What is the difference between a broker and an exchange in digital currency?
In recent years, the market for buying and selling digital currencies has flourished. The rise in the price of cryptocurrencies and the emergence of new cryptocurrencies has led to a similar increase in the number of exchanges that allow investors to trade digital currencies.
The decentralization of digital currencies, the relationship of shareholders around the world, and other factors have led to different ways of digital trading currencies. In addition to exchange offices, a broker is also one of the most important and suitable platforms for buying and selling digital currencies.
In this article, we will explain the existing exchanges for digital trading currencies and their differences with brokers:
How to trade digital currencies?
The first solution, which is the most common for buying and selling, and trading in the world of cryptocurrencies, is to refer to digital exchange offices and operate in their context. An exchange is a place where investors can go and buy the digital currencies they want or convert their digital currencies into other currencies.
These exchanges can be managed in the form of a site, mobile application, or both. You do not need any face-to-face referral to register in a digital currency exchange and only need an email account, password, and confirmation.
As the number of investors in the crypto market increases, The type and number of exchange offices also increase day by day.
Currently, two types of centralized and decentralized exchanges operate as the main type of digital currency exchanges. Other exchanges, such as B2B exchanges or peer-to-peer exchanges, fast exchanges, and derivative exchanges, can be subdivided into centralized exchanges.
What is a digital currency broker?
In addition to digital trading currencies using exchange offices, there is another way to trade. Brokers or brokers are real or legal intermediaries who act as intermediaries between the buyer and the seller.
The broker is not only active in the digital currency market but also in other fields such as the stock market, precious metals, real estate, and so on.
The broker must inform the clients about the rates of assets in the market. Customers also leave the purchase or sale of their shares to the brokers according to the contract they have registered with the broker. Brokers also use the telephone, internet, fax, and… customer orders from their customers’ deposits and buy and sell.
After the transaction, they charge a fee. Brokers’ source of income, like other intermediaries, is the transaction amount that is obtained from various trades and transactions.
One of the salient features of brokers versus exchanges is the facilitation of the trading process. This is because brokers make the trading process more flexible and faster by finding people who have a lot of digital currencies to sell or buy and pairing them with buyers or sellers.
What are the best features of a digital currency broker?
As we said, brokers have better advantages over digital currency exchanges. So it’s natural for more clients to seek out brokers.
Before using brokers, it is necessary to know the characteristics of a good broker to choose a suitable broker more easily:
- Regulation
Currently, there are regulations set by legal entities for the activities of brokers. If you also want to work with brokers, you should note that the broker is regulated and acts following the rules. Of course, note which country and company the regulations apply to.
- Advanced structural personalization
One of the most important features that should be considered in choosing a broker is the possibility of personalizing it. The broker must be flexible and allow the trader to use the broker according to the client’s needs.
- Leverage
Leverage One of the most important characteristics of a good broker is leverage. Using levers, customers can buy more currency than their money and deposits.
- Spread
Spreads are the difference between buying and selling. Although lower spreads of brokers are more popular, you should also pay attention to the fake ads on different sites.
- Negative alignment protection
A good broker is a broker who protects his client’s capital against market losses. The broker must be able to stop the loss when it rises and reduce the risk of trades.
The best digital currency broker for Iranians
If you have a simple search to find the best brokers, you have probably seen that the best brokers are Forex brokers such as FXTM or Plus500 and many other brokers that have met with great success from investors around the world. But are these brokers also responsive to Iranian users?
You also know that due to Iran’s economic sanctions, most brokers have sanctioned Iranian users, and they have difficulty verifying their entry into the broker. However, there are brokers for Iranian users that allow them to register and order.
Some of these brokers include the following:
Hot Forex
Hot Forex is one of the most popular brokers among Iranians, which also has a good spread. Another positive feature of this broker is that the minimum deposit amount is only $ 5. Support for conventional deposit and withdrawal methods is also a positive feature of this broker.
IQ Option
This broker is also one of the most popular and relatively new brokers for Iranians, which has been considered due to the support of various assets such as CFD, Forex, stocks, digital currency, and…
This broker is regulated by the regulations of Cyprus and is free from any legal restrictions. For this reason, it is very popular with Iranian users.
Olympus Trade
The most popular broker among novice users is Broker Olympus. Until now, Olympus Trade had no problem registering Iranian users but recently did not allow Iranian users to register.
Most users have to change their identity to register in this broker to use this broker. However, the registration and use of this broker are so good that many Iranian users still want to use this broker.
The most important differences between brokers and exchange offices in the digital currency market
In addition to their similarities, exchange offices and brokers also have fundamental differences. The most important of these differences are as follows:
1- Registration and authentication
There is no need to go through difficult steps to register for an exchange. All you have to do is provide an email exchange on the site and create an account at the exchange using a password and confirmation of the email address.
It would help if you also authenticated to make the transaction. That means uploading your ID card to the site. The process of authentication by an exchange usually takes several days.
Registering with a broker is as easy as opening an account at an exchange. The difference is that the broker site may ask you for more documents, and you will upload more identification documents to the broker. However, the difference between a broker and an exchange is the same authentication speed.
While exchange authentication may take several days, broker authentication takes less than 30 seconds.
2- Deposit and withdrawal from the account
Exchange offices often have difficult conditions for depositing and withdrawing accounts. Most digital currency exchanges do not support other currencies such as the euro. So to buy digital currency, you have to buy more digital currency to get the desired amount of digital currency.
On the other hand, buying any digital currency requires a fee. This will make you pay a lot of money.
On the other hand, withdrawing from an exchange account also required the payment of a fee. Transferring money to a bank from a digital currency exchange is another matter. This is because some banks avoid receiving money from unknown sources.
But in brokers, you can only buy and sell digital currency using euros or dollars, and you can not trade using digital currency. In brokers, you do not need to buy other digital currencies to buy digital currency, so you do not have to pay for each transaction.
3- Buy and sell
One of the most important differences between a broker and an exchange office is that you do not need specialized knowledge to trade in exchange offices, and you can easily buy and sell currency. At the same time, this is quite the opposite in a broker.
The tools available to the broker are many, and the options given to you as an investor to trade are just as great. Accordingly, to use a broker to do transactions, you must have expertise.
Conclusion
As the number of digital currencies increases, so do the trading methods and platforms that make trading possible. Digital currency exchanges are one the suitable platforms for digital currency trading.
In addition to the various exchanges that exist for traders in this area, brokers are also one of the most convenient methods for trading. Brokers can be individuals and legal entities that help traders buy and sell digital currencies. There is a big difference between an exchange and a broker.
Although the ease of registration and deposit in brokers is much more than in exchange offices, working in brokers requires more knowledge than in exchange offices.
So if you also want to use brokers to trade digital currencies, it is better to learn about working with this platform well beforehand and not jump into the water.
