Almost a decade after Satoshi’s middle finger to banks and government, through the creation of a peer-to-peer digital currency which does not need intermediaries to function, bitcoin has inspired the creation of more trading exchanges than seen in traditional markets. Today we’ll focus on Bitmex, a bitcoin futures trading exchange. This will be a review on what the exchange offers, its security status, team behind the spotlight, and pros & cons.
First things first, Bitmex is short for Bitcoin Mercantile Exchange. It’s an advanced platform best suited for pro traders. Beginners in crypto trading would do well to garner experience from other simpler platforms. One distinguishing factor between Bitmex and other crypto exchanges is that the former only offers bitcoin futures trading services. Thus, traders are actually not trading bitcoin and other cryptos, but trading contracts/ derivatives with bitcoin as the underlying value. Bitmex also allows margin trading, also known as leverage trading. Records shows the exchange has a trading volume of over 35,000 BTC daily, with not less than $34 billion worth of BTC being traded since first transaction.
Let’s backpedal a bit, to explain some terms. Derivatives are contracts whose value is based on an underlying asset. Derivative contracts can be written on virtually anything, including bitcoin. Margin trading, or leverage trading is simply trading with borrowed funds, using the initial balance as collateral. For instance, a trader needs $5000 for a trade, but has $2500, he can then proceed with his trade via a 2:1 leverage. This means he gets to borrow an extra $1 for every $1 he has.
How it Works
Only BTC is allowed for deposits and withdrawals on the exchange. Although, on the exchange, there are trading contracts featuring other cryptos like Bitcoin Cash, Litecoin, Dash, Ripple, Zcash and a few others. Traders from the US are not allowed on the platform. But of course, some US based traders utilize VPN in order to bypass the IP checks. Contracts are valued in USD and two other fiat currencies: Japanese Yen and Chinese Yuan.
To get started, all that is required is a functioning email to which the account opening verification link will be sent to. Anonymous names are allowed, meaning there is no KYC. However, the complicated nature of the platform, coupled with the high risks involved in margin and derivatives trading, means those able to trade on the platform, are likely to be pros.
Once registered, one can begin trading, of course after depositing into the Bitmex account. Trading through the Market Order button means it is an instant trade using the current market price. Trading through the Limit Order button means the trade will be initiated once it is triggered by the market getting to the given price. As explained in details in a different article, Bitmex offers two types of leverage accounts on their platform. Futures account which has an expiry date, sometime in the future and perpetual account which is continuously being renewed. Leveraging on Bitmex allows for up to 100x leverage.
Unknowing to many, Bitmex’s fees are actually on the high side. But at least, they are straightforward and not hidden nor subtle. Fees depend on the type of contract or the product. From as high as 5% for margin and maintenance, to as low as -0.25% for maker fees. No fees are deducted for deposits and withdrawals. Although, there is a minimum withdrawal amount and a minimum fee to be paid for blockchain load. Trading on Bitmex can only be done on a PC, as there is currently no mobile version, nor an app for the platform.
HDR Global Trading Limited is the holding company for Bitmex. HDR itself was founded by the trio Arthur Hayes, Ben Delo and Samuel Reed, former banker, trader and web developer. Yes, HDR happens to be an acronym for the first letters of their surnames. The trio registered the trading platform Bitmex in Seychelles in 2014, but currently operate out of Hong Kong.
Having such an experienced and skilled team behind the platform presupposes there is a strong security framework in place. This is a fact, considering there are security protocols in place such as multi-signature deposits and withdrawals process, text messages, emails and two-factor authentication features, and also, hardware tokens. Written in kdb+, a database and toolset used by major banks involved in high volume trading, Bitmex has held its ground and has never been hacked.
In today’s era of automated responses and chatbots, Bitmex customer support appears to be able to attend to traders within an hour. Feedback on their customer support is good. They also have other on site help like FAQs and trading guides.
All in all, Bitmex has several advantages, with the major disadvantage being that anyone considering braving Bitmex must be a pro trader, a beginner is likely to get rekt, if not careful. The platform’s trading sophistication is better suited for persons familiar with crypto trading. For those who like referral programs, Bitmex pays out millions of dollars annually to referrers.
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