Bitfinex Review: Legit Or A Risk?
Founded in 2012 as a peer-to-peer margin lending platform, Bitfinex is a Hong-Kong based trading platform which offers advanced services to traders. However, the company is known for a couple of high-profile security breaches, so many people are unsure of its legitimacy. We’re here to shine a light on the platform, with an honest Bitfinex review.
Read on to learn everything you need to know about Bitfinex.
What Is Bitfinex?
Bitfinex is a Hong-Kong based trading platform which is best suited to advanced traders. As well as traditional trading, Bitfinex also facilitates margin trading and lending, making it an ideal platform for traders looking to expand their portfolio.
The company was founded in the British Virgin Islands by iFinex inc in 2012 as a peer-to-peer margin lending platform, dealing in only Bitcoin. It has since expanded to offer a vast range of trading services to advanced traders.
Bitfinex is also known for its past of high-profile hacks and allegations, which has led many traders to be wary of the platform. However, the platform has a range of security features which are bound to provide reassurance to many.
So, how secure is Bitfinex and should you trust it with your investments? Read on to learn everything you need to know about Bitfinex.
What Can You Do With Bitfinex?
First of all, let’s take a look at some of the features that the Bitfinex platform offers to traders.
Bitfinex has the most liquid order book in the world, where users are able to deposit, trade and withdraw digital tokens. This helps to ensure a low spread for traders, enhancing price stability and increasing confidence.
Through Bitfinex, traders are able to borrow and trade with up to 3.3x leverage, by receiving funding through the peer-to-peer margin trading platform. The borrowing terms including the amount, duration and interest can be determined by the user themselves or automatically through Bitfinex.
Through Bitfinex, cryptocurrency owners can also earn interest by lending funds securely to other traders. Funding can be offered across a wide range of cryptocurrencies, with the lender choosing the rate and duration.
Over The Counter Services
For traders who don’t want to go through public order books, Bitfinex offers an over the counter trading facility. This allows users to trade large sums of cryptocurrency privately, matching traders together and helping them to secure private deals.
Staking And Lending
Bitfinex users are able to stake or lend their cryptocurrency quickly and easily. This is done through the Bitfinex staking and lending service, without the need to have technical knowledge or specialist staking software.
Pros And Cons Of Bitfinex
Before we take a closer look at the functionality of Bitfinex, let’s take a look at some of the pros and cons of this platform.
|✅ Wide range of trading options||❌ Only suitable for advanced traders|
|✅ High liquidity||❌ Troubled history|
|✅ Reasonable fees|
|✅ Great customer support|
Advantages Of Bitfinex
There are many advantages of Bitfinex which are enjoyed by its users across the globe. Here are just a few of the advantages of Bitfinex.
Wide Range Of Trading Options
Bitfinex offers its users a broad range of trading options. This includes margin trading and margin funding, as well as limit, stop, trailing stop, market, fill or kill, OCO, iceberg and hidden orders.
Bitfinex has the most liquid order book in the world, with an extremely high volume of BTC/USD trades each day. This helps to guarantee price stability and confidence for traders, whilst helping to ensure a low spread.
Bitfinex offers extremely reasonable fees for the services that it offers. This includes lower “maker” and “taker” fees than most leading competitors. Its withdrawals are also generally cheaper than other similar exchanges such as Kraken and HitBTC.
Great Customer Support
The customer support offered by Bitfinex is outstanding. Users are able to access support 24/7 via email, with queries typically answered within 12 hours. There is also an extensive knowledge base available online which covers most of the frequently asked questions.
Disadvantages Of Bitfinex
There are also some disadvantages that you need to be aware of, in order to make an informed decision about whether Bitfinex is right for you. Here are the key disadvantages of Bitfinex.
Only Suitable For Advanced Traders
First of all, Bitfinex has been designed for advanced traders. Although the user interface is fantastic, the entire platform has been created with advanced traders in mind. This means that it is not suitable for use by beginner traders.
If you’ve heard of Bitfinex in the past, it’s likely to be a result of its troubled past. Bitfinex has been the target of some high-profile hacking security breaches, one of which was the second largest Bitcoin theft in history so far. This has led many traders to question the security of Bitfinex.
Which Currencies Does Bitfinex Support?
Contrary to its name, Bitfinex doesn’t just support Bitcoin. Cryptocurrencies supported by Bitfinex include Bitcoin, Ethereum, Monero, Dash, Zcash, Ripple, EOS, Iota and many more.
Fiat deposits must be made through wire transfer and can be made in many of the major currencies including EUR, GBP, USD and JPY.
When you deposit money into Bitfinex, crypto deposits are free whilst bank wire transfers are charged at 0.1%. Withdrawals in Euros or US dollars are also subject to a 0.1% fee, whilst withdrawals in cryptocurrency depend on the currency being withdrawn. Bitfinex’s withdrawal fees are typically cheaper than its two main competitors, HitBTC and Kraken.
As with any cryptocurrency trading platform, Bitfinex charges fees for trader. These fees vary depending on the amount being trader and whether the user is the maker or the taker of the trade. Maker fees vary from 0.0% to 0.1% whilst taker fees range from 0.055% to 0.2%.
