Kraken VS Bitstamp: Crypto Exchange Comparison
The cryptocurrency industry is one of the most dynamic and innovative to date, and it constantly evolves and changes the way we lead our daily lives. It’s like one giant puzzle, where every piece stands for all the milestones, new launches of coins and platforms, including all the slumps on the way.
The first groundbreaking event was in 2008 when Bitcoin was introduced to the public by Satoshi Nakamoto, in a white paper called “Bitcoin: A Peer-to-Peer Electronic Cash System”. In the paper, the coin was presented as a new way to buy, sell, and trade digital assets within a decentralized system, without any government or banks being involved. In January 2009, Nakamoto processed the world’s first cryptocurrency transaction and sent Bitcoins to another cryptographer Hal Finney. But that was just the beginning.
The next cryptocurrency to be released was Litecoin, followed by Namecoin, in 2011. As estimated in October 2019, there’re now approximately 2,957 cryptocurrencies available on the crypto market. These new coins needed suitable crypto exchanges where traders would complete their transactions on secure platforms.
At first, things looked rather grim for these companies, because of the regulatory issues they frequently dealt with. Governments were not yet ready to recognize and accept the fact that cryptocurrencies are here to stay. With time, these things changed and we now have licensed platforms that allow smooth and secure trading. Their number is growing, together with that of the digital assets, and it’s becoming harder for traders to choose among them.
Today, we’ll introduce you to two of the oldest but highly functional crypto exchanges – Kraken and Bitstamp. We’ll familiarize you with their stories, the rise of both companies, and how similar or different they are from one another. Let’s get started!
About the Exchanges
In the crypto world, the year 2011 will be remembered for a couple of things. One of the good things was that the price of one Bitcoin (BTC) went up to one US dollar for the first time ever! This meant that cryptocurrencies were gaining in value, and more people started thinking of getting involved. It was also the year when Mt. Gox, one of the first and most popular crypto exchanges, was the victim of a serious hacker attack when customers lost most of their Bitcoins.
Jesse Powell was asked by Mt. Gox CEO Mark Karpelès to join the rest of the team in bringing the company back on its feet. During that period, he began thinking about what could happen if he tried to found his own platform and run things differently, minimizing the risk of hackers. That same year, he created Kraken, with headquarters in San Francisco, California.
Kraken quickly rose to be one of the largest digital currency platforms when it comes to exchanges in euro volume and market liquidity. Powell came to value high-tech security measures above all and doesn’t tighten his belt when it comes to investing in more secure ways to store the funds of Kraken’s customers. As a result, traders come to the platform drawn by its functionality and reliability.
Bitstamp is a crypto exchange founded by Nejc Kodrich and Damian Merlak in 2011, in their home country Slovenia. The founders’ idea was to create a trusted platform which meant that they had to move some of its operations someplace where the sale of cryptocurrencies will be guided.
In 2016, Bitstamp moved to Luxembourg and became the first nationally licensed exchange, which means that it follows the same laws just as any other financial institution in the country, and the European Union as well.
Kraken vs Bitstamp: The Comparison
One of the most important things when looking at crypto exchanges is to check whether they also support fiat-to-crypto exchanges. If you’re a beginner you would need to trade fiat currencies in order to purchase your first digital assets. Luckily, both Kraken and Bitstamp allow this type of trades.
Kraken supports US Dollars (USD), Canadian Dollars (CAD), and Euros (EUR), while Bitstamp only supports USD and EUR. You can also use GBP and Swiss Francs but they will be converted into USD or EUR before you trade with them.
The main advantage of Kraken over Bitstamp is in the number of supported cryptocurrencies. It currently supports over 20 cryptocurrencies to purchase and has 124 trading pairs. A unique thing about this platform is that it uses XBT as an abbreviation for Bitcoin, instead of the regular BTC. Kraken also offers advanced trading options like margin trading, conditional closes, and automated trading, making it a popular choice for experienced traders.
Bitstamp, on the other hand, supports five cryptocurrencies: Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Ripple. It has only 15 trading pairs.
We already told you how the founder of Kraken was determined to create the most secure crypto exchange for the traders who have lost their faith in these platforms with the issues surrounding Mt. Gox. To ensure that, Kraken offers a two-factor authentication when logging to your personal account, as well as a special Kraken “Master Key” which is another passcode used for restricted account actions, and a Global Settings Lock. This feature blocks any unfamiliar IP addresses from entering your account and making any changes to it for the period it has been activated for.
Kraken stores your funds in separate wallets to keep them safe from hackers’ greedy hands. It has a cold wallet, which functions as offline storage for the majority of your funds, and a hot wallet where the remaining assets are placed for easier access. For 8 years, Kraken’s system has never been hacked. The only security breach they’ve had so far was in 2017 when they had to deal with a DDoS attack. This is caused by a sudden surge of fake requests which impairs the normal work of the website, and can even lead to a crash. The problem was quickly solved by the team.
