How secure is Bitstamp exchange? This Bitstamp review aims to show how it has developed in the six years that it was established. Based on dependable and regular volumes of high trading, it has become the best Bitcoin trading platform and a limited selection of major cryptocurrencies in western Europe. The fast progress of Bitstamp has enthralled spectators, investors, and consumers.
Bitstamp was founded by two Slovenian college-dropouts in the year 2011. They were a software developer and part-time bitcoin mineworker Damijan Merlak and computer salesman Nejc Kodrič They found a gap in accessibility of exchange services for bitcoin users in Europe.
The only choice presented back then was to wire funds to the Mt. Gox exchange in Japan. This took days and frequently ended in losses financially because of the high unpredictability of bitcoin. They decided to set up Bitstamp as an alternative to Mt. Gox. This was an easy choice for Bitcoin users in Slovenia and nearby countries. When Mt. Gox came to an end in early 2014, Bitstamp started to receive more global users. Since then, it has become one of the leading platforms in the business.
The Strengths of Bitstamp
- It has a simple interface, showcasing advanced pages for trading, graphs, and parameters.
- Represents a good exchange due to noteworthy trading volumes
- Enables crypto buying with the use of debit and credit cards (recently made available to several other countries).
- CSSF (Commission de Surveillance du Secteur Financier) regulated. A good standard for safeguarding user funds.
- Supports Bitcoin Cash Trading and allocates allowed BCH tokens to customers.
- Inexpensive and more well-organized compared to person-to-person exchanges like Localbitcoins.
- Upheld a strong reputation and has not experienced from lengthy trading shutdowns.
The Weaknesses of Bitstamp
- Private keys are controlled by the exchange operator just like central exchanges
- Different from The free 10$ credit for new traders by Coinbase, Bitstamp does not offer these kind of freebies.
- It takes more than three days to verify an account just like Coinbase, Kraken, and CEX.
- When a certain amount of transaction is reached, users should share an amount of personal information
- The service is not available in all countries.
- Coinmama, the Bitstamp competitor, gives comparable credit card purchases to users wherever in the world.
- Supports only four cryptocurrencies and are also slow to add new major altcoins. Bitstamp is slow in adding popular coins.
- Many unnecessary fees are charged, but fees are less compared to others like CEX or Coinmama.
Move with Bitcoin
The headquarters of Bitcoin has been moved twice. First, it was in Slovenia, and it was then moved to London in April 2013. This is because of the exploration of improved economic and legal prospects for their business. During that time, most governments around the world searched for how to approach Bitcoin and the industries that were created around it. Slovenia showed to be a tough place to Bitcoin Exchange Guide.
The UK has yet to grow the governing framework to issue a cryptocurrency-related business authorization, Bitstamp managed to self-regulate similar to traditional licensed financial organizations. It asked its customers to provide documents to prove identity.
The company transferred its headquarters again in 2016. They transferred to Luxembourg after the government there approved them a license to function as a payment institution. The regulatory acknowledgment made Bitstamp the first fully controlled virtual currency exchange in the EU. With this, it can transact in all 28 EU member states.
There are currently offices in Slovenia, London and in Berkeley, California. Bitstamp supports services in close to 50 countries aside from of Europe. Some of the countries in the list include US, South Africa, Brazil, China, South Korea and Australia.
They are one of the few that allow debit and credit cards. You can buy Ripple, bitcoin, Litecoin or ether with it. The credit card company needs to be informed though, to be approved for use. Be sure to check if your country of residence is included in the list.
Fiat can also be deposited in Single Euro Payments Area (SEPA) bank transfer. SEPA transfers to Bitstamp are usually fast, taking only two days.
Funding and Cryptocurrencies that are Supported
Bitstamp has finished two cycles of investments. Pantera Capital invested $10 million in the company in 2013. It was the only member in a Series A round. Bitstamp ran a crowd sale on the asset website BnkToTheFuture and raised a further $4 million in January 2017.
Bitstamp was wholly a bitcoin exchange until January 2017. After this, it has included other cryptocurrencies to its combination options. Allowed cryptocurrencies aside from bitcoin includes Ripple and Litecoin. The exchange also included ether last August 17, 2017.
Bitstamp receives less than other global exchanges because it has only four supported cryptocurrencies. To compare, Coinbase allows five cryptocurrencies. The minimum value of the dollar today for trading in any pairing on the platform is $5.
