Cryptocurrency Exchange and Brokerage: How Are They Different?

Exchange and brokerage in a nutshell

The main distinction between exchange and broker platforms is how the trading process is executed. In cryptocurrency exchanges trading is based on a peer-to-peer (P2P) network – it means that platform users trade between each other without any intermediaries. The price there is set by the traders themselves.

Cryptocurrency broker services, on the other hand, act as an intermediary between buyers and sellers – they buy cryptocurrencies from exchange platforms and then sell them to their customers at the market price. One of the examples of a broker platform is SpectroCoin.

Why is it beneficial to use a cryptocurrency exchange?

Exchange platforms are the most commonly used cryptocurrency trading tools, perhaps due to multiple advantages available for their users.

A broad selection of trading options

Firstly, exchanges tend to offer a more extensive selection of trading options. In exchanges, users can place Market orders for buying or selling cryptocurrencies at the best available market price. Additionally, users can schedule orders at their desired price via Limit order feature. 

The latter order type frees traders from the hassle of having to continually monitor the market to time the trade with a favourable market price. However, it might result in more prolonged trade execution as the trader has to wait for other market participants to match the order.

In-depth market information

What is more, cryptocurrency exchanges often provide more in-depth market information than brokers. The interface of exchange platforms usually offers informative trading dashboards to check price fluctuations and market behaviour. 

API (Application Programming Interface) tools provide experienced exchange traders with a possibility to track market behaviour and execute trades on the platforms using their own trading software.

Low trading fees

Exchanges mainly act as a trading medium for different platform users, so the trading fees are some of the lowest among all trading options. Exchanges charge maker-taker fees for all market participants, which tend to be smaller than 0.5%. Additionally, some exchanges offer variable fee schedules – the more significant the amount of assets traded, the lower the trading fee.

Why is it beneficial to use cryptocurrency broker services?

In comparison, brokers are quite popular among users searching for speed and ease in cryptocurrency trading.

Fast trade execution

Cryptocurrency broker services offer fast trade execution as trading speed there does not depend on the availability of market orders at a specific price, like in exchanges. Conversion rates are predefined and typically adjusted according to the market price, offering the users an opportunity to complete a trade instantly.

As brokerages are less dependent on the supply offered in the market than exchanges, they are a good option for buying a larger amount of assets.

User-friendly interface

Brokerages are designed to have a more straightforward trading interface – it often includes limited market information or charting tools. Such design is an advantage for less experienced traders as it does not confuse the user with complex details.

A wide selection of payment options

Lastly, brokerages usually offer a broader selection of deposit and withdrawal options, including SEPA payments, credit/debit card, e-wallets, such as Skrill, Neteller, and more. The variety offered is one of the features that make brokers attractive to a broader audience, especially to the people who have just discovered crypto and need to convert fiat assets to begin trading cryptocurrencies.

Which option should I choose?

Cryptocurrency exchange and cryptocurrency broker services can both be regarded as useful alternatives for exchanging digital assets. While brokers are the perfect option for exchanging fiat to crypto, exchanges are designed for advanced crypto to crypto trading, offering a number of tools for order customization.  For best trading experience, broker and exchange services can be used in conjunction, utilizing one for fiat and the other for cryptocurrency trading.

At SpectroCoin, our team is developing an all-in-one solution for cryptocurrencies. Our business started as a cryptocurrency broker that currently supports over 20 different digital assets, as well as numerous deposit and withdrawal options. 

Would you like to start trading cryptocurrencies? Take advantage of the broker services we offer at SpectroCoin.