While in late 2017 Bitcoin (BTC) was trading at around $20,000, it stooped to almost $3,200 a year later, only to spring back to life in 2019, and continuing to appreciate overall since then. Bitcoin brokers allow trading in BTC for users who prefer ‘speculative’ over ‘buy and hodl’ approach.
In this detailed piece, we have listed the best Bitcoin brokers in 2022, and have also gone over some basics like what a Bitcoin broker means, how it works and differs from a crypto exchange, key things to consider when choosing one, and the difference between trading and buying activity.
Our List of the Top Bitcoin Brokers
When it comes to picking the best Bitcoin brokerage services, there are all kinds of variables involved, for instance, reliability, customer service, payment methods and spreads. Keeping that in mind, this guide will list some of the best Bitcoin brokers along with their unique advantages and features.
What Is a Bitcoin Broker?
When it comes to trading Bitcoin, you can either buy/sell the actual crypto, along with its ownership, by placing buy/sell orders on a Bitcoin or cryptocurrency exchange. Or the other option, and in fact, the most popular one is to do leveraged trading, wherein you don’t actually own the Bitcoin, but can take long or short positions in the market, based on your technical analysis, and still book handsome profits.
The second type of trading Bitcoin activity is more speculative and involves derivative crypto products like CFDs (Contracts for Difference), Futures and Options. The entities that make it possible are called Bitcoin broker platforms.
Unlike Bitcoin cryptocurrency exchanges where the buying and selling happen directly between traders, a Bitcoin brokerage works as an intermediary between the trader (buyer/seller) and the market. The price is set by the broker and usually includes a small premium. What makes such brokers so popular is the fact that they enable traders to take big positions and obtain major exposure, without investing plenty of capital.
How Do Bitcoin Brokers Work?
Let’s now go over a simple step-by-step process to learn how BTC brokers work from a trader’s perspective.
Locating a good Bitcoin online broker
You must start by locating a broker which meets all your requirements. For this, you’d need to understand your objectives first and then carry out a thorough comparative analysis to find trading platforms that can help you meet each one of them with ease.
Opening an account
Once you have decided the platform you’re going to trade on, you should open an account with them. It’s normally a 5 to 10 minutes process, and may or may not involve providing personal details like full name, address, contact details, nationality, date of birth etc. depending upon the KYC measures taken by the broker. You may also be asked to upload a government-issued ID proof. In most cases, providing a valid email address for account confirmation is a must. Once the verification/confirmation is complete, you can move on to deposit funds, such as fiat currency like USD. It’s important to note that while registering with a KYC broker crypto exchange might seem like a hassle, it’s essential for the trading platforms to keep anti-social elements at bay.
Making a deposit
After your account is opened, you will have to deposit funds in a fiat currency permitted by the broker. The majority of brokers accept all major fiat currencies and/or cryptocurrencies. The deposit can be done with a wallet transfer, credit/debit card, bank wire transfer, e-wallet, PayPal etc. Please note, there may be a minimum deposit required, which might vary between trading platforms.
Of all the derivative products that can be used to trade Bitcoin, trading CFDs are the most popular. As also touched upon earlier, Bitcoin contracts for difference provide you with the exposure to current BTC market price, without the need of actually purchasing and owning the coin. You can use a Bitcoin CFD to open long or short positions with a broker, depending upon whether you expect the BTC price to rise or fall. The broker will charge you a spread to open and close the trade. Any proceeds from the trades will get credited to your broker account, and can then be withdrawn easily.
Using a Broker Vs a Cryptocurrency Exchange
The biggest difference between a crypto exchange and a crypto broker is the type of trading they allow. Crypto exchanges mostly permit unleveraged trading, wherein the buyers and sellers trade ownership of the cryptocurrency and pay trading fees to the cryptocurrency exchange for its function as an intermediary. A broker on the other hand connects traders to the crypto market and usually includes its fee as a premium in the price of the coin. It also offers leveraged trading, mostly using CFDs, through which traders can speculate on Bitcoin’s price movements and take appropriate positions to book short-term profits. There is no exchange of BTC ownership and the trader can get a lot of exposure without blocking large amounts of capital.
