Beginners Guide to Bitstamp: Complete Review

Bitstamp is one of the oldest and most well respected cryptocurrency exchanges in operation today. Having been in operation since 2011, the exchange has built upon its European user base to become one of the most popular choices with cryptocurrency traders around the world.

Bitstamp has offices in a number of locations and provides cryptocurrency trading solutions to clients located across the globe.

Overview

Bistamp was founded by Damijan Merlak and Nejc Kodrič in 2011, and the pair aimed to provide a service that catered to a European client base and offered an alternative to a market that was dominated by Mt. Gox at the time.

After starting out in Slovenia, Bitstamp branched out by opening a UK office in 2013 and one in Luxembourg in 2016. In addition to its office in Luxembourg, the exchange now has a presence in London and New York.

Bitstamp has become popular with both intermediate and experienced cryptocurrency traders who are interested in purchasing the more established cryptocurrencies by using fiat currencies.

The exchange aims to offer its users a low-fee way of exchanging large amounts of digital currencies and it currently ranks among the top ten for its trading volumes.

Bitstamp currently handles over $700m worth of cryptocurrency trades a day, and is one of the top exchanges for BTC/EUR, ETH/EUR trading pairs. However, over 60% of trading on the platform is taken up by USD trades of the top three cryptocurrencies.

Bitstamp Features

• Functionality – The Bistamp platform is generally well designed and relatively easy to use. The site contains all the key data on prices and orders, whilst also providing constantly updated charts and balances. In addition to this Bitstamp provides a mobile app that is available to both iOS and Android users.
• Low Fees – Bitstamp operates a lower fee system than the majority of cryptocurrency exchanges and international wire deposits accrue a fee of .05% fee with a minimum of 7.50 USD/EUR. International wire withdrawals accrue a .09% fee and the minimum you can withdraw via this method is 50 USD/EUR. Trading fees cost .25% for monthly volumes under $20,000 this drops all the way down to .10% for a monthly volume of $20 million.
• Security – The team operate at a high level of professionalism and remain fully compliant with all digital asset regulations and consumer protection laws. The exchange places all its digital assets into cold storage, while its online assets are hosted on Amazon Web Services. In addition, its US Dollar Accounts are insured by the FDIC, while its funds are held in a New York-chartered bank.
• Customer Support – There is an FAQ section provided that seeks to answer the most common questions as well as give instructions on how to buy and sell Bitcoin. Specific user inquiries are handled via email and the support team aims to reply to customer enquiries within a few hours. Members can also call their nearest office for emergency or more specific issues.
• International Availability – In addition to be widely available across the EU and the US, the exchange is currently available to over 60 countries. These include Australia, Brazil, China, Hong Kong, India, Japan, New Zealand, Singapore, and South Korea.

 

Supported Currencies

Bitstamp currently focuses on providing access to the most established cryptocurrencies and operates markets featuring Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Litecoin (LTC), and Ripple (XRP). There are currently 12 market pairs being traded on the site which are linked to the 3 base currencies of the Euro (EUR), the US Dollar (USD), and Bitcoin (BTC).

As one of the older cryptocurrency exchanges in operation today, Bitstamp enjoys a high level of liquidity and currently handles over $700m worth of cryptocurrency trades a day. The exchange handles well over €100m worth of trades a day across its various Euro pairings, whilst handling over $400m worth of trades per day across its US Dollar pairings.

Bitstamp Signup & Login

Visit their official site and create an account by following the signup process. You can easily open an account by entering your name, email address, country of residence, and password. The following steps will enable you to quickly create an account.

By clicking ‘register’ on the homepage, you will be directed to give your name, email address, and country of residence. It’s also necessary to tick the terms and conditions box and click ‘register’.

After this, you will receive a “registration complete” email at the address you entered. Here you will also be provided with your unique client Id and password. These are automatically generated and you will be prompted to change your password after your first login.

