Trading Cryptocurrency Markets


I am Vlada Gurvich, a support manager at Platinum. Our company provides the best marketing solutions for ICO and STO. By the way, you can get the demo of our STO platform now!

I am also a part of the University of Blockchain and Investing, the one and only platform for blockchain education in the world. In brief, Platinum makes ICO successful, the UBAI learns how to make it successful. Do you want to know how to sell and transfer cryptocurrencies? Click on the link to study our course demo:

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Lesson Objectives:

By the end of this lesson you will have learned the following things:

  • You will understand how to sell and transfer Cryptocurrencies; and the related parties involved.
  • You will have a clear understanding of the role exchanges play in the new decentralized environment, the regulatory standing in different countries around the world, as well as a brief history of the more prominent exchanges.
  • You will have a basic understanding of common behavioral patterns observed so far in the cryptocurrency space for different coins and ICO tokens.
  • You will understand the unfortunate frauds and immoral behavior that has occurred in both the public and private markets, as well as the key signposts of fraudulent participants.


Cryptocurrency Exchange: is a market-making mechanism, an exchange where buyers and sellers of cryptocurrency are brought together to trade. And, similar to what happens on a traditional stock market exchange, the action of buyers and sellers in the market on the various exchanges is what determines the price of a token.

MtGox: was a previously very prominent cryptocurrency exchange in Shibuya, Japan that was subject to a dramatic hack causing it to fail completely in 2014. Now, years later, lawyers are still trying to unwind the mess left behind.

Bull run: A period when prices rise in any financial market. The terminology comes from the motion bulls make when they attack, thrusting upwards with their horns

Bear Market: A period when prices fall in any financial market, so named due to the method bears use to attack, swiping downwards with their paws.

ATH: All Time High, the point at which a particular stock/crypto/asset was at its highest price

FOMO: Fear of Missing Out. A type of market sentiment or psychology that often happens when a certain stock/asset is experiencing a period of wild growth.

HODL: Hold on for Dear Life. A strategy used most successfully by bitcoin early adopters who held on through many drastic and dramatic market downturns, but then they eventually experienced massive profits due to their intestinal fortitude.

Alt Season: A period in the crypto markets where alt-coins experience massive growth, usually following a BTC bull run.

Panic Selling: Fearing the worst, and selling when the market is going down.

Weak Hands: generally newer individual investors who are too nervous, so they sell too quickly, and cannot hold through a small down turn.

Ponzi Scheme: one of the most famous of all fraudulent schemes whereby old investors are paid with new investor funds until the scheme eventually runs out of money, or the fraud is exposed.

Pump and Dump: is a scam where the price of a token is raised artificially with the sole purpose of profiting on the inauthentic rise at the expense of the new buyers/investors.1.

Major Exchanges

1.1 Introduction

In finance, an exchange is a forum or platform for trading commodities, derivatives, securities or other financial instruments. The principle concern of an exchange is to allow trading between parties to take place in a fair and legally compliant manner, as well as to ensure that pricing information for any instrument traded on the exchange is reliable and coherently delivered to exchange participants.

In the cryptocurrency space exchanges are online platforms that allow users to trade cryptocurrencies or digital currencies for fiat money or other cryptocurrencies. They can be centralized exchanges such a Binance, or decentralized exchanges such as IDEX. Most cryptocurrency exchanges allow users to trade different crypto assets with BTC or ETH after having already exchanged fiat currency for one of those cryptocurrencies. Coinbase and Kraken are the main avenue for fiat money to enter into the cryptocurrency ecosystem.

1.2 Function and History

Graphic for most profitable crypto exchanges

Crypto exchanges can be market-makers that take bid/ask spreads as a commission on the transaction for facilitating the trade, or more often charge a small percentage fee for operating the forum in which the trade was made.

Most crypto exchanges operate outside of Western countries, enabling them to avoid stringent financial regulations and the potential for costly and lengthy legal proceedings.

