Bitstamp vs Poloniex at a Glance
European exchange Bitstamp only lists a handful of coins, but lets you trade them against dollars and euros. America’s Poloniex has a much larger altcoin listing — and supports leveraged trading — but is still rebuilding its support and verification processes.
The Bitstamp vs Poloniex comparison is not an easy one, but our guide will help you decide whether either is a good place for your crypto trading.
Where Did They Come From?
Bitstamp is one of the oldest exchanges still standing. Founded in Slovenia by a pair of bitcoin enthusiasts in 2011, Bitstamp now has a headquarters in Luxembourg and exchange operations in London.
Earning the trust of the traditional financial industry, as well as its regulators, has been one of Bitstamp’s long-standing priorities. CEO Nejc Kodrič told potential crowdfunders that his company is committed to “providing the oversight and reassurance that customers, investors and the financial industry need from a digital asset exchange.”
Whether Bitstamp has actually earned that trust is an open question. Regulators now place Bitstamp under the same microscope as the rest of the crypto industry.
Among the crypto community, however, Bitstamp has a reputation as a reliable place to trade cryptocurrencies as well as fiat currencies. CoinMarketCap ranks Bitstamp among the top 20 exchanges with more than $100 million in daily trading volumes.
Freelance composer Tristan D’Agosta founded Poloniex in Boston in 2014. By offering margin trading and dozens of cryptocurrencies, neither of which were common on American crypto exchanges, Poloniex became a popular place for the crypto community to trade.
“Polo,” as its customers fondly call the exchange, reached billion-dollar daily trading levels during last year’s mad rush into bitcoin. However, that success came at a heavy cost. Poloniex’s customer support and new customer verification processes almost collapsed.
A Wall Street-backed firm bailed Poloniex out by acquiring the exchange in early 2018. Circle Internet Financial’s leadership made it their top priority to fix the struggling exchange’s support and verification systems. They’ve made some progress, but Circle still has work to do before Poloniex can drive the company’s growth plans.
Poloniex’s daily trading volumes today are nowhere near their 2017 peak. CoinMarketCap regularly reports trading volumes in the $60 million to $70 million range, placing Poloniex among the world’s top 40 exchanges.
Supported Currencies and Listing Policies
Bitstamp’s crypto coverage is limited to the highest-volume coins: bitcoin, bitcoin cash, ether, litecoin and ripple. You can also trade US dollars and the euro, which gives Bitstamp an edge over some of the crypto-only exchanges.
Poloniex lets you trade in more than 60 bitcoin trading pairs. You can also trade on Poloniex’s ether, ripple and tether markets, but those markets are much smaller with only a dozen or fewer trading pairs.
With a business model that does not rely on any but the highest-volume cryptocurrencies, Bitstamp does not add new altcoins. If the exchange’s leadership has guidelines for new listings, they haven’t shared it with the world.
Poloniex goes for broader coverage than Bitstamp, but it’s not as aggressive as some of the Asian exchanges about supporting a huge number of coins. About all Poloniex says to altcoin teams interested in a listing is that they want “unique, innovative” projects that would be popular with Poloniex’s users.
Security and Hacks
Both Bitstamp and Poloniex have had their share of hacks and crypto theft.
Hackers hit Bitstamp in early 2015 and took the exchange for nearly 19,000 bitcoins. Although Bitstamp never discussed the details, someone on Reddit with a throwaway account posted documents showing the hack was a phishing attack targeting Bitstamp employees. Bitstamp shut down its exchange while it rebuilt its systems on new servers. Today, most of its customers’ coins are stored in cold wallets. Bitstamp also requires all of its customers to activate 2-Factor Authentication (2FA). Without 2FA turned on, Bitstamp users can’t make trades.
Poloniex’s hacking incident happened the year before Bitstamp’s. A few months after the exchange opened, someone stole 97 bitcoins. Poloniex absorbed the cost and tightened up its security systems.
Availability and Identity Verification
Opening its headquarters in Luxembourg gave Bitstamp instant credibility, as that made it a fully-regulated payment institution. Bitstamp’s compliance with EU law allows it to operate throughout most of Europe. Bitstamp also serves most Americans. Regulations in New York, Hawaii and Wyoming, however, keep the exchange out of those states.
The gaps in Poloniex’s coverage of America are a little different: Washington, New Hampshire and New York. Things may change for New Yorkers since Poloniex’s new parent company, Circle, has a BitLicense. Looking beyond the United States, Poloniex is available in more than 100 countries.
Both Bitstamp and Poloniex require all of their customers to complete know-your-customer (KYC) forms and get verified before allowing them to trade on the exchanges. This means providing personal information as well as scans of proof-of-identity and proof-of-residence documents.
Poloniex’s new owners have focused on reducing the new customer verification cycle time. A recent update highlighted the exchange’s progress, citing a 33% increase in instant verifications and an 85% decrease in wait times.
Trading, Fees and Apps
Where Bitstamp only allows traders to place market and limit orders, Poloniex also offers the ability to place margin orders.
Bitstamp’s website lets you manage your account and place orders. However, they would really prefer that you use the Tradeview web app to do your trading. Tradeview gives you advanced analytical tools to help you plan your trading strategy.
Poloniex uses a similar interface, but the analytical tools Poloniex offers are nowhere near as advanced as Bitstamp’s.
