To buy, sell and trade digital currencies in general, you should visit a digital currency exchange; Exchanges that are virtual and operate in the form of a site or mobile application. If you do not know what a digital currency exchange is, how it is traded, what types it can have and how we can use them in Iran, read this article to the end.
What is a digital currency exchange?
A digital currency exchange or exchange is a platform where individuals can trade their digital currencies and convert them into another digital currency or national currency. An exchange can be a site or a mobile application that is installed on a mobile phone or both.
By registering in a digital currency exchange, you can buy digital currency for the national currency or another digital currency, or sell your digital currency for the national currency (such as Rials) or another digital currency.
To register or make a transaction, there is no need to be physically present at the digital currency exchange office and it is only necessary to apply through the site or mobile application, because when dealing with digital assets, the need to visit in person disappears.
How does a digital currency exchange work?
How a digital currency exchange works depends on the type of exchange. You can read the rest of the article about the types of exchanges, but if we want to have an overview of the work of exchanges, each exchange works in one of two ways:
Case 1: You are dealing with the money changer himself. (You buy from an exchange office or you sell to an exchange office.)
Case 2: The exchange itself is not a party to the transaction and is only an intermediary between buyers and sellers and charges a fee for trading.
In a small number of exchange offices (which, of course, are numerous among Iranian exchange offices), the party to the transaction is the exchange office, it means that people buy it from the exchange office to buy digital currency and sell their digital currency to the exchange office for sale. Income of exchange office is from the difference between the buying and selling price; That is, the purchase price of digital currency from an exchange office is higher than the selling price of it to an exchange office.
In the latter case, the exchanges are no longer part of your transaction, but are in fact intermediaries between buyers and sellers and receive a commission percentage (for example, 0.1% of the transaction amount) from each transaction. Globally, most exchanges operate in the second method, but in Iran (at least at the time of writing) most exchanges are of the first type, ie the exchange itself is a party to the transaction.
Types of digital currency exchanges
Like everything else, the classification of digital currency exchanges is relative, and according to the characteristics of each exchange, they can be placed in different categories, but in general, digital currency exchanges are of two types:
- Centralized exchange
- Decentralized exchange
Centralized digital currency exchange
Behind a centralized exchange is an intermediary company that will have access to users' assets.
A centralized exchange, as its name implies, is run by a specific institution or company, and full control of the exchange as well as the assets within the exchange is in the hands of a few individuals or entities.
At the time of writing, most digital currency exchanges, including Bainance, Coinbase, kraken, Houbi, Bitfinex, etc., are centralized, and according to CoinMarketCap, at the time of writing, more than 90% of the volume of digital currency transactions is at the disposal of centralized exchanges.
In these exchanges, full control of the digital assets of individuals is in the hands of the exchange. In fact, the assets are kept in the wallets of the exchange offices and only the balance number is included in the account of the exchange users.
One of the biggest weaknesses that can be attributed to centralized exchanges is that they are centralized, which activists believe is contrary to the decentralized nature of digital currencies. This weakness is especially evident among Iranian users, who are always at risk of account blocking due to sanctions.
Decentralized digital currency exchange
Behind a decentralized exchange is one or more smart blockchain-based contracts that will access users' assets.
Decentralized exchanges are a new type of digital currency exchange that are likely to capture a large share of this market in the coming years. The most important thing that distinguishes a decentralized and centralized exchange is the way assets are managed and controlled. In a decentralized exchange, exchange managers have no control over the assets of individuals.
In these exchanges, with the help of blockchain, smart contracts and other decentralized protocols, the conversion of assets is done directly through each person's personal wallet; That is, the person enters the exchange site, connects his wallet to the exchange, and sends the currency directly from inside his wallet to a smart contract to make a transaction, and then receives his new currency from the same smart contract. At the time of writing, Uniswap is the largest decentralized exchange on the market.
Although these exchanges have a significant advantage over the centralized type, due to technical and structural challenges, they still cannot be as a substitute for centralized exchanges.
Because decentralized exchanges use blockchain-based infrastructure, the scalability of the host blockchain will have a huge impact on its proper functioning. UniSwap, for example, uses the Ethereum network, and in early 2021 this led to a fee of over $ 40 per transaction, as conversions required transactions on the Ethereum network and the Ethereum network was busy at the time. Also, the connection between different blockchains is not currently possible or very difficult in decentralized exchanges. For example, if you want to trade bitcoins or a token that only exists on the blockchain, you cannot trade on UniSwap, because UniSwap only supports Ethereum network and Ethereum-based tokens.