These entities will often maintain bank accounts in multiple jurisdictions, allowing the exchange to accept fiat currency and process transactions from customers all over the globe.

1.2 Function and History

The concept of a digital asset exchange has been around since the late 2000s and the following initial attempts at running digital asset exchanges foreshadows the trouble involved in attempting to disrupt the operation of the fiat currency baking system.

The trading of digital or electronic assets predate Bitcoin’s creation by several years, with the first electronic trading entities running afoul of the Australian Securities and Investments Commission (ASIC) in late 2004.

Companies such as Goldex, SydneyGoldSales, and Ozzigold, shut down voluntarily after ASIC found that they were operating without an Australian Financial Services License.

E-Gold, which exchanged fiat USD for grams of precious metals in digital form, was possibly the first digital currency exchange as we know it, allowing users to make instant transfers to the accounts of other E-Gold members. At its peak in 2006 E-Gold processed $2 billion worth of transactions and boasted a user base of over 5 million people.

Popular Exchanges

1.2 Function and History

Here we will give a brief overview of the features and operational history of the more popular and higher volume exchanges because these are the platforms to which newer traders will be exposed. These exchanges are recommended to use because they are the industry standard and they inspire the most confidence.


It is unfortunate to have to start out on a sour note, but we must begin with a brief overview of the MtGox bitcoin exchange. At one point in 2014 MtGox exchange was handing over 70% of all BTC transactions! MtGox was based in Shibuya, an ultra-trendy neighborhood in Tokyo, and was in operation from July 2010 to February 2014.

1.2 Function and History

Key figure: Allegedly masterminded by Russian hacker Alexander Vinnik, almost 750,000 BTC were stolen from MtGox over a period of years, and only a portion have ever been successfully recovered. Vinnik, the operator of the BTC-e exchange since 2011, is alleged to have obtained the stolen MtGox BTC and laundered the funds through the BTC-e exchange and the Tradehill exchange that he also owned and operated out of San Francisco.

You will also have a basic understanding of common behavioral patterns observed so far in the cryptocurrency space for different coins and ICO tokens. Make the most important investment in your professional life and buy our courses!

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1.2 Function and History


Originally founded in 2011 by Nejic Kodric and Damijan Merlak as a European alternative to the then dominant MtGox exchange, this company has operated at various times, out of Slovenia, the United Kingdom, and Luxembourg. Bitstamp is a cryptocurrency exchange that enables trading between USD and Bitcoin, and also allows USD BTC, LTC, ETH, Ripple or Bitcoin cash deposits and withdrawals. Though the exchange trades in USD, it only accepts fee-less fiat deposits via SEPA Credit transfer (Single Euro Payments Area) which is the primary international payment system for EU countries.

The Bitstamp exchange is thought of as one of the most rigorous as far as regulations are concerned. Its prestige as an exchange is demonstrated by the fact that it is used in figuring the Chicago Mercantile Exchange’s Bitcoin Reference Rate (BRR).

The Chicago Mercantile Exchange’s BRR serves as a once-a-day reference rate of the USD price of Bitcoin, and is set through the daily rates at Bitstamp, Kraken, GDAX and itBit.


Owned and operated by iFinex Inc, the cryptocurrency trading platform Bitfinex was the largest Bitcoin exchange on the planet until late 2017. Headquartered in Hong Kong and based in the US Virgin Island, Bitfinex was one of the first exchanges to offer leveraged trading (“Margin trading allows a trader to open a position with leverage. For example – we opened a margin position with 2X leverage. Our base assets had increased by 10%. Our position yielded 20% because of the 2X leverage. Standard trades are traded with leverage of 1:1”) and also pioneered the use of the somewhat controversial, so-called “stable coin” Tether (USDT).

1.2 Function and History

Tether is issued on the Bitcoin Blockchain through the Omni layer Protocol, and is designed as a stable coin wherein each unit is backed by one United States dollar.


