How do Exchanges work?
Exchanges are essentially intermediaries that play the role of converting from one currency (euro, dollar, etc.) to another (bitcoin, litecoin, etc.). The way they work is quite simple. First, we will have to create an account on an exchange. Once we do this, we will receive instructions on how we can send money to it via a bank (SEPA or SWIFT, although the first is by far more economical). The money we send will be credited to our account at the exchange and we can use it to buy bitcoins. The bitcoins we have purchased can then be sent to our wallet.
If we have bitcoins and want to convert them into euros, we send our bitcoins to the exchange and they are credited to our account. Then we can sell them to receive euros, which will be credited to our account at the exchange. Then, we can request the transfer of the euros that are in our account at the exchange to our bank account.
What should we pay attention to?
First, we should keep in mind that bank transactions above a certain threshold are subject to control. If we produce bitcoins and choose to liquidate them on an exchange, and therefore there is a continuous flow of money from a bank abroad to ours, we will be asked to explain the origin of the money.
Bank transfers, from our bank to the exchange and vice versa, are not immediate and can take many days. It is also advisable to avoid non-SEPA bank transfers, as these have a high fee.
Due to recent regulations, most exchanges now require user identification to comply with KYC and AML. In order to remove some limits on transactions, or in some cases to be able to make transactions to and from the exchange, we will need to send the exchange a copy of our ID or passport, in electronic format. Some exchanges also request a copy of a utility bill, which is also in our name. Finally, we will need to send the exchange money from a bank account that is in our name, but in order to be able to receive money in the account we will declare, it must also be in our name. Otherwise, the money may be blocked.
Where can I find the exchange offices?
The most popular exchanges where you can buy and sell bitcoins are:
- Mt.Gox – Supports many currencies
- Bitcoin Central – Supports transactions to and from euros. To use the service, you must send the required supporting documents such as a copy of your ID, a copy of a second identification document, a bank document showing your bank account, and proof of permanent residence.
- Bitcoin.de – Buy and sell directly between users, with secured transactions. The seller sends the bitcoins they want to sell to the service. Once they receive payment from the buyer, they register it in the system and then the coins are sent to the buyer. 1% transaction fee, which is divided equally between buyer and seller. Supports Liberty Reserve and Bank transactions.
- BitStamp – Scalable transaction fees with a maximum of 0.5% for monthly transaction volume less than $500 and a minimum of 0.2% for monthly transaction volume greater than $150,000. SEPA transfers are charged at €0.9 per order with a minimum order amount of $10.
A complete list of all Bitcoin exchanges can be found here.
What other ways are there?
Another very useful service for acquiring Bitcoins is GetBitcoin, through which you can find the fastest "way", depending on what you have (from Linden Dollars, to vouchers and Moneygram). Finally, for cash transactions, you can also use LocalBitcoins.