You can now login to Bitstamp with your new details and you will be directed to a page that allows you to change your generated password.

At this point, you may also choose to setup 2-factor authentication and once this process is complete you will be able to access various features of your Bitstamp account.

Verify your account

In order to gain access to certain account functions such as bank transfers, it’s necessary to verify your account. Bitstamp provides personal and corporate accounts and both require the following documentation to become verified:

• A valid Citizenship/National ID. Passports and drivers licenses can also be used.
• Proof of residence, this includes a bank statement, utility bill, and a variety of government issued documents.

There is also a second verification phase that requires users to verify their phone number by using an OTP code that is sent to their phone. Once the entire verification process is complete, you will gain access all the features of your Bitstamp account and be able to make deposits, purchases, trades, and withdrawals via a number of different methods.

Make a Deposit

Before being able to trade or purchase any cryptocurrencies, it’s necessary to fund you account. This can be done by navigating to the Deposit tab in your account. You can choose to make a bank transfer, transfer your preferred cryptocurrency or use a credit card in order to transfer funds.

Trading on Bitstamp

Deposits made onto the platform can take as long as 1-3 working days, though some users do report much faster deposit times. Once your funds are available you can make a purchase by clicking the BUY/SELL button, choosing your preferred trading pair and placing a market or limit order. Once this is done, you just enter the correct price and quantity and process your buy order.

After you complete your purchase, your account will be credited with your cryptocurrency purchase.  You may sell your cryptocurrency on the exchange or choose to transfer your funds to an external wallet that you control.

Supported Payment Methods

Bitstamp allows its user to make purchases via a number of different methods. The exchange supports a variety of payment options which include:

• Credit/Debit Card.
• International Wire Transfer.
• SEPA.
• Cryptocurrency Exchange (BTC, ETH, LTC, XRP, BCH).

Is Bitstamp Safe?

Bitstamp is one of the industry leaders in terms of its security procedures, and the platform has a good reputation as being a trustworthy exchange. However, Bitstamp has suffered hacks in its past and had to stop trading for a few days after incidents in 2014 and 2015. The latter incident proved to be the most serious as 19,000 Bitcoin were stolen after a successful hack on the exchange.

As a result of this, the team re-evaluated their security procedures and the exchange currently provides secure wallet options for all its customers. Also, approximately 98% of all funds are held offline in cold storage, meaning that they’re inaccessible to hackers. These funds are also fully insured, and the exchange also utilizes Two-Factor Authentication (2FA), mandatory confirmation emails, and SMS alerts in order to secure user accounts. On top of all this, it also uses PGP (Pretty Good Privacy) data encryption to help authenticate and keep all uploaded files private. Since the hack in 2015, Bitstamp has been free of any other incidents and has built itself a reputation as being one of the most secure exchanges in operation today.

Bitstamp Fees

Bitstamp has managed to keep its fee structure relatively unchanged since it began operating in 2011. However, as of 20 August 2019; their unified fee structure is as follows.

Trading Fees

The fee schedule is based upon a user’s total trading volume over the previous 30 day period, and the tiered approach aims to reward high-volume individual and institutional traders with zero and/or low fees. Anyone using the platform starts out at a basic trading fee rate of 0.5%, and this is reduced down to 0% once the maximum monthly trading volume requirement has been met. It’s worth noting that all non-USD trading volumes are converted to USD using a spot exchange rate at the time of each trade.

All Trading Pairs (Cumulative)

• < $10K: 0.5%
• < $20K: 0.25%
• < $100K: 0.24%
• < $200K: 0.22%
• < $400K: 0.20%
• < $600K: 0.15%
• < $1M: 0.14%
• < $2M: 0.13%
• < $4M: 0.12%
• < $20M 0.11%
• < $50M: 0.1%
• < $100M: 0.07%
• < $500M: 0.05%
• < $2B: 0.03%
• < $6B: 0.01%
• < $10B: 0.005%
• > $10B: 0%

Bitstamp also operates a minimum order size of 25 EUR/USD or 0.001 BTC (for BTC denominated trading pairs).

