Last updated on June 20th, 2017 at 05:04 pm
The recent altcoin boom has brought in a lot of new cryptocurrency traders and many people are looking for quick, cost effective ways to buy altcoins like Ethereum, Litecoin, Monero and others.
In today’s post I want to cover a relatively new type of altcoin exchange. It’s something I call “instant” cryptocurrency exchanges. These exchanges allow you to trade any cryptocurrency for a different cryptocurrency with a relatively simple process, small fee, speed and sometimes even anonymously.
Full disclosure – I haven’t used any of these exchanges personally yet. I’ve mainly reviewed the sites, the online reviews and compared the different features. Personally, I’m not that big of an altcoin fan. If you have any experience with either of these exchanges please share it in the comment section below.
Shapeshift – Fastest, most private and most convenient exchange
Shapeshift was founded in 2013 by Erik Voorhees and received its first round of funding only in 2015. Shapeshift does not let you buy crpytocurrnecy with fiat (i.e. Dollars, Euros etc.) but only to quickly swap between cryptocurrencies.
The process is fairly simple:
- You select the crypto you want to swap (i.e. send)
- You select the crypto you want to receive and insert the relevant crypto address (e.g. your ETH address)
- Shapeshift creates a deposit address for you, once you deposit the funds the new currency will be on its way.
That’s it. No emails or passwords. No lengthy signup process. No accounts. No bid and ask orders. No friction. And no sending your money to be held on a centralized exchange. Here’s a short video demonstrating the process:
Small deposits are processed with zero confirmations. Larger deposits wait for at least 1 confirmation. The exchange rate shown is exactly what you’ll receive, minus only the miner fee required by the network. There is no exchange fee, or service fee. For a full list of mining fees check out this page.
I haven’t confirmed this yet but it seems that Shapeshift is monetizing the company off the diffrence between the actual mining fee and the fixed mining fee Shapeshift charges. For example, the current Bitcoin mining fee is 0.003BTC which is around $7.8. However, you can pass a transaction through the network with a much lower transaction fee.
If you go through user reviews of the exchange you can see that the most common complaint is regarding the time it takes the transaction to go through and the high fees. However always take user reviews with a grain of salt. Some user don’t try to reach out for help and are left frustrated in a case that may have been solved relatively quickly through the customer support.
It’s also worth mentioning that Shapeshift allows you to stay completely anonymous as they don’t request any sign up to their service.
Moving on to the competition – Changelly.
Changelly is a cryptocurrency exchange that claims to have “an intuitive interface, the best exchange rates and secure transactions. Fees are said to be 0.5% and that’s it, full stop.” Changelly was established on 2016 and within a year has managed to attract over 100,000 users which is very impressive.
Changelly was set up by the same guys who established MinerGate – a mining pool that allows you to join other miners from around the world using your computer or mobile phone. Although MinerGate is a very popular service I personally have issues with companies that don’t disclose who is running the show. As is the case with Changelly and MinerGate.
Changelly indeed has a very sleek and intuitive interface. From the get go it’s clear how much money you’ll spend and how much you’ll receive. Fees are also stated clearly at the side of the transaction as shown below.
However as you can see, for $2500 which is the current price for 1 Bitcoin on Bistamp I’d get only 0.8357 Bitcoins. This seems like more than a 0.5% fee to me. Below the exchange rate Changelly shows the following message:
“USD/EUR rates are slightly high now, sorry. Please check rates attentively before payment.”
So at least they are aware of that, however it still doesn’t explain the big difference. I’ve contacted Changelly and asked about this, apparently it’s due to the fact that they are using a 3rd party service for fiat to Bitcoin purchases, this makes the fees on those trades much higher.
If you check other currency exchange rates such as ETH or LTC you see that indeed the prices are more or less the same like you’d find on Poloniex or Shapeshift. In many cases you’ll even get a better exchange rate on Changelly than on Shapeshift.
Another thing to keep in mind is that unlike Shapeshift, you’ll need an email address in order to use Changelly. Of course you can use a fake one if anonymity is important but that’s something to consider.
Checking out other online reviews of Changelly I found only that people are complaining about the high exchange rates, fees and long transaction times.
Additional concerns were raised about the fact the Changelly may ask users to supply social media accounts to verify their identity in addition to the email account. However it doesn’t seem like this poses any real barrier to someone who still wishes to remain anonymous.
So who’s the winner?
It’s hard to say, both exchanges seem to have a good product but also a lot of angry users. I suggest starting out using a very small amount you are willing to risk in case something goes wrong and trying both exchanges.
If you’re really into getting the best possible rates you’re probably better off using a traditional altcoin exchange like Poloniex or Bittrex and buy at specific prices (i.e. not the market price). This of course will take more time.
In the end Changelly seems to have better fees but Shapeshift has better reputation. As it seems there’s no clear winner this time and the choice, as always, is yours…
If you have any experience with either of these exchanges please share it in the comment section below.