What is a cryptocurrency broker?
A cryptocurrency broker is a middleman between the buying party (the consumer) and the cryptocurrency exchange. An some cases a broker buys up big amounts of cryptocurrency and offer them on their own platform. Lately, we see more and more brokers that do not have a stock, but immediately places the offer (of the buying party) on the exchange. The process looks like this:
- You place an order through a broker
- The broker places an order on the exchange after payment
- The exchange delivers the coins to the reported wallet
- You have your coins
Most of the time, a broker asks higher fees than exchanges, but in return you get an easy working system, payments with easy payment methods (credit card, SOFORT, MyBank and many more) and you get top-notch support. Our advice is to choose for a broker in case you are not planning on trading much. Normally, a broker gives you your own wallet and everything is easily explained and categorized. If you are planning on trading a lot, we advise you to use an exchange. Take a look here for our How does Binance work guide.
What is the difference between a broker and an exchange?
A broker has its main focus on starting traders, people who choose for convenience or people who would like to do a one-time investment. Buying cryptocurrency through a broker is both easier and more user-friendly. At an exchange you will first need to know how everything works and at first that can be quite difficult. Besides, at exchanges it is often not possible to pay with easy payment methods. However, this is possible at the Bitvavo exchange. They offer a simple interface and a more advanced interface combined with low fees.
What are the advantages of a broker?
- At a broker you can buy cryptocurrency without any knowledge and is as easy as buying a t-shirt at Amazon, at an exchange this is (often) not possible
- At a broker you can pay with easy payment methods, like: credit card, SOFORT and more, in case of an exchange this is not possible
- At a broker you will get good support via mail, telephone and live chat, most of the time the support of an exchange is not very good
What are the disadvantages of a broker?
- The trading fees at a broker are, generally speaking, higher than at an exchange, you simply pay for convenience
- The offer of a broker is often smaller than at an exchange
- An exchange has advanced functionalities, such as limit orders, stop losses or margin trading