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Bittrex review

BitMEX Vs. Bittrex: Futures Trading Versus Crypto Exchange

BitMEX vs Bittrex at a Glance

Beyond the first three letters of their names, BitMEX and Bittrex are nothing alike. BitMEX is an Asian cryptocurrency futures exchange that serves everyone in the world except Americans. Bittrex is an American cryptocurrency trading exchange.

Our guide to BitMEX vs Bittrex will walk you through the two exchanges to help you understand which one is the better fit.

BitMEX Bittrex
Pros
  • Fast, stable trading platform.
  • Focused approach minimizes customer complaints.
  • Allows 100X leverage.
  • Resources to help novices with futures trading.
  • Nearly 200 bitcoin trading pairs.
  • Expanding to fiat trading.
  • Available in the US (including New York)
Cons
  • Americans cannot trade on BitMEX.
  • Riskier form of trading for novices.
  • High trading fees.
  • No discounts for market makers.
  • No discounts for high-volume traders.

Visit BitMEX

Where Did They Come From?

BitMEX

BitMEX review
Source: BitMEX

When CitiGroup slashed 11,000 jobs around the world back in 2014, Arthur Hayes was one of the people cast aside. Hayes had built a futures-trading career in Hong Kong, first at Deutsche Bank and then with CitiGroup.

While deciding what to do next, Hayes began trading bitcoin. He quickly noticed how the crypto trading system was inefficient and underdeveloped compared to the world of equities trading.

Hayes and some friends began developing BitMEX in 2014. Registered in Seychelles, but operating out of Hong Kong, the original goal of BitMEX was to give financial institutions better tools for trading bitcoin. Futures trading, in their view, would let companies navigate the volatile crypto space by applying hedging strategies.

It was only after BitMEX opened for business in 2015 that the founders realized financial institutions weren’t ready for bitcoin. They had to pivot BitMEX towards individual investors and speculators.

“The commercial uses of Bitcoin are not large enough to warrant a liquid hedging market,” Hayes explained to Bitcoin Futures Guide in 2016. “We have grown exponentially since we pivoted to focus on retail traders.”

None of that growth came about with the help of venture financing. After initial attempts to raise venture capital failed, Hayes and his team decided to pursue an organic growth strategy.

“When we needed the VCs the most,” Hayes said in a Business Insider interview, “they didn’t want to be associated with Bitcoin or cryptocurrencies.”

Related: BitMEX Review: Crypto Futures Markets for Traders in Asia, Europe

Bittrex

Bittrex review
Source: Bittrex

Seattle-based Bittrex opened its doors to traders in 2014. At the peak of cryptocurrency markets’ hypergrowth last year, Bittrex customers were generating more than $3 billion in daily trading volume. The exchange now has nearly 4 million customers and about $90 million in daily trading volume.

Having systems that could scale with that growth helped Bittrex navigate 2017 better than many other exchanges. The company’s founders had spent their careers developing IT security systems for enterprise customers. They realized that most crypto exchanges had been started by enthusiasts with little experience in running enterprise-scale systems.

Bittrex’s systems, by contrast, was built on Microsoft’s Azure cloud platform. When trading skyrocketed last year, all Bittrex had to do was flip a switch to scale along with it.

Unfortunately, Bittrex’s verification and support systems weren’t designed with the same scalability in mind. As 2017 came to a close, delays kept building. Finally, Bittrex stopped accepting new customers in order to work through the backlog. Bittrex resumed new customer signups after the crypto markets cooled off in early 2018.

Related: Bittrex Review: Stable, Secure and Pricey

Supported Currencies and Listing Policies

Bittrex bitcoin market
Source: Bittrex

BitMEX does not let you trade cryptocurrency — all of the trading on the exchange is in futures contracts for bitcoin, bitcoin cash, ada, ether, litecoin and ripple.

Bittrex supports trading in more than 190 cryptocurrencies. Those trades happen in one of four markets. The bitcoin market is the largest with 194 trading pairs, followed by markets in ether (71 trading pairs), tether (19 trading pairs) and the US dollar (3 trading pairs).

Bittrex’s US dollar market launched in May 2018. Although it will eventually roll out to all Bittrex customers, it is now limited to “qualified international customers” and US corporate customers in California, New York, Montana and the state of Washington.

Listing policies

Bittrex has a dedicated FAQ for altcoin projects interested in getting listed on the exchange. If the results of Bittrex’s preliminary review are promising, the exchange will invite the project team to submit a more detailed application for a full listing review.

Company co-founder and CEO Bill Shihara described the process during an interview on the Unikrn Radio podcast. Shihara looks for projects that enhance the crypto community. In addition, the people involved in the project, from the developers to the advisors and investors, must have the background and commitment to make the project successful.

BitMEX does not discuss its listing policies. In fact, the exchange recently slashed in half the number of altcoins it supports. In March 2018, BitMEX stopped trading in half a dozen altcoins like dash and NEO in favor of the “more popular” contracts that remain.

Security and Hacks

Beyond saying it uses “industry-leading security practices”, Bittrex does not discuss its security systems in detail. Instead, the exchange’s marketing leans heavily on the decades of experience the founders have in developing enterprise security applications.

Shihara, for example, spearheaded the anti-malware efforts at mobility company Blackberry before joining Amazon to manage security engineering. Shihara’s co-founders, Richie Lai and Rami Kawach, have similar backgrounds at Amazon, Microsoft and Qualys.

As with Bittrex, BitMEX took an enterprise-based approach to developing its own systems. The company’s exchange runs on the same kdb+ database that the fiat financial industry uses to run futures exchanges. The software runs at such a fast pace that it can execute 100 audits per second without slowing down the trading system.