What should we Iranians do?
If you are new to the digital currency market, you have probably wondered how you can register and operate a digital currency exchange by now. For us Iranians living in a time of very heavy sanctions, digital currency trading comes with many restrictions, but it is not impossible.
One of the ways to operate in the digital currency market is to use an Iranian exchange called KIFPOOL.ME. This exchange is one of the most reputable exchanges in the field of digital currency, which has been able to attract a lot of attention since the beginning of its activity. The services and facilities that this exchange offers to its users are very efficient and useful. All users can easily log in to KIFPOOL.ME and use its services.
Everyone may have their own way of trading digital currencies, but in experience, most Iranian users use the following two methods of trading digital currencies:
- Refer to Iranian exchange offices
For most of us, Iranian digital currency exchanges are the best possible starting point. This means that if at first you only have Rials in your bank card, it is probably best to go to an Iranian exchange site to get started.
We say "probably" because everyone's situation may be different. For example, if you have relatives abroad, you may be able to convert your rials to digital currencies at a lower cost. However, in general and considering all Iranian users, the best possible way to get started is to go to an Iranian exchange. We suggest you to use KIFPOOL.ME exchange services.
By registering on the Iranian exchange site KIFPOOL.ME, you can convert your Rials into bitcoins and several other digital currencies.
Unfortunately, at the time of writing, many Iranian exchange offices do not support large amounts of digital currencies and have very low trading volumes. In fact, these exchanges are not suitable for trading a wide range of digital currencies. But the Iranian exchange KIFPOOL.ME supports many digital currencies and is increasing the number of these currencies every day. Therefore, for people who want to invest in a variety of digital currencies, the best option for them is to register on the KIFPOOL.ME exchange site.
How to find a reputable Iranian exchange?
Regardless of the fact that KIFPOOL.ME is the best Iranian digital currency exchange, there may still be some doubts in some users about using this system. So if you want to make sure about this exchange, you can search the word "buy bitcoin" in Google right now. You will be surprise with the high number of active Iranian exchange offices by searching for this word. As a rule, Google's first and second page websites are all valid. With a simple Google search, you can see the familiar name of the KIFPOOL.ME exchange on the first page of your search results. In addition, the following steps can be useful for you to validate an Iranian exchange:
By comparing the prices of exchange offices with each other, you can find the most suitable price for buying or selling. Do not forget that price should not be the only criterion, and a very reasonable price may be a trap for fraudsters.
- Check the appearance of the exchange
Reputable exchanges usually pay a lot of attention to the appearance and user interface of their site. So look at the different pages of websites and compare them with each other. Also, the more reputable an exchange is, the more audiences it has. Alexa (Alexa.com) ranking of exchange websites (which is in terms of exchange visits) can also help you make a better choice.
Message or contact the site support department and ask basic questions. A professional and reputable team will guide its customers well.
- Go to the "About Us" section
All reputable exchanges introduce their platform development team in the "About Us" section. Also, most exchange offices put their office address on the site.
Many reputable digital currency exchanges produce educational content for their audiences in a section called "Blog". It is very unlikely that a fraudulent exchange office would spend such time and money on fraud.
- Do not underestimate social media
Almost all reputable exchanges are active on social networks such as LinkedIn, Twitter and Instagram. Browse their pages and read other users' comments about these exchanges.
- Get help from professionals
If you still do not reach the final result after all the above steps, get help from friends and acquaintances who are more familiar with the digital currency space to identify reputable exchanges. Also, the question and answer section of the digital exchange site (stack) is one of the best places where you can be sure of the credibility of an exchange office. Stack users have already published a lot about the best Iranian exchange offices.
The last word
Given the number of sites that operate in the field of digital currencies and may confuse users, we suggest you use the KIFPOOL.ME exchange. This exchange is a familiar name among digital currency exchanges and is fully approved in terms of security issues. The support of this system for various digital currencies, as well as the presence of a professional and expert support team who are ready to answer all your questions at any time, are also very good advantages of this exchange.
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