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Cryptopia Review

Cryptopia Review: Hundreds of Altcoins but Small Volume

Cryptopia in Brief

Cryptopia is a small cryptocurrency exchange operating out of New Zealand. The exchange stumbled as it grew from 30,000 customers to more than 2 million customers in less than a year. A new CEO is bringing things under control and positioning Cryptopia for even more growth.

With more than 400 altcoins listed on the exchange, Cryptopia is an interesting option for traders looking for coins the big exchanges don’t list. Our Cryptopia review will help you decide if you should give the exchange a shot.

Pros

  • Hundreds of coins.
  • Straightforward interface.
  • Resources for learning about obscure coins.
  • Friendly relationship with regulators.

Cons

  • Small daily trading volumes.
  • Fiat deposits suspended.
  • Altcoins get delisted frequently.

What is Cryptopia?

History

New Zealand entrepreneurs Rob Dawson and Adam Clark founded Cryptopia as a part-time hobby in 2014. Working full-time jobs, the two co-founders ran the exchange on their own for the next three years. It was not until early 2017 that Dawson and Clark quit their jobs to focus on Cryptopia exclusively.

At that time, the exchange had a mere 30,000 users trading an average 300 BTC per day. As demand for cryptocurrencies accelerated in 2017, Cryptopia was swept right along with it. By December, the exchange had grown to 500,000 users. On the last day of 2017, the millionth customer joined the exchange. Three days later, membership grew to 1,100,000 before jumping to 1,200,000 in less than 24 hours.

Cryptopia’s systems could not keep pace and response times from the verification and customer support staff ballooned. At the same time, Cryptopia’s trading engine struggled under the heavy loads imposed by the new customers. The exchange had to suspend trading on the litecoin and dogecoin base markets.

A new CEO (more on that below) brought the focus and experience needed to bring response times to within three days. In mid-April, Cryptopia reinstated the litecoin and dogecoin base markets.

Cryptopia now claims to have more than 2 million users from around the world. CoinMarketCap ranks the exchange in the low 70’s with about US $7 million in daily trading volume.

Leadership and investors

After Cryptopia’s internal systems broke under the pressure of exponential growth, it became obvious to co-founders Dawson and Clark that the exchange needed help. They turned to local business consultant Alan Booth. Booth had built a fifty-year business development career helping New Zealand companies grow in the global marketplace.

Booth’s letter to the Cryptopia community acknowledged the systematic break down of the previous months. He promised a full focus on “short term urgent priorities of faster support response times, improved user experience and enhanced transparency and security.”

Protecting customers’ coins

Legal and regulatory compliance

Cryptopia is registered with the government of New Zealand as a financial service provider which lets it operate a “money or value transfer service.”

Cryptopia CEO Alan Booth explained in his interview with CoinCentral that “working with regulators is critical, in my opinion, and we’re doing that very well…. In New Zealand, in particular, we have a great relationship with the regulators and all the powers that be, right down to the banks….”

Coin listing policies

Cryptopia charges its coin listing team with a mandate to “offer all the coins that our customers want to trade.” The review process requires a team to verify their identities and supply extensive background information.

In what is becoming a controversial practice among crypto exchanges, Cryptopia charges project teams to list on its exchange. Those fees are payable in dotcoins, the utility token Cryptopia uses for its internal transactions. Paying the listing fees, which  start at 5,000,000 dotcoins, does not guarantee a Cryptopia listing. However, for the projects that pass the review process, the listing fee ensures placement on the bitcoin, dogecoin and litecoin base markets.

Cryptopia’s standards

Listing zestcoin on Cryptopia
Source: Cryptopia

Cryptopia’s listing team has to evaluate whether a new coin even can operate in New Zealand. Coins that act like pure currencies or serve as utility tokens have a good chance of getting accepted. On the other hand, coins that fall under the New Zealand government’s definition of a “financial product” could fail the test.

Cryptopia also reviews the coin’s technological foundations. Among other technical requirements, a project team must demonstrate that their digital wallet can scale with demand and that its mining mechanism is not vulnerable to 51% attacks.

The most recent addition to Cryptopia is the altcoin zest– “the world’s first cryptocurrency designed for cyclical good.” This project intends to use its blockchain as a funding mechanism for scholarships, charities and non-governmental organizations.