Bitstamp had faced some security issues in the past. Its reputation was tarnished in 2015 when more than 19,000 BTC were stolen from the company by hackers. Bitstamp did all in its power to reimburse the lost coins to its customers and showed that it has learned the lesson. It was actually them who first incorporated the two-factor authentication, mandatory confirmation mails, and the fully insured cold wallet which are now used by most other platforms, and by Kraken as well.
Another good thing about these two exchanges is that they have lower trading fees than most platforms. Kraken uses the maker and taker fee schedule and has a whole comprehensive guide on their website that explains this in more depth.
So, for example, there’s a maker fee of 0.16% and a taker fee of 0.26% if the trading volume is lower than $50,000. If the 30-day volume is higher than $50,000, the fees can get as low as 0.14% and 0.24% for maker and taker respectively. The platform also offers volume-based discounts on its trading fees.
Bitstamp uses a volume-based trading schedule where the maximum trading fee is 0.25%.
Kraken charges deposits made with fiat through wire transfers: a 5€ fee for EUR deposits, a $5 fee for USD when using domestic wire transfer, and $10 with SWIFT International wire transfer. The withdrawal fees are slightly higher.
With Bitstamp, EUR SEPA deposits are free, while withdrawals have a 0.90 fee. For users trading outside of the EU, the international deposits come with a minimum fee of 7.5 USD/EUR or a 0.05% fee applied. The withdrawals have a higher fee of 0.09%.
The advantage with Bitstamp is that they accept credit card purchases but, naturally, the fees for that kind of payment method are much higher (5%). Still, many newbies decide to opt for this option.
Kraken is usually criticized for its off-putting interface, which requires some knowledge of crypto trading jargon and maybe even some previous experience in this market. The website is quite clunky and oftentimes buggy. Its statistics, volumes, and charts are ideal for seasoned traders.
Before you create an account, Kraken will ask you to check whether your country is one of their supported areas. The exchange is available almost everywhere in the world, except in Japan, Iran, Iraq, Afghanistan, Cuba, North Korea, and Tajikistan because of differences resulting in crypto-financial regulatory issues. Upon verifying your account, you can choose a Simple interface if you’re a beginner, or go with the Intermediate or Advanced one instead. With the last two, you get more trading options and enjoy margin trading.
The inconvenience with Kraken is that it takes more days to complete a transaction if you deposit fiat currencies via bank transfer, as it takes additional 1-5 business days before they’re transferred to your Kraken account. It is then that you’re allowed to place the order.
Its opponent, Bitstamp, wasn’t made with beginners in mind either. However, compared to Kraken’s website, it’s much more user-friendly and cleanly organized. Newbies won’t have a problem finding their way around, as long as they click on the Simple order options when making an order.
With the sudden boom in crypto enthusiasts, crypto exchanges have been grappling with the challenge of providing proper customer support.
Kraken’s customers have been complaining about their lack of responsiveness. As a response, the team added a 24/7 live chat on their website, which makes it compulsory for them to answer the customers’ queries immediately.
Bitstamp offers superior customer support and for that they have earned the respect of many users. They’re known to respond within an hour and are always able to assist their customers in times of need. The team often hires additional staff in busy times to be able to attend to every support ticket promptly and efficiently.
When it comes to being mobile-friendly, Bitstamp is the clear winner. Out of the two, it’s the only platform that has a mobile app, available for download for both Android and iOS users. Kraken used to have an iOS app available but they’ve recently lost support for it, and it has been removed from the App Store.
Pros and Cons
- An average trading fee of 0.26%
- Supports fiat deposits and withdrawals
- Supports over 20 cryptocurrencies and 3 fiat currencies
- Two-factor authentication, a Master Key, and a Global Settings Lock
- Stores customers’ funds in hot and cold wallets
- Has a 24/7 live chat
- It takes 1-5 business days for your fiat deposit to reach your Kraken account
- No mobile application
- Challenging interface for beginners
- Average customer support
- The first nationally licensed exchange
- Has a maximum trading fee of 0.25%
- Offers fiat-to-crypto exchanges
- Supports credit cards
- Has offline fund storage
- Mobile- and user-friendly
- Excellent customer support
- Supports only five cryptocurrencies
- It was hacked once
In this guide, we went through all the important details you need to have in mind when considering these two platforms as your trading mediators. Both of them have a longstanding reputation in the crypto world, with millions of users optimizing their features daily.
Kraken and Bitstamp will offer you low trading fees and high-security measures to protect your funds. Both will allow you to trade with fiat currencies, but Kraken has a better choice of cryptocurrencies up their sleeve. However, Bitstamp is the one that supports credit cards as a payment method, plus it has a mobile app as well. Kraken is praised by seasoned traders for all those charts, technical information, trading tools, and options, but condemned by newcomers who like to keep it simple.
Since you can’t go wrong either way, pay close attention to your investment capacities and choose the exchange that caters to them the best.
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Disclaimer: Digital currencies and cryptocurrencies are volatile and can involve a lot of risk. Their prices and performance is very unpredictable and past performance is no guarantee of future performance. Consult a financial advisor or obtain your own advice independent of this site before relying and acting on the information provided.