If you're looking to find out more on exchanges then take a look at our best crypto exchanges guide.
Trading Vs Buying
Investing in or buying a cryptocurrency can be perceived as a long-term approach, indulged mostly at a crypto exchange. Trading on the other hand is a short-term undertaking which can be done at a crypto exchange and/or a crypto broker platform. The former is usually practised by conservative crypto investors who prefer buying and holding onto a cryptocurrency for the long-term, regardless of the market fluctuations in between. Trading, in that regard, is practised by short-term crypto investors, who prefer speculating on the currency’s short-term price movements, to make the most of their analysis through derivative crypto products like trading CFDs, futures and options.
Whilst buying a cryptocurrency entails using a digital wallet for its storage and indulging in a rather complex process of transferring it over a network (at the time of sale), crypto trading, as explained above, can be done without any such requirements.
Key Things to Consider When Choosing the Best Bitcoin Brokers
As far as the selection of best BTC brokers is concerned, you must go with the one that offers a competitive trading environment and can help you consistently implement your trading strategies. Having said that, there are certain considerations and unique features you must keep in mind. Some of them are listed below:
- Regulation – It’s very important that you sign up and trade only at a regulated broker exchange. Although doing so won’t offer any guarantees against malpractices, it can go a long way in protecting you from outright thefts and frauds.
- Spread – It’s also important to refer to the ‘spread’ offered by the broker, which implies the difference between the platform’s ‘ask’ and ‘bid’ price for Bitcoins. The spread is one of the prominent ways in which crypto brokers make money, and it’s best to go with one which offers a tight spread.
- Payment methods – All reputed BTC brokers allow for a wide variety of funding methods including fee-free crypto wallet transfers, credit/debit cards, e-wallets and online payment processors.
- Leverage options – It would be good if the broker offers all popular leverage options including trading CFDs. Additionally, the extent of leverage should be enough to give you a competitive edge.
- Reputation – It’s always better to trade on a brokerage site that is actively used by a large number of traders, is well-known for its security measures and has been operational for a considerably long time.
- Ease-of-usage and design – The trading portal should have a user-friendly interface, enabling hassle-free management of portfolios.
- Initial deposit – The size of the initial deposit required by a broker can go a long way in improving the flexibility of your financial strategy. The smaller the better.
- Fee Amounts – There are various fees when using a broker, which makes up a lot of the trading costs.As mentioned before you're more likely not to see trading fees with a broker but rather a premium on the coin, or withdrawal fees. It's best to be aware of any confusing fee structure.
- Customer support – Considering that BTC is a highly-volatile cryptocurrency, you never know when you might instantly need assistance from customer service. It’s best to go with a site that offers round-the-clock support.
Pros and Cons of Using Bitcoin Brokers
The online crypto trading space is currently jam-packed with all kinds of Bitcoin brokers. This makes it extremely important to do ample research before starting trading at any such portal. This article should make things easier for you by providing you with a comprehensive list of best Bitcoin brokers in 2022, as well as by touching upon basics like the meaning of a BTC broker, how it works and compares against a crypto exchanges, key points to remember while choosing one and the pros & cons of such platforms.
Frequently Asked Questions
Yes, all regulated crypto CFD brokers allow for shorting of Bitcoin.
As long as you know what you’re doing and can successfully implement well-thought-out strategies, then yes, you can make money when you trade Bitcoin.
No, you can buy Bitcoin from any well-known crypto exchanges too.
While BTC cryptocurrency trading is legal in many countries of the world, it’s always a good idea to cross-check with your local laws to confirm.
You can normally locate regulatory information in the bottom-most section of the broker site’s homepage.
Considering its price swings, Bitcoin trading can be termed as risky. However, that also presents an excellent opportunity to make large gains.
Yes, you can trade Bitcoins at any time of the day or night, using the brokerage platforms.
Yes, it’s entirely your choice. Many people do it to manage risk.