Cryptocurrency Fees

Any crypto deposits made to Bitstamp are free of charge; however, crypto withdrawals incur the following withdrawal fees:

• Bitcoin: 0.0005 BTC
  • Ethereum: 0.001 ETH
  • XRP: 0.02 XRP
  • Bitcoin Cash: 0.0001 BCH
  • Litecoin: 0.001 LTC

Fiat Deposit & Withdrawal Fees

• INTERNATIONAL WIRE – 0.05% Deposit fee (minimum fee = 7.5 USD/EUR, maximum fee = 300 USD/EUR)/ 0.1% Withdrawal fee, minimum fee is 25.00 USD/EUR on Bitstamp’s end and may incur additional international bank fees.
• SEPA – Deposits, free of charge/ Withdrawals 3 EUR flat fee.
• CREDIT CARD PURCHASE – 5% for all amounts (an additional fee may be charged by the card issuer).

Any non-standard financial activities which require processing are charged as follows:

Non-standard processing

Service type	SEPA	International Wire
Transfer return	0.25% (minimum fee = EUR 25.00)	0.25% (minimum fee = USD 50.00)
Transfer trace	EUR 30.00	USD 35.00
Transfer amendments	EUR 30.00	USD 35.00
Administrative costs	EUR 50.00	EUR 50.00
Transfer re-call	EUR 30.00	USD 35.00
Transfer receipt	EUR 30.00	USD 35.00
Bounced back transfers	Charged like a regular bank deposit	Charged like a regular bank deposit

Bitstamp Credentials

Bitstamp is a well respected exchange and one with a number of notable achievements and partnerships. As the first Ripple Gateway, Bitstamp was also the first partner in Ripple’s incentive programme. The exchange also has partnerships with CACEIS (Crédit Agricole SA) and Swissquote which is testament to its standing within the financial industry.

It was also the first fully licensed cryptocurrency exchange in Europe and is currently regulated by the Luxembourg Financial Industry Supervisory Commission (CSSF). This ensures that the exchange periodically files reports with the appropriate agencies and is fully compliant in its practices.

The exchange aims to provide its clients with an overall positive experience and feedback regarding the platform is generally positive. The majority of issues users have with the platform are linked to the customer support service provided as the support team usually take approximately 24 to 72 hours to respond to emails and support tickets.

For new registrants, the verification process can also be quite slow as the exchange is currently dealing with a surge of new applicants. However, Bitstamp generally provides its clients with a reliable and efficient platform on which they can trade the more popular cryptocurrencies.

Bit License

In April this year, Bitstamp was also granted with a BitLicense by the New York State Department of Financial Services. As a result, Bitstamp can continue to provide crypto trading services in the US and also move towards expanding its operations across the entire United States of America.

The BitLicense requires companies to meet several stringent requirements regarding consumer protection, and further highlights the exchanges commitments to remaining fully transparent and regulatory compliant. The team aim to operate to the same high standards followed by traditional financial institutions, and are a planning to ramp up their activities with regards to institutional investors.

New Partnerships

Over the last 18 months, Bitstamp has entered into a number of partnerships that enhance the range of products and services the exchange offers. These include a partnership with BCB group, who are leading global digital asset prime brokers, and this allows customers to make British Pound Sterling (GBP) deposits and withdrawals when using the exchange.

They have also partnered with Dukascopy Bank, a leading Swiss online bank, which enables   Dukascopy’s clients to send Bitcoin to their accounts. These funds can be converted to US Dollars, and then used to trade on the Swiss FX Marketplace. Clients can also withdraw funds back into Bitcoin and Bitstamp will manage the process and help Dukascopy to administer the exchange of fiat funds into Bitcoin and vice versa. This link up helps to improve Bitstamp’s liquidity levels, ability to operate in a regulatory compliant manner, and also helps to close the gap between crypto organisations and the world of traditional finance.

