Let’s take a closer look at why miners choose EXMO and other exchanges to cash cryptocurrencies. Learn about all the benefits.
Cryptocurrencies were developed as a way of excluding intermediaries (banks, for example). They were meant to solve problems of speed, transparency, and large fees. The technology is imperfect, and miners understand that selling cryptocurrencies into fiat money is complex. That is why they choose exchanges to withdraw cryptocurrencies. Cryptocurrency ownership does not imply illegal income or tax evasion. On the contrary, blockchain technology is designed to make this process automatic, fast and simple.
Exchanges have a number of significant advantages:
Workaround for translation scalability problems.
The ability to profitably sell cryptocurrency at quotes convenient for the miner.
Increased system security.
Simple and intuitive interface for sharing.
The ability to cooperate with tax authorities.
Bitcoin network had a small transfer fee. Costs were calculated in tenths of a cent. However, with the growing popularity of blockchain as a technology, the scaling problem arose.
The transfer reward for the miner is measured in BTC, and it has grown exponentially. Currently, transferring small amounts via Bitcoin is no longer profitable. Working through the exchange, the miner does not actually make transfers to different BTC addresses.
When withdrawing funds to fiat, a user does not have to pay a commission to the miner, and the costs are much less than when using the blockchain.
Another stumbling block for miners was the execution queues on the blockchain, which were especially noticeable during the booms of 2017 and 2018.
With a large volume of transfers, queues for their implementation appear. As a result, it may take several days to complete the transaction.
It is important to consider the volatile nature of the market for blockchain projects. Due to delays of transactions, one can lose a substantial profit share in case of a cryptocurrency drawdown.
The withdrawal period remains within the regulations’ limits. Assets will be withdrawn at the initial rate even if the coin’s price drops during the waiting period.
One of the main advantages is that you can buy cryptocurrency at the quoted prices. You simply need to wait until the rate reaches or drops to the desired level.
Since the quotes of BTC and other crypto projects fluctuate greatly, you don’t have to wait long for a suitable point for withdrawal. A user can even be away from the computer when the price reaches the specified mark, and the transaction will be executed automatically.
In any country, news coverage has an impact, for example, theft of funds from cold wallets or financial fraud.
Transparency could be improved using Ethereum and its smart contracts. However, the latter does not allow financial transactions with fiat funds and is not suitable for most users. After all, the main task of a crypto enthusiast is to make a profit, and services remain a reliable, fast and transparent way of exchanging Bitcoin for fiat funds.
Cryptocurrencies are not regulated in most countries. If the revenue and tax office enquires about the source of a trader’s funds, then they will have to pay up to 30% of income tax (in some countries up to 50%). When trading through a centralised exchange, documents confirming the fact of trading operations can be provided upon request. This will “whiten” the income, and the tax rate for traders is much lower than income.
In addition, many exchanges are introducing mandatory verification, which simplifies the communication with state tax authorities.
People remain the weakest link in terms of e security and anonymity of cryptocurrencies. There are many different schemes fraudsters use to steal money. Moreover, it is impossible to track them later because of mixers and shufflers.
Crypto assets can be stored on special cold wallets with a key verification, but such a process is rarely convenient.
If using exchange wallets to store Bitcoin, the situation becomes much simpler:
The crypto exchange’s servers are resistant to DDoS attacks.
In the event of malfunctions or hacks, the owners of the exchange compensate the traders’ losses.
Therefore, even if your account was hacked and your funds were lost, the exchange’s support service will offer assistance.
The biggest problem with blockchain-based infrastructure is its weak interconnection with classic fiat systems. This means that Bitcoin and other digital assets can be exchanged for fiat only on special exchanges and exchangers.
Moreover, the funds withdrawal of funds via exchangers is fraught with great risk. Exchanges, on the other hand, are often regulated and offer better security.
Besides USD, exchanges usually allow you to work with other national currencies and easily cash out crypto assets directly to a bank account.
Services are not the only way for miners to cash out cryptocurrency — various private exchangers appear every day. However, if in the BTC case the rate can be adequate, it is not the case with the altcoins.
When working with an exchanger, the user still needs to pay a commission for both the transfer and the miner’s work. The same applies to the transactions’ execution terms (since funds are transferred from one wallet to another) — it may take several days for the transaction to be fully confirmed, which may affect the final amount. Crypto exchanges, however, allow you not to lose money on the difference in the exchange rate.
EXMO checks all new projects and ICOs according to its criteria. If the asset has satisfactory liquidity indicators and there are no signs of a “fraudulent project”, it is listed on the platform.
Consequently, all promising altcoins that meet the required criteria can be found on the exchange almost immediately after launch. This allows miners to quickly connect pools with addresses to the exchange and sell the currency during its growth.
The most convenient way to exchange funds on EXMO is buying fiat currency via a trading terminal. The process is extremely simple and straightforward.
The next step is depositing your coins to the exchange. If the miner works directly from the pool, then the wallet address should be indicated in the pool. All obtained funds immediately go to the internal Bitcoin address on the server.
If the miner verified the account and deposited altcoins on EXMO, the process is even easier — launch a trading terminal and find a suitable pair. For example, BTC/USD. Next, buy dollars for Bitcoin at the market price or create a buy order at the one you are interested in.
In the “Wallet” section, choose a convenient payment method (Visa/MasterCard, Payeer, AdvCash, SEPA etc), indicate the amount and address.
The term is usually determined by the payment system itself. The maximum is 3 banking days.
The purchase of crypto assets is done in a similar way: you can transfer your crypto funds from other exchanges to EXMO or exchange fiat for crypto on the platform itself. For instance, you can buy cryptocurrencies via bank card using Simplex service.
Here are the main reasons miners should choose an exchange for storing and exchanging cryptocurrencies into fiat:
You can link BTC addresses to the pool.
Easy and fast conversion to any currency.
Ease of handling altcoins. For instance, more than 190 trading pairs are available on EXMO.
Convenient withdrawals. Besides bank cards, the main types of electronic payment systems are supported.
The rate is determined by the miner instead of the exchange. A “limit” transaction can be created to automatically convert BTC to fiat when the mark reaches the desired price.
Note: EXMO Gift Card allows cryptocurrencies’ withdrawals to any exchanger and guarantees the security of the operation. It is convenient if the miner needs to pay with cryptocurrency without using fiat funds.
Moreover, exchanges have a high level of liquidity. If the user operates with large amounts, it is almost impossible to transfer the amounts through the exchanger as there may not be a suitable number of crypto assets available. When making a transfer through EXMO, you always carry out transactions on the market, which means working with unlimited liquidity.
The only negative aspect is the partial loss of anonymity. To withdraw funds through the exchange, you need to verify your passport. However, such measures only ensure the security of the platform.