Currency conversion on the exchange: mechanism and life hacks

Currency conversion on the exchange: mechanism and life hacks

It's great if you've managed to make money on the crypto market. But now how do you withdraw this money so that you can use it? So that it doesn't get stolen. So that the process does not take several days. And also, so as not to lose the profit you have earned on fees. Let's take a closer look at what conversion means in this article, because understanding currency and conversion is crucial for anyone looking to make international transactions efficiently.

What is currency conversion? 

Currency conversion is the process of exchanging one currency for another. You can convert cryptocurrencies into fiat money, fiat money into cryptocurrencies, or exchange one token for another. In all these cases, we are talking about conversion. Money conversion currency tools are widely used by travelers and businesses alike to ensure they get the best rates when exchanging funds.

A conversion currency converter allows you to quickly calculate the equivalent value of your money in another currency. To get the most accurate exchange values, make sure to use the best crypto currency conversion calculator available online. There are several crypto currency conversion sites that provide up-to-date exchange rates for different digital currencies.

According to CoinGecko's statistics, the daily global trading volume of cryptocurrencies is more than $50 billion, and a significant part of the trading is an exchange between fiat money and cryptocurrencies.

Conversion is a tool that allows you to:

• Protect assets from volatility and avoid losses during market fluctuations.

• Pay for goods or services in local currency.

• Invest efficiently and buy assets at the best prices.

Main ways of currency conversion

Let's briefly consider what currency conversion is in the context of different ways of exchanging currencies: goals, terms, and amount of exchange.

1. Cryptocurrency exchanges (ByBit, Coinbase, Binance)

Cryptocurrency exchanges are the most convenient and popular way to convert currencies today. They are transparent, have a large selection of assets, and provide constant support for users.

Advantages:

• Many currencies: dozens or even hundreds of cryptocurrency types are available on exchanges, including rare assets.

• Current rates: the value of tokens is updated in real time and corresponds to the value of coins on the market.

• High liquidity: due to the high trading volume on popular exchanges, orders are executed quickly.

• Automation tools: you can monitor and analyze the market, set stop-loss orders, and even run automatic trading scenarios.

Disadvantages:

• Fees: some exchanges may charge 0.1%-2% depending on the type of exchange. However, this is not the case everywhere. On ByBit, for example, there are no fees for spot accounts.

• Regulatory restrictions: due to local laws, trading in some countries may be limited.

• Processing time: during times of heavy traffic, orders may be executed a little slower than usual. However, the speed is still high.

What is the main advantage?

Convenient for regular exchanges of large amounts or if you need access to additional features such as trading or custody of assets.

2. P2P-platrforms (Peer-to-Peer) 

They allow users to exchange digital assets directly with each other without using an exchange as an intermediary.

Advantages:

• A wide range of payment methods: bank payments, PayPal, etc.

• Low commissions: transactions do not include exchange fees.

• Comfortable pricing: users can set their own prices and rules for selling or buying (for example, transferring to cards of a certain bank).

• Local transactions: you can find a seller or buyer in your region, and even pay in cash.

Disadvantages:

• Probability of fraud: despite the fact that the platforms have a security system (escrow), fraudsters can rarely bypass it and take your money or assets.

• Speed is on the side of the counterparties: the speed of the transaction depends on the human factor – the actions of the buyer or seller. For some, it can take 1 minute, and for others, it can take 40 minutes.

• The currency conversion rates do not update automatically: due to the high volatility of the cryptocurrency market, prices may become outdated.

• Time to search for a counterparty: you need to choose a transaction partner carefully.

• Breaking a deal: the counterparty may refuse to make a deal (change its mind about buying or selling something, or find a more favorable price), and you will have to look for a new one.

What is the main advantage?

Such conversion of currency is primarily about saving on fees. This is a good option for exchanging small amounts within local transactions if you have time to find a reliable partner. 

3. Cryptocurrency ATMs

Currency exchange terminals can already be found in Ukraine. They exchange digital assets for fiat money and vice versa. They are mainly used to buy Ethereum and Bitcoin.

Advantages:

• Speed: a few minutes are enough to complete a transaction. 

• No verification: in most cases, there is no need to go through KYC or create an account.

• Intuitive procedure: even a beginner can easily understand the exchange process.

• Convenient for one-time exchanges: especially when it comes to a small amount. 

Disadvantages:

• High commissions: depending on the region, the average conversion price is 5-10%.

• Only a few cryptocurrencies: as we have already mentioned, most often it is BTC or ETH.

• Local location: machines can be found only in small cities.

• Set limits: each device can have its own limits.

• Technical factor: as in the case of ATMs, the transaction may be delayed (or even not completed) in the event of a technical malfunction.

What is the main advantage? 

You can easily and quickly exchange small amounts of money on the way to work or home.

4. Applications for exchange (Exodus, Ka.app)

These are wallets or programs that allow you to exchange digital assets directly from your wallets or accounts, without going to third-party services and without manual transfers.

Advantages:

• Ease of use and speed: you can convert currency in a few clicks.

• Integration: you can store, transfer, and receive cryptocurrencies in one tool.

• Accessibility: any device with an Internet connection is suitable.

• Simplicity: a minimum of actions, understandable even for beginners.

Disadvantages:

• Higher fees than on exchanges: the cost of exchange reaches 1-1.5%.

• Small selection of assets: only popular cryptocurrencies.

• Lack of additional features: there are no detailed charts or stop-loss orders.

• Security: if a wallet or account is hacked, there is a risk of losing funds.

What is the main advantage? 

This online conversion is a convenient way to quickly transfer small amounts.

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Discover the mechanisms of currency conversion on exchanges and gain valuable life hacks for better trading decisions.

Step-by-step instructions: How to convert currency to ByBit

On cryptocurrency platforms such as ByBit, the conversion process is simplified and you can use the automatic exchange function.

We have chosen ByBit as an example because you can count on fast exchange (less than 1 minute) and support for more than 1000 crypto assets. Moreover, exchange rates are updated every 15 seconds.

1. In the top menu, find the “Trade” section.

2. Click “Convert”.

3. In the first field, click on the cryptocurrency you want to exchange, and in the second field, click on the cryptocurrency you want to receive.

4. Enter the number of units of your asset.

5. Check the current exchange rate.

6. Click the “Confirm” button.

7. Check the funds on your balance.

Tips for effective conversion

1. Always choose exchanges, services, and platforms that have a high level of security and a good reputation. The risks of hacking or fraud are much lower there. It is ideal if the platform uses data digitization and 2FA (two-factor authentication).

2. To avoid surprises, check the exchange rate, currency conversion is rather volatile. If you are using an exchange and the crypto currency conversion rate does not suit you, you can wait a few minutes – the rate of currency conversion may change. This is not a fact, but there is a possibility.

3. Plan your trades. During peak hours (for example, during the American trading session), rates may be less favorable and commissions may increase. Take this into account.

4. Pay attention to commissions. Especially if you make transactions with large amounts. Pay attention to hidden costs and use platforms with a transparent commission policy.

5. Diversify your assets. During a volatile market, exchange at least some of your volatile assets for stable ones (USDT, USDC). 

6. Monitor the market. Install the ByBit app, for example. There you can activate notifications about changes in the rate of your assets.

7. Test new platforms with small amounts to avoid mistakes and understand the interface.

Choose the method that best suits your needs and use it. And read the Bikotrading blog to invest even more profitably!