Founded in July 2011 by Brian Armstrong and Fred Ersham, the firm received $105 million in venture capital from 2011 to 2016. Coinbase is the first port of call for the vast majority of new cryptocurrency traders due to the ease with which you can transfer fiat currency into one of the four cryptocurrencies listed on the website or app: BTC, ETH, LTC, or BCH.

1.2 Function and History

Coinbase’s operations revolve around two products, GDAX (Global digital asset exchange) for trading of a number of digital assets on its professional trading platform; and the “Coinbase” app/website, for the exchange of fiat currency for BTC, LTC, ETH and BCH.


Binance is an international multi-language cryptocurrency exchange that rose from the mid-rank of cryptocurrency exchanges to become the market dominating behemoth we see today. At the height of the late 2017/early 2018 bull run, Binance was adding around 2 million new users per week! The exchange had to temporarily disallow new registrations because its servers simply could not keep up with that volume of business. After the temporary ban on new users was lifted the exchange added 240,000 new accounts within two hours.

Key figure: Binance CEO Changpeng Zhao, a.k.a “CZ”, was the founder of Fusion Systems in Shanghai which offered high frequency trading solutions for brokers. He had previously worked for as part of the wallet team, and also as the Chief Technical Officer for OKCoin, a platform for spot trading between fiat and digital assets.

1.3 Role of the Exchanges

There are several different types of exchanges that cater to different needs within the ecosystem, but their functions can be described by one or more of the following:

  • To allow users to convert fiat currency into cryptocurrency.
  • To trade BTC or ETH for alt coins.
  • To facilitate the setting of prices for all crypto assets through an auction market mechanism.

Simply put, you can either mine cryptocurrencies or purchase them, and seeing as the mining process requires the purchase of expensive mining equipment,

exchanges offer a way for people to convert fiat into cryptocurrency.

Cryptocurrency exchanges can be loosely grouped into one of the 3 following exchange types, each with a slightly different role or combination of roles:

Exchange Types

These are the type that most closely mimic traditional stock exchanges where buyers and sellers trade at the current market price of whichever asset they want, with the exchange acting as the intermediary and charging a small fee for facilitating the trade.

Kraken and GDAX are examples of this kind of cryptocurrency exchange. Fully peer-to-peer exchanges that operate without a middleman include EtherDelta, and IDEX, which are also examples of decentralized exchanges.

2. Cryptocurrency Brokers:

These are website or app based exchanges that act like a Travelex or other bureau-de-change. They allow customers to buy or sell crypto assets at a price set by the broker (usually market price plus a small premium). Coinbase is an example of this kind of exchange.

1.3 Role of the Exchanges
3. Direct Trading Platform:

These platforms offer direct peer-to-peer trading between buyers and sellers, but don’t use an exchange platform in doing so. These types of exchanges do not use a set market rate; rather, sellers set their own rates. This is a highly risky form of trading, from which new users should shy away.

1.3 Role of the Exchanges

Functions of Exchanges

To understand how an exchange functions and fulfils the roles described above, we need only look as far as a traditional stock exchange. Most all the features of a cryptocurrency exchange are analogous to features of trading on a traditional stock exchange.

In the simplest terms, the exchanges fulfil their role as the main marketplace for crypto assets of all kinds by catering to buyers or sellers.

These are some definitions for the basic functions and features to know:

Market Orders:Orders that are executed instantly at the current market price.

Limit Order:This is an order that will only be executed if and when the price has risen to or dropped to that price specified by the trader and is also within the specified period of time.

1.3 Role of the Exchanges

Transaction feels:Exchanges will charge transactions fees, usually levied on both the buyer and the seller, but sometimes only the seller is charged a fee. Fees vary on different exchanges though the norm is usually below 0.75%.