In a recent blog post, BitMEX Chief Technology Officer Samuel Reed said “The first rule of running a Bitcoin exchange is, and always has been, ‘Don’t lose the Bitcoin’.”

Reed goes on to explain that 100% of its customers’ bitcoin are held in cold wallets that require multi-signature approvals to access.

Availability and verification

As with many crypto exchanges, BitMEX bars residents of certain sanctioned countries, such as Iran and North Korea. Due to US regulations, BitMEX also blocks Americans from trading on the platform.

Bittrex serves most Americans. It is one of the few exchanges that can accept new customers from New York. Even though Bittrex hasn’t received a BitLicense, it submitted its BitLicense application to the State of New York early enough to be grandfathered in.

Verification policies

BitMEX only requires a name and email address to create an account, although it does reserve the right to verify users’ identities in order to comply with the anti-money-laundering regulations of Seychelles.

Bittrex has a multi-tier verification process. At its most basic level, you can sign up with an email address, deposit crypto and trade on the exchange. However, you cannot make withdrawals.

ID-verified accounts at Bittrex can withdraw one bitcoin per day. Activating 2-Factor Authentication increases the limit to one hundred bitcoin per day. Verification requires a scan of a government-issued identification document as well as a selfie.

Trading, Fees and Apps

Bittrex allows market and limit orders on its cryptocurrency exchanges, but does not offer margin trading.

BitMEX lets you buy and sell futures contracts (which have settlement dates) and perpetual contracts (which do not expire). Market, limit, stop, take-profit, post-only and other advanced orders are supported in the BitMEX interface. The exchange also supports margin trading with up to 100X leverage.

Trading interface

The BitMEX webapp lets you easily shift between the six futures markets. The customizable interface lets you customize which tools are visible, how they are laid out, and set your preferred color scheme.

BitMEX trading interface
Source: BitMEX

Expanding the chart lets you use the BitMEX analytical tools to evaluate price trends.

BitMEX time series chart
Source: BitMEX

Bittrex offers a similar trading interface and analytical tools.

Bittrex Bitcoin Ada Market
Source:Bittrex

Fees

While Bittrex designs its service to appeal to advanced traders, its fee structure has more in common with services like Changelly that focus on simple trades. Bittrex charges a 0.25% flat fee on all trades. Unlike most advanced exchanges, Bittrex does not reward high-volume traders or people who add liquidity to the market by discounting fees.

BitMEX does not discount its fees based on volume, but it rewards the market makers who add liquidity to the exchange by paying them credits rather than charging fees. Makers receive a 0.025% credit for bitcoin trades and a 0.05% credit for altcoin trades. Market takers, on the other hand, pay a 0.075% fee for bitcoin trades and a .25% fee for altcoin trades.

Mobile apps

Neither BitMEX or Bittrex offer mobile apps.

Customer Support and Community

Bittrex provides its customers with a knowledge base for self-support. The number of articles is not as extensive as the knowledge bases other exchanges provide, but the ones that are there cover the basics. A ticket-based system provides more personalized support for specific issues.

Because futures trading is new to a lot of crypto enthusiasts, BitMEX provides a thoroughly-documented support site. It also has a simulator where you can practice futures trading without being exposed to any risk.

Cryptocurrency Regulation

In an interview with the Wharton School of Business’ Wharton Fintech, BitMEX CEO Arthur Hayes addressed the regulatory environment in the United States. “The U.S. is intent on applying banking regulations to essentially an industry filled with startups,” Hayes said, adding that this burden made serving the US market unappealing.

Later on in the interview, Hayes addressed the question of China’s cryptocurrency regulations. “We’re not really exposed to regulatory risk per se in China,” Hayes said, “we don’t handle cash, so technically we don’t exist in China. We’re an offshore company.”

Hayes also explained that China’s regulations did not stop Chinese citizens from being the largest demographic among BitMEX customers. “… with the phenomenal number of people in China who have Bitcoin, and know what the coin is, is much larger than anywhere else. It’s still a very exciting place for digital currencies.”

Working within the system

Bittrex is one of the more proactive crypto exchanges when it comes to dealing with regulators. As mentioned above, Bittrex has applied for a New York State BitLicense.

Bittrex also hired two heavy-hitters from the Washington, DC, establishment late last year: Chief Compliance and Ethics Officer John Roth and Chief Strategy Officer Kiran Raj. Roth was most recently the US Department of Homeland Security’s inspector general. He also oversaw anti-money-laundering activities at the Department of Justice. Raj was a deputy general counsel at the Department of Justice.

When New York Attorney General Eric Schneiderman launched an inquiry into crypto exchanges, he sent fact-finding letters to 13 crypto exchanges. This sparked a scathing response from Jesse Powell, the outspoken founder and CEO of Kraken. Bittrex’s response was more measured:

“We look forward to working with NY Attorney General Schneiderman on our shared goal of improving transparency, accountability and security across all virtual currency trading platforms.”

Final Thoughts

Where you land on the BitMEX vs Bittrex question depends on how experienced you are as a trader — and whether or not you’re an American.

Bittrex offers a conventional trading experience where you can place market or limit orders. Its bitcoin market has nearly 200 trading pairs. However, the fees are higher than what you would find at similar exchanges, like Kraken, that also serve the US market.

BitMEX offers futures markets in bitcoin and a handful of altcoins with advanced order options and the ability to place margin orders with up to 100X leverage. If you know what you’re doing, then BitMEX can let you maximize your profits for whatever level of risk you’re comfortable with.

Christopher Casper

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