Additional partnerships and collaborations aimed at improving the trading experience for Bitstamp’s customers include a partnership with Irisium, a leading provider of market monitoring and analytics software for exchanges, regulators, and trading firms. Bitstamp has committed to use Irisium’s holistic monitoring platform to gain a deeper understanding of market activity, and the team will use their insights to enhance customer protection and market integrity at the exchange. They will also use the software to monitor market trends and in turn ensure a more robust and transparent trading platform for their customers.

The team have also partnered with Cinnober, an independent provider of financial technology solutions, and have replaced their previous in-house matching engine with Cinnober’s TRADExpress Trading System. The move allows Bitstamp to operate more efficiently, increases its ability to sustain sudden surges in demand, and helps to close the gap in terms of performance between traditional exchanges. As a result of upgrading its matching engine, the platform’s order matching speed is expected to become 1250x faster, with throughput predicted to increase by 400x.

A collaboration with Onfido has helped the exchange to streamline its our customer onboarding process, and working with the identity verification provider allows Bitstamp to further automate its customer verification process. The three stage implementation process has seen the exchange significantly reduce its verification backlog by utilizing the automated service, and embark on revamping its entire online verification process in order to fully automate it. The final implementation stage involves adding user verification to Bitstamp’s mobile app.

Bitstamp acquired by NXMH

On October 29, 2018, the exchange announced that it had been acquired by NXMH, a Belgium-based investment company. Bitstamp CEO, Nejc Kodrič has reassured customers of the exchange that the mission, leadership and vision of the company remains the same.
NXMH is a subsidiary of NXC Corporation, who also owns South Korean crypto exchange Korbit, as well as the Nexon video game company.

Bitstamp was acquired for an estimated price of $400 million and the acquisition is expected to result in Bitstamp gearing up for international expansion. The exchange plans to expand globally, and with NXMH providing financial and developmental support, Bistamp should make a move into the Asian market in the not so distant future, on the provision that it gets the green light from industry regulators.

Despite the sale, Kodrič will remain CEO of Bitstamp and things are expected to stay the same for the company’s customers and roughly 180 employees. The quality of the buyer, offer, and the numerous benefits of consolidating operations have all been given as  major factors behind the team agreeing to the sale. The acquisition has been conducted to strengthen Bitstamp’s positioning for growth, and everyday operations should remain the same with customers not experiencing any differences to their accounts and/or trading activity.

The Bitstamp Mobile App

The team have also launched a new Bitstamp app for iOS and Android that enables people to keep up to date with their accounts while on the move. Users can quickly check prices from the welcome screen, and log in using either fingerprint or face ID.  The app also incorporates real-time charts and a range of analytical tools, and users get to choose between a simple buy and sell interface or the more advanced Tradeview interface. As a result, both newer and more experienced traders can monitor the markets, and perform in depth price movement analysis.

Some of the app features include:

• Simple buy/sell interface for beginners
• Tradeview for experienced traders
• All currencies paired with USD, EUR and BTC
• Instant, market, limit and stop orders available
• Balances, transaction history and transaction details
• Ability to remotely disable the app
• Send/Receive crypto for free

Some additional features include a private mode which allows balances to be hidden, the ability to switch between sub-accounts, attachments in support forms, four order types, and notifications for open orders.

The Bitstamp mobile app can be accessed by the following process:

1. Install the Bitstamp mobile app on your device. Get it from:
   1. Google Play for Android
   2. The App Store for iOS
2. Once installed, open the app and press the “Start activation” button.
3. Agree to the Terms and Conditions to proceed.
4. Enter your User ID and your password and press “Next”.
5. In case the Captcha puzzle appears, solve it to proceed with activation.
6. Enter your 6-digit two-factor authentication (2FA) code from your Authenticator app.
7. Choose the 6-digit PIN you will use to enter the app. This will let you access the app quickly without entering your User ID and password.
8. Enable or disable touch/face ID (on supported devices) and press “Finish activation”.