In terms of maker and taker fees, Bitfinex is one of the cheapest advanced trading platforms on the market. For example, Poloniex charges a 0.25% taker fee and a 0.15% maker fee for its users.
These fees make Bitfinex one of the cheapest advanced trading platforms on the market, a strong advantage for the platform.
Who Can Use Bitfinex?
Bitfinex is suitable for advanced traders who have experience in different types of trading. It is not a suitable platform for beginner traders due to the complexities of the platform.
But which countries are eligible to sign up to Bitfinex? According to the terms of service, the only country which is excluded from using the Bitfinex platform is the United States. This means that if you live in the USA, you will not be able to sign up with Bitfinex.
If you stick to the basic services offered by Bitfinex, which include exchange, margin trades, deposits, and withdrawals, you will only need to provide a valid email address to sign up to the platform. This means that anyone could sign up to the platform. However, if you want to use the more advanced features of the platform, you will also need to provide proof of address.
You might assume that due to the historical security breaches, Bitfinex lacks in security. However, this is far from the truth. Security is a top priority at Bitfinex, with excellent security precautions taken. This could be a result of lessons learnt from past mistakes.
For example, not only does Bitfinex enforce two-factor authentication, but users can also opt to take advantage of Universal 2nd Factor (U2F) authentication. This involves logging in from a second device such as a USB stick.
Bitfinex also takes measures to track behavioural patterns which can trigger manual inspections on unusual withdrawals. Notifications are sent to users and accounts can be frozen if suspicious activity is suspected.
Additionally, the platform protects its systems by backing up databases on a daily basis, automatically encrypting and duplicating the back up data. There is also enhanced protection against Distributed Denial of Service (DDoS) attacks, reducing Bitfinex’s vulnerabilities.
Has Bitfinex Ever Been Hacked?
Bitfinex has hit the headlines several times over the years, mainly for its security breaches. The first occurred in 2015, when the exchange was hacked. 1,500 Bitcoins were stolen and unfortunately the right measures were not put into place to prevent the next attack.
In April 2016, a far more significant hack hit Bitfinex, with almost 120,000 Bitcoins stolen. This currently stands as the second largest hacks in history. As a result, Bitfinex cut all user accounts by 36% to distribute the loss between users. Over the next year, the clients were fully compensated for their losses.
Unfortunately, the difficulties for Bitfinex didn’t end there. Although the platform has not been hacked since 2016, it has had its fair share of financial difficulties. One year after the infamous hack, in April 2017, Bitfinex had its bank accounts frozen for several weeks. This caused difficulties for clients and distortions in Bitfinex’s pricing. As a result of this, Bitfinex decided to cease accepting US customers to avoid future issues with US banks.
Is Your Money Safe With Bitfinex?
There is some debate as to the safety of Bitfinex. The current security measures in place are some of the strongest in the industry, meaning that Bitfinex is one of the most secure platforms. However, this does not erase the past history of the platform, which many traders will find difficult to forget.
Some traders choose to avoid Bitfinex as a result of its troubled history. However, others argue that the hacks that the platform has suffered has forced it to prioritise security, increasing its resistance to future attacks – and this is certainly evident in its current security measures.
Overall, Bitfinex appears a secure and safe platform today, and the fact that the platform has fully reimbursed its clients for previous hacks gives us confidence for the future.
Which Is Better Bitfinex Or Binance?
Bitfinex and Binance are both popular trading platforms. However, there are some key differences which will influence which platform you ultimately choose. Whilst Binance provides access to the widest range of digital currencies, Bitfinex supports both fiat-to-crypto and crypto-to-crypto trading.
It’s important to weigh up the pros and cons of each platform before deciding on the right exchange for your needs. You’ll need to consider which currencies are supported, the deposit methods, security measures and fees before choosing a crypto exchange.
Is Bitfinex A Wallet?
Whilst first and foremost Bitfinex is a crypto trading platform, it does incorporate three wallets in which you can store your cryptocurrency. This includes an exchange wallet, a margin wallet and a funding wallet. The exchange wallet is used for exchanging funds between currencies, the margin wallet is used for trading leveraged short and long positions and the funding wallet is used to provide margin funding to other traders.
Bitfinex: The Verdict
Despite its troubled past, Bitfinex is a successful and popular crypto trading platform that continues to perform well year-on-year. If you are an advanced trader, Bitfinex could be a great option for you. However, if you are a novice trader and are new to cryptocurrency, there are far simpler trading platforms out there which would be much better suited to your needs.
It isn’t straightforward to deposit funds into Bitfinex, and the interface can seem complicated to novice traders. This will mean that you would need to take the time to understand the platform, meaning that you may be more likely to make mistakes.
However, for more advanced traders, Bitfinex offers some exciting features such as margin funding, leverage, and multiple order types. Combine this with the high cryptocurrency liquidity of the platform and you’ve found yourself a great advanced trading platform.
I’m Jon, owner of Trade Wise at https://tradewise.community/ and https://www.youtube.com/channel/UC7VmOx8DbvX4Rbrac2pPcjw
I review forex and crypto trading products and services to find the best of what’s out there for creating a passive income without becoming a full-time trader.