuing the tokens, Bitfinex has purchased them all back and completed their purchases in April, 2017.
As a result of these hacks, Bitfinex has stepped up its security and currently, 99.5% of client funds are stored offline in a cold storage system that employs a multisignature function that is geographically distributed across multiple secure locations.
Client accounts are secured by using 2FA and U2F, in addition to PGP email encryption. Accounts are also monitored and strengthened by using a number of advanced verification tools that cover account activity. These include:
The analysis of saved login data to root out unusual activity.
The use of an intelligent system that detects IP address changes and prevents session hijacking.
Email notifications that report logins and include a link to instantly freeze your account if you suspect malicious activity.
Limiting access to your account based on IP address.
Bitfinex also chooses to closely monitor withdrawals in order to help stave off attacks; the platform’s security system currently monitors withdrawals by IP address and other behavioural patterns that trigger manual inspection on withdrawals that appear to be unusual.
Customers can also whitelist an address to ensure that withdrawals can only be sent to that particular location. Bitfinex also claims that it uses a withdrawal confirmation step that is immune to malicious browser malware.
Bitfinex utilizes the Tether (USDT) stablecoin and verified users on the site have the “Tether” funding option, in addition to “Crypto-Currencies” and “Wire Transfer” on the Deposit and Withdraw pages.
Tether is a cryptocurrency asset issued on the Bitcoin blockchain and each USDT unit is backed by a U.S Dollar held in the reserves of the Tether Limited.
Tether tokens can be deposited and traded for other tokens on Bitfinex and any other exchange that supports Tether. Funds held in Tether can also be transferred and held in any Bitcoin wallet where you control the private key.
Most importantly, USDT is linked or “tethered” to the price of the US Dollar and acts as a stable digital currency that allows traders to jump to a more stable cryptocurrency during times of extreme volatility.
While Tether has proved to be beneficial to traders everywhere since its introduction, the stablecoin is also beginning to attract an increasing amount of attention.
Each Tether is supposedly backed 1-to-1 by a US Dollar and there is currently around $1.65B worth of USDT in circulation. Doubts concerning the validity of this large amount have caused people to scrutinize the relationship between Bitfinex and Tether as they share certain key members of staff.
Bitfinex employs Phil Potter as its chief strategy officer and he also acts as a director at Tether, while Giancarlo Devasini is employed as a director by both companies. Bitfinex has promised to undergo an external audit to prove that its accounts are fully in order and to help clear up the controversy but this has yet to take place.
Fees on Bitfinex are outlined by their fee schedule and are determined by trading volume over the last 30 days as well as maker or taker status.
Maker fees are paid when you add liquidity to the order book by placing a limit order below the ticker price when buying and above the ticker price for sales.
Taker fees are paid when customers do the opposite and remove liquidity from the order book by filling an order that’s already in the order book.
Maker fees range from 0.1% to 0.0% while the taker fees range from 0.2% to 0.1%.
The higher rates cover trading volumes of up to $500k a month whilst customers will have to accumulate trades worth more than $30m a month in order to qualify for the lowest fee rates.
All cryptocurrency deposits are free, however withdrawals are not and there are a variety of different charges depending on the particular cryptocurrency you would like to withdraw. Deposits made via bank wire are charged a 0.1% fee.
The trading platform suits both intermediate and advanced users and offers a variety of trading options. In addition to leveraged margin trading, Bitfinex also offers the following types of orders:
Fill or kill
One cancels other (OCO)
Post-only limit order
As the exchange attracts a high volume of trades and has a high level of liquidity, bid/ask and order count is resolved in real time, which gives members more flexibility with regards to choosing the best time to place an order.
Bitfinex is one of the most established exchanges in operation today and provides a service tailored to experienced traders and institutional investors.
As a result of this, the exchange enjoys high USD liquidity, while offering extensive orders and trading options, and is the largest BTC exchange by volumes traded.
However, Bitfinex has courted controversy on a number of occasions and isn’t a very transparent company, after learning of its history some potential users may be put off by any security concerns they might have even though the exchange paid back all the losses from its 2016 hack.
With this in mind, we would recommend that anyone using Bitfinex to only keep a small balance on the exchange at any time, making sure to withdraw your currencies to your own wallet and make sure to use all the security features available to you on the site.
Overall, We wouldn’t recommend Bitfinex to beginners but intermediate to advanced traders will be fine using it.
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