Staying on Cryptopia

Delisting rupees on Cryptopia
Source: Cryptopia

Failure to communicate issues promptly could result in a delisting. Likewise, changes to the coin that violate the exchange’s rules or New Zealand regulations may get the coin booted from Cryptopia.

Most recently, Cryptopia dropped the rupee (an altcoin, not India’s fiat currency) from its exchange due to an upcoming hard fork. Cryptopia froze trading in rupees and gave customers one month to withdraw their balances.

Cryptopia tells its customers what delisting means for their holdings:

“Once a coin is delisted, the wallet will be removed from Cryptopia and we will be unable to recover any remaining coins which were not withdrawn.”

This could be bad news for anyone who isn’t tracking the Cryptopia news feed or isn’t paying attention to developments in the coins they hold. More than one Cryptopia customer has complained in forums that they lost their holdings in a delisting.

Network security

Cryptopia's hardware 2FA generator
Source: Cryptopia

While there is no history of the exchange being hacked, that may have more to do with Cryptopia’s relative obscurity prior to 2017. Even after the surge in registrations, though, the exchange did not suffer any direct security breaches. Cryptopia does not discuss its security policies.

The exchange uses 2-Factor Authentication (2FA) to protect its users’ accounts in the event of phishing attempts. After a recent upgrade, the exchange began encouraging its customers to stop using the email-based authentication. They recommend instead app-based dynamic authentication using Google Authenticator or Authy. Customers can also buy the Cryptopia Authenticator Device, a physical code generator linked to their account.

Customer support

In early 2017, Cryptopia’s co-founders were the only full-time employees. They handled the relatively few support requests the exchange’s 30,000 customers generated. By September, the exchange’s staff increased to 12, but Cryptopia’s growth expanded faster than the support team itself.

By early 2018, response times for support requests had ballooned to weeks. One of Alan Booth’s first priorities as CEO was getting the support situation under control. He expanded the number of contractors and set up a second support center in the United Kingdom.

Cryptopia reputation

Cryptopia provided a convenient way for people in New Zealand to join the cryptocurrency community. The ability, until recently, to deposit New Zealand dollars let Kiwis avoid the costs of trading their local currency for US dollars or euros.

How to Join Cryptopia

Who can join?

Cryptopia is available worldwide to anyone over the age of 18. Your local regulations may not allow you to use the exchange, but Cryptopia leaves it to you to figure out any applicable laws.

Verification

Individual accounts

When you first set up a Cryptopia account, all you have to provide is an email address. This Level 1 Verification allows you to deposit and trade cryptocurrencies without any limits. Cryptocurrency withdrawals, however, are limited to the equivalent of $5,000 NZD every 24 hours.

Getting a Level 2 Verification increases this 24-hour limit to $50,000 NZD. Cryptopia requires personal information, a scan of a government-issued identification document, and an identification selfie.

You can move from Level 2 to Level 3 by providing proof of residency and statement explaining how you can afford to trade at a level that requires a $500,000 NZD deposit and withdrawal limit.

What Can You Trade on Cryptopia?

Cryptocurrencies

Cryptopia lists 400 different coins trading in one or more of Cryptopia’s five base markets. Most of the coins are paired with bitcoin, dogecoin and litecoin. The tether base market only has 29 currency pairs while the nzed base market has a mere 19-coin listing.

Nzed, with the symbol NZDT, is a token tethered to the New Zealand dollar. CoinTelegraph reported that the Cryptopia team created the nzed in response to comments made by speakers at The Blockchain Conference in 2017. Over the course of 8 hours, the team built the new token and began distributing it at the conference.

Researching altcoins

With so many altcoins listed on the exchange, Cryptopia created its Coin Information section to give traders more details about each coin.

Cryptopia provides information on how each altcoin is structured, as well as links to the project’s website and source code. You can also see what fees and withdrawal limits Cryptopia applies to the altcoin.

A rating system gives traders an idea of how thoroughly the project team has positioned their altcoin for success. For example, producing wallets for all of the major desktop and mobile platforms increases the number of potential community members. Navcoin, for example, has one of the best scores on the exchange due, in part, to having wallets for anyone interested in getting the altcoin.