The mobile app should now be activated and ready to use and you can view or deactivate all your active devices in your account’s Mobile Access section.

Connecting with Bitstamp’s Lightning Node

Bitstamp is running its own Lightning Network node, and the exchange is committed to helping the network grow and is actively encouraging other companies to begin working with the network. The Lightning Network acts as a secondary layer of connections built over the Bitcoin blockchain that improves the performance and scalability of the Bitcoin network. Via Lightning, Bitcoin be used to process millions of transactions per second with almost zero fees.

A Lightning Network node is software that connects to the Lightning Network and enables the sending and receipt of Bitcoin from other nodes, with the network being comprised entirely of these nodes connecting to one another. The network increases in strength and efficiency as the number of nodes increases, and also survives on nodes remaining online. Furthermore, as more nodes open payment channels, the total network liquidity increases, thus allowing users to make more transfers, and process more payments.

How does the Lightning Network work?

The Lightning Network acts as a second-layer solution, builds on top of blockchain technology, and adds supplementary off-chain features. The network allows users to open special payment channels between themselves that enable Bitcoin to be sent and received instantly for the duration of the time that a payment channel remains open. Once the interactions are completed, and the channel is closed, the new balances are written on the blockchain.

In order for two parties to can send Bitcoin payments over the Lightning Network, they have to open a payment channel and then send some Bitcoin to it. From here, it becomes possible for either party to send as many transactions as they want within the payment channel, with their transactions being funded by the Bitcoin they have already sent to the channel.

Once the funds run out, the parties can choose to send more Bitcoin to the channel and continue transacting, or close the channel entirely. The channel can also be closed at any time, and the closure results in the new Bitcoin balances being written on the blockchain.

The Lightning Network allows transactions to be conducted off-chain with the confidence of on-chain enforceability, and work in principle in a similar way to entering into a contractual agreement with another party. However, with the Lightning Network, the blockchain’s algorithms act as the final arbiters.

While the Lightning Network can be used to facilitate payments in a variety of industries, the team at Bitstamp have already established their Lightening node in order to create and use their own payment channels, and both individual and institutional clients of the exchange are encouraged to do the same.

Setting up and running a Lightning node requires a good level of technical expertise, and it’s also necessary to run a full Bitcoin node. However, Bitstamp recommends the Casa ready-made hardware node for less tech-savvy users.

Once you have your Lightning node up and running, you can connect to the node operated by Bitstamp and begin conducting transactions. In order to learn more about the process, as well as connect to the Bitstamp Lightning node, you can access their network node explanation page.

Conclusion

Bitstamp is a highly professional exchange that has established itself in the sector after being in operation since 2011. The exchange acts as a gateway into the world of cryptocurrency in a similar way to Coinbase and Kraken and allows new entrants to the market to make cryptocurrency purchases using fiat currencies. The exchange is a good choice for anyone looking for a secure platform that allows its users to purchase currencies such as Bitcoin, Ethereum, Ripple, and Litecoin.

Due to its low fees for transfers using SEPA, Bitstamp is also a good choice for people based in Europe. However, the exchange still has room to improve its service and can add new cryptocurrencies to its platform as well as integrate direct chat options into its support department.

In conclusion, the site is a good for choice for individuals and institutions looking to trade the core cryptocurrencies in either Euros or US Dollars. As one of the more established and reputable exchanges available today, users can feel secure when dealing with either smaller or more considerable amounts on the platform.

Pros

• High volume and liquidity
• Clear and low fee structure
• Compliant and transparent practices
• A reputable and globally available exchange platform

Cons

• Limited cryptocurrencies supported
• High fees for credit cards deposits
• No Margin Trading
• Slow support response during busy periods