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There are many interesting and strange things in the world of cryptocurrency. For example, swapping. Despite the unusual word, it is the exchange of one coin or token for another, which should be very simple. But there are over 7000 tokens, which makes it all not as easy as it might seem at first glance.
Web3 is constantly evolving and expanding. And with it comes the number of new companies that have started issuing their tokens. That makes it very important for those interested in investing to know how and where to make exchanges.
For example, you may have tokens of one chain. Then there is a profitable opportunity to profit from them in another chain. What’s next? Usually, in this case, it follows the usual way of converting into fiat currency and then buying needed coins. This is quite a working option, but it requires a series of actions and often a commission for each transaction (and there can be several of them).
Cryptocurrency exchanges are faster and easier. This option is available on most major deals, which makes trading even more convenient.
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For example, you go to get Bitcoin instead of your Ethereum. You can exchange one cryptocurrency for about the same value through services and swap providers.
Swap also refers to migrating different projects and platforms from one blockchain to another. Such actions can often require a coin swap. In this case, the creators must give investors and users the means to exchange the token of the current project for another that will be compatible with the new blockchain network. This is called swapping or token migration.
Lately, the pioneer bitcoin is receding into the background, and cryptocurrencies with less market capital are coming to the fore. More and more people are learning about other digital assets, their capabilities, and their value.
However, many of the solutions are complicated and confusing, which scares away newcomers. They are especially afraid of losing money by making a mistake.
Therefore, it is important first to find a platform that you can trust and on which you can exchange a large number of different cryptocurrencies. The best swap platforms are easy enough to determine: by the number of users and their reviews. They also add new cryptocurrencies that are in demand. Handy platforms also try to be easy for those more used to fiat currencies.
It’s also important to have all of the following together, so you don’t have to constantly move cryptocurrency between platforms, exchange for exchange, and wallet for storage.
Swapping and trading, at first glance, are very similar. But if you dig deeper, they are not. When you trade cryptocurrency, the trade is based on an order book. And transactions are only possible with those trading pairs available on a particular exchange.
With swapping, you can exchange one cryptocurrency for another, even if that pair is not available on the spot market (the open financial market, where the processes of buying and selling assets occur in a short time). You don’t have to pay multiple transaction fees.
Although it seems that swapping is more profitable in this case, there are many cases where it is better and more convenient to trade. For example, when you need to quickly exchange one cryptocurrency for another to make a purchase, there is no question of making a profit.
Swapping also allows exchanging of fiat and cryptocurrencies, even if the user does not know about trading.
Cryptocurrency exchanges have become popular on large platforms, even on small exchanges. The main reasons are the large variety and transaction fees.
There are advantages to using both centralized (CEX) and decentralized exchanges (DEX). And many people are simply afraid of DEX, feeling their finances are more secure with CEX. Here, for example, are the arguments of one such person. Everyone wants a certain amount of certainty, especially when it comes to money. And DEX’s lack of regulation tends to make people wary. But DEX has a major trump card: affordability. All new tokens and cryptocurrencies are easy to find exactly on DEX.
But users of decentralized exchanges often face high exchange fees. They can be reduced by using a centralized platform. In addition, the official exchanges always have various rewards or bonuses. Some companies allow you to exchange interchain assets cheaper. This does not happen on decentralized exchanges.
As we wrote earlier, a swap is a seamless exchange of one cryptocurrency for another. This makes it easy to access tokens that have just appeared or have a low market capitalization.
All you have to do is enter the amount you want to exchange and the desired trading pair. The transaction will then be instantly processed and the coins converted. Thus, there will only be one commission.
Various platforms offer a convenient and secure gateway between cryptocurrencies. Exchange is possible both from a custodial (Custodial services work similarly to custodians: they store customer funds and private information on the server side.) and from a non-custodial wallet (A non-custodial cryptocurrency wallet retains full control of its funds for the address creator, as it does not transfer their private keys to anyone.) Sometimes you may not need to transfer your coins to a cryptocurrency exchange service or exchange. Often, wallet creators include a cryptocurrency exchange service in their wallets.
The most famous services specializing in cryptocurrency swaps are Simpleswap, Changelly, ChangeNow, and Shapeshift. But most services and wallets also support this service.
And pay attention to the exchange rate. The higher it is, the lower the possibility of slippage. It implies that the amount of the desired cryptocurrency in exchange for another may decrease by the time the transaction is completed.
Therefore, several services operate without slippage and offer a fixed swap rate that does not change until the transaction is completed. However, it is worth paying attention to the fact that the commission may be higher.
For beginners, the three most common methods of exchanging cryptocurrencies are best suited: over-the-counter (OTC), centralized and decentralized exchanges. Let’s explore them.
With the growing number and popularity of cryptocurrencies, centralized exchanges have become numerous. On some of them, it is possible to make an exchange at a very low price or for free.
However, such exchanges have traders as their main audience, which makes the platforms adjust to them. And this can make it difficult for ordinary people to be involved.
With the growing number and popularity of cryptocurrencies, centralized exchanges have become numerous. On some of them, it is possible to make an exchange at a very low price or for free.
They were invented as an alternative to CEX and have surpassed them in many ways.
OTC exchanges (OTC for short) may be the best solution for unsophisticated users. Usually, they work with centralized exchanges via API and have simple and clear menus.
They are quite opaque, so until the end of the exchange, the user may not know the final rate and be cheated.
OTCs have their fees for each transaction. The exchange rate, in the end, will be less favorable than on CEX.
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