The Security of Bitstamp
Key Security Features
Like first centralized exchanges, Bitstamp has user’s private keys on its platform. Users need to put their trust the company to secure and protect their digital currency. Users look at their funds through accounts through the use of passwords and two-factor authentication (2FA). Based on the history of cryptocurrencies, entrusting third parties with your private keys should be taken with precaution. It is advisable to transfer your crypto assets to wallets under your control after purchase. Only bring it to the platforms if you are ready to sell.
The time you register, Bitstamp already shows their security features. You fill a registration form, and then an email is sent to confirm a username and ID. A password which you should change is also sent.
You need to verify your account before you are permitted to trade. You need to provide a postal address, your full name, and birthdate. For further authentication, you need to upload a government-issued ID and a utility bill. Such scans should be visible, and it takes three days for Bitstamp support to confirm your application.
Breaches of Security
Since the establishment of Bitcoin, it has undergone a minor and major security incident. It became the target of a compromising disseminated denial of service attack in February 2014. Due to this, withdrawals for certain users were postponed for two days to stop hackers from retrieving private keys and cashing out.
Bitstamp was blackmailed, and hackers demanded 75 bitcoins for ransom. The company declined payment and stated a rule of non-negotiation with criminals.
Another attacker stole about 19,000 bitcoins upon breaking the exchange’s security. This was in January 2015. The suspects used Skype and email communications with workers to present malware to Bitstamp’s organization.
The malware got the private keys of the hot wallets of the company. It was only released to the public after six months, due to a leaked internal report. Bitstamp never confirmed if it was true. The merely demanded the document be removed from the platform it was published.
Overall Bitstamp User Experience
Bitstamp has mobile and web applications. Most of its traffic originates through the web. It has a good score from users and credit is usually associated with large simplified buttons. It is very straightforward, and beginners do not have a hard time using it.
There is also the option to develop own software to access and account management. Third-party apps are allowed because of custom API.
Based on a score on downdetector.com, most stated problems with Bitstamp’s website are interruptions (66%) and transmissions (33%). There were also problems in logging in and verification.
There is a mobile application for Android and Apple where orders can be places, deposit and withdraw funds. But these applications have a lot of negative reviews.
Important problems range from customer support, trouble in performing orders and poor exchange chart experience.
Aggressive customer “selection”
Support may request valuable information. It seems that Bitstamp took advantage by demanding customers give data on competitor usage. Requests may also compromise the banking security and privacy of the customer.
Many users complain about getting similar invasive requirements from Bitstamp. However, credits should be made to exchanges that effort to make the vetting procedure as smooth as possible for their clients. Not all users receive this request though.
Fees on Bitstamp
Bitstamp has three kinds of fees. Deposits, withdrawals, trading, and for various services. Deposits and withdrawals are free. But the use of BitGo Instant costs 0.1%. The transfer of Ripple IOUs between accounts charges 0.20% of the value included.
Depositing using SEPA is free, but 0.90 EUR is charged when withdrawing on the same channel. International wire transfers cost 0.05% to deposit. There is a $7.5 minimum fee. Minimum withdrawals are set at $15 and cost 0.09%.
Charges for using credit cards to make purchases vary depending on the amount involved. It costs 8% for amounts less than $500, 7% for amounts between $500 and $1,000, and 6% for purchases above $1,000 but less than $5,000. It costs 5% for purchases above $5,000.
Using a credit card costs a flat fee of $10 for amounts not beyond $1,000. For transactions beyond $1,000, you are charged a fee of 2%. As for trading, the larger the amount traded, the lower the percentage cost you suffer.
Overall, Bitstamp charges a lot of service and working fees. Declined cash withdrawals, a monthly account, and a dormancy fee are even included.
The Position of Bitstamp in the Market
Based on Bitcoinity.org, terms of trade volume and controls, Bitstamp is the sixth largest exchange in about 8.9% of the worldwide market. The exchange processed transactions having a combined value of close to $12 billion in early 2017.
The Bitstamp website obtains more than 15 million visitors on a monthly basis. Bitstamp’s traffic is less than Poloniex’s (95.8 M)m Coinbase’s (95.8 M), Kraken’s (38.7 M). It is more than Bitfinex’s (12.5M).
Alternatives to Bitstamp
Here are the most popular alternatives to Bitstamp:
- Coinbase – website for beginners with many users seen in this Coinbase review. Credit card and bank transfer deposits. (USA)
- Coinmama – not many users and there is no selling. However, it is advisable for purchasing with a card from anywhere in the world. (Israel)
- CEX – easy interface like Bitstamp. Card & bank deposits/withdraws are allowed. (UK)