Transfer charges:The exchange is in effect acting as a sort of escrow agent, to ensure there is no foul play, so it might also charge a small fee when you want to withdraw cryptocurrency to your own wallet.

1.4 Regulatory Environment and Evolution

Cryptocurrency has come a long way since the closing down of the Silk Road darknet market. The idea of crypto currency being primarily for criminals, has largely been seen as totally inaccurate and outdated. In this section we focus on the developing regulations surrounding the cryptocurrency asset class by region, and we also look at what the future may hold.

1.4 Regulatory Environment and Evolution

The United States of America

A coherent uniform approach at Federal or State level has yet to be implemented in the United States. The Financial Crimes Enforcement Network published guidelines as early as 2013 suggesting that BTC and other cryptos may fall under the label of “money transmitters” and thus would be required to take part in the same Anti-money Laundering (AML) and Know your Client (KYC) procedures as other money service businesses. At the state level, Texas applies its existing finance laws. And New York has instituted an entirely new licensing system.

1.4 Regulatory Environment and Evolution

The Securities and Exchange Commission has issued a number of warnings regarding the volatility and risk involved in taking part in ICOs. That alone was enough for new projects to ban American participants, other than accredited investors. The Commodity Futures Trading Commission (CFTC) has designated BTC as a commodity and allowed crypto currency futures to be traded.

The European Union

The EU’s approach to cryptocurrency has generally been far more accommodating overall than the United States, partly due to the adaptable nature of pre-existing laws governing electronic money that predated the creation of Bitcoin. As with the USA, the EU’s main fear is money laundering and criminality.

The European Central Bank (ECB) categorized BTC as a “convertible decentralized currency” and advised all central banks in the EU to refrain from trading any cryptocurrencies until the proper regulatory framework was put in place. A task force was then set up by the European Parliament in order to prevent and investigate any potential money laundering that was making use of the new technology.

The EU’s plan is to require cryptocurrency platforms to perform rigorous due diligence on customers and report any suspicious transactions, much like traditional exchanges and banks would do today too.

1.4 Regulatory Environment and Evolution


The attitude to cryptocurrency trading in the People’s Republic of China has perhaps been the harshest of all the developed nations. Xi Jinping’ s crusade against capital outflow and corruption have caused cryptocurrency miners and traders to have their operations curtailed and bank accounts frozen. ICOs have been banned completely. The harsh stance is strange considering approximately 40% of bitcoin mining takes place in China. But in early 2018 the government took steps to try to completely eradicate cryptocurrency trading. The People’s Bank of China affiliated publication Financial News stated, “To prevent financial risks, China will step up measures to remove any onshore or offshore platforms related to virtual currency trading or ICOs.”

1.4 Regulatory Environment and Evolution

Likely future regulations for cryptocurrency traders within the European Union and North America will probably consist of the following proposals:

  • The initiation of full KYC procedures so that users cannot remain fully anonymous, in order to prevent tax evasion and curtail money laundering.
  • Caps on payments that can be made in cryptocurrency, similar to caps on traditional cash transactions.
  • A set of rules governing tax obligations regarding cryptocurrencies
  • Regulation by the ECB of any companies that offer exchanges between cryptocurrencies and fiat currencies
1.4 Regulatory Environment and Evolution

It is less likely for other countries to follow the Chinese approach and completely ban certain aspects of cryptocurrency trading. It is widely considered more progressive and wiser to allow the technology to grow within a balanced accommodative regulatory framework that takes all interests and factors into consideration.

It is probable that the most severe form of regulation will be the formation of new governmental bodies specifically to form laws and exercise regulatory control over the cryptocurrency space.

But perhaps that is easier said than done. It may, in certain cases, be incredibly difficult to implement particular regulations due to the anonymous and decentralized nature of crypto.

You will also have a basic understanding of common behavioral patterns observed so far in the cryptocurrency space for different coins and ICO tokens. Make the most important investment in your professional life and buy our courses!

Get it!

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