After its acquisition by Circle, Poloniex announced that it would lower the fees traders pay. The maker-taker fee structure now starts at 0.1% for market makers and 0.2% for market takers. Volume discounts start when your 30-day average trading volume breaks the $500,000 mark. Maker fees disappear when your average exceeds $7,500,000. Taker fees never go away, but drop to 0.1% at volumes of $30,000,000 every 30 days.
Poloniex does not charge for crypto withdrawals or deposits, but does take 15% of any interest you earn on loads to margin traders.
Everyone gets a fee
Bitstamp applies a range of fees on deposits. Credit card purchases of bitcoins get hit with a 5% surcharge on top of any fees your credit card company charges. Bitstamp assesses a 0.05% fee for international wire deposits (again, on top of any bank fees).
Fiat withdrawals get charged 0.09% when made through a wire transfer and 2% when done through a Bitstamp-issued debit card.
Bitstamp does not charge fees for cryptocurrency deposits and withdrawals — with the exception of a 0.1% processing fee on bitgo instant transfers.
High-volume traders benefit from Bitstamp’s volume discounts on transaction fees. Normally 0.25%, the fees can drop to as little as 0.1%. Of course to get the low rate you have to conduct more than $20,000,000 in trades every 30 days.
Beyond these traditional charges, Bitstamp has a complicated list of sixteen other fees that it could charge you. Accounts without any activity, for example, get charged $5 every month until the account’s empty.
The Poloniex trading system only works through the website, so avoid any Android or iOS apps that claim to be from the exchange.
Even though Bitstamp’s apps are legitimate, you may want to avoid them as well. Bitstamp’s Android and iOS apps don’t have the full trading capability of the exchange’s website. All you can do is place limit orders for bitcoin and altcoins.
Bitstamp hasn’t updated its apps since mid-December. This, along with the other issues, results in some poor ratings. The app has only 2.8 stars on the Google Play Store and a meager 1.8 stars in the Apple App Store.
Customer Support and Community
Compared to other exchanges, Bitstamp does not go out of its way to educate its customers. You won’t find any detailed support documents or knowledge bases. The only self-help information is a single FAQ page.
You could try asking a question on the Bitstamp subreddit, where the exchange’s support staff sometimes answers general questions. Otherwise, you’ll be forced to open a support ticket.
Poloniex puts a little more effort into documenting its systems for customers, but there are some significant gaps. The knowledge base doesn’t have any information on placing margin orders, for example— a crucial oversight for one of the few American exchanges to offer leveraged trading.
One of the first priorities for Poloniex’s new owners was to clear the backlog in service requests. Although the newly staffed-up support team has worked through half of the open tickets, that still leaves 83,000 open customer issues waiting to be addressed.
D’Agosta was not optimistic about Poloniex’s chances in New York. Speaking with Bitcoin Magazine, He called the regulations “limiting” and “frustrating”. The BitLicense’s high costs ultimately forced Poloniex to withdraw from New York. “BitLicense was not written with small businesses in mind,” D’Agosta said.
In contrast to Poloniex, Bitstamp seemed to have a good relationship with regulators. For example, Ars Technica reported that Bitstamp helped prosecutors investigate a corrupt DEA agent who was laundering bitcoins through the exchange.
Rather than walk away from New York’s crypto traders, Bitstamp was one of the few exchanges to apply for the state’s BitLicense. The company’s US lawyer, George Frost, told CoinDesk that “applying for the BitLicense is an expensive and difficult process.” The exchange expects getting a BitLicense will make it easier to handle ACH bank transfers.
Subpoenaed by the Feds
Bitstamp even received a seal of approval from the traditional finance industry. The CME Group, owners of the Chicago Mercantile Exchange, included Bitstamp in the basket of exchanges used to calculate a bitcoin price index. This price index was supposed to enable the CME Group’s futures market, which the US Commodities Futures Trading Commission (CFTC) had endorsed.
Kodrič told the CoinTelegraph that being part of the pricing index was only possible for exchanges with “solid systems to detect and prevent any potential market manipulation…. We’re proud that we’ve earned the trust of the industry.”
That trust quickly crumbled. The Wall Street Journal reported that the CFTC has subpoenaed Bitstamp and the three other exchanges. The CME Group settled its first bitcoin futures contract in January and asked Bitstamp and the other exchanges to provide the necessary trading data to calculate the index for the next futures.
Apparently, the exchanges refused. Citing “people familiar with the matter”, the Journal reported that the exchanges thought the request was too intrusive. The CFTC subpoenaed the exchanges for the trading data out of concern that the bitcoin futures market could be manipulated.
You may hesitate before using Poloniex for your trading, given its support and verification backlogs. But the exchange’s new owners, Circle, have deep pockets and the backing of Wall Street firms like Goldman Sachs– so they may be able to solve its lingering problems. Poloniex offers a large selection of bitcoin-altcoin trading pairs and even gives advanced traders the ability to place margin orders.
Bitstamp, on the other hand, is a much more conservative kind of crypto exchange. Only the highest-volume coins are allowed on its listings and you can’t place margin orders. Bitstamp’s fees are higher — and there are a lot of them.
If you’re looking for a place for pure crypto-to-crypto trading, then Poloniex may be the better choice. Consider Bitstamp if you need to fund crypto purchases with fiat (especially with a credit card) or if you take a conservative approach to crypto trading.