Highly rated altcoin on cryptopia
Source: Cryptopia

Altcoins get lower scores if their project teams paid themselves a large share of the ICO. Projects that provide less transparency by not having a website or block explorer also get lower scores. Einsteinium’s lack of Linux, web and paper wallets drove its score towards the bottom.

Low-rated altcoin on Cryptopia
Source: Cryptopia

Fiat currencies

Cryptopia used the nzed as a way to bridge the fiat and crypto worlds. Customers could deposit New Zealand dollars into their account which then were converted into nzeds. Customers could then trade their nzeds for other cryptocurrencies.

Cryptopia had to suspend its fiat deposits in early 2018 when its bank closed the exchange’s nzed-related accounts. The New Zealand Herald received a statement from ASB Bank that, without acknowledging whether it was the bank in question, said it was reviewing its relationships with crypto exchanges due to the “complex regulatory environment.”

Fiat transactions are still unavailable as Cryptopia’s leadership works on getting a new bank. Trading of the nzed continues even though deposits and withdrawals are not possible.

Currency exchanges

You can buy and sell cryptocurrencies by placing what Cryptopia calls an Instant order. Simply select an open order and enter the quantities you want to trade. With that done, your order will close instantly and your new coins added to your account.

Alternatively, you can place an Open Order to buy or sell coins by entering the quantities and your desired price. Then you’ll have to wait for another trader to see your order and match it.

Advanced trading

Arbitrage information on Cryptopia
Source: Cryptopia

With the exception of API access, Cryptopia does not offer any advanced trading features. The exchange does, however, have an arbitrage page that compares cryptocurrency prices on Poloniex and Bittrex. Armed with that information, you could place orders on each exchange that lets you profit from the price difference.

Trading Tools and Fees

Trading interface

The Cryptopia web app opens with summary stats on the top markets. To the left a tabbed interface lets you switch between the five base markets.

Cryptopia's trading interface
Source: Cryptopia

Selecting one of the currency pairs brings up the price history and open orders for that pairing.

BTC/ETH market on cryptopia
Source: Cryptopia

The chart tool lets you analyze price trends by applying tools such as Fibonacci lines. The tools are not as extensive as those you’ll find on Binance or other large exchanges.

Chart tool for Cryptopia trading
Source: Cryptopia

You can see the liquidity in the currency-pair market by switching from the chart to the order book.

Cryptopia's order book for ether
Source: Cryptopia

Below the analysis tools, forms let you place Instant Orders or Open Orders.

Forms for buy/sell orders on cryptopia
Source: Cryptopia

Below the forms, you can find a list of Open Orders on both the buy and sell sides. Selecting one of these orders lets you initiate an Instant Order.

Open orders on cryptopia
Source: Cryptopia

Mobile app support

Although Cryptopia does not have its own app, some developers have used the Cryptopia API to create apps for iOS and Android. You should be careful using any app that asks for your Cryptopia account information as it could be a phishing attempt.

Deposits and withdrawals

Fiat currencies

Cryptopia suspended deposits of New Zealand dollars until the exchange develops a new banking relationship.

Digital currencies

Cryptopia does not charge a fee for deposits but withdrawals incur a flat fee that varies by cryptocurrency. CryptCoins, for example, have a 0.01 CRYPT fee while bitcoins have a 0.0005 BTC fee.

Transaction fees

Cryptopia charges a flat 0.2% fee on all trades made on the exchange.

Final Word

Cryptopia’s early success came from providing people living in New Zealand a convenient on-ramp to cryptocurrency ownership. The rapid growth in customers from beyond New Zealand’s shores, however, is due to Cryptopia’s extensive altcoin listings.

Once the exchange’s new CEO brings Cryptopia’s tottering systems under control, he plans to add more services to raise Cryptopia’s reputation and attract more crypto traders.

For new traders

Cryptopia makes getting started on the exchange easy thanks to a  simple registration process and limited Level 1 Verification requirements.

While the sheer number of altcoins available on Cryptopia can be overwhelming, the rating system the exchange provides is a helpful way to find altcoins you can be comfortable buying.

For advanced traders

Cryptopia does not provide advanced risk-management tools or opportunities to maximize returns through leveraged trading. Advanced traders can still find opportunities in Cryptopia’s listing of more than 400 altcoins.

Christopher Casper

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