Bitfinex Exchange Review | Fees, Security, Pros and Cons
Bitfinex is a well-known name in the crypto community, but seeing as it has had its fair share of controversy, is this exchange still safe to use? In our review, we will help you understand how this cryptocurrency exchange works, analyzing its features, security, pros, and cons.
The exchange is known for offering several trading pairs and supporting the most popular digital assets. In this Bitfinex review, we will also share with you which are the benefits of using this platform. The article will make a general overview of the services provided by this crypto exchange.
Bitfinex Review: Exchange Overview
Bitfinex was established in the British Virgin Islands, in 2012, by Raphael Nicolle, a Frenchman that was also part of iFinex.inc. It is based in Hong Kong and first started out as a Bitcoin-only, P2P margin lending platform.
At that time, there were just a few cryptocurrency exchanges and the industry was starting to move forward. Thus, Bitfinex played an important role in order to help cryptocurrencies reach new users. This decision allowed Bitfinex to become one of the largest and most recognized platforms to trace cryptocurrencies in the world.
Bitfinex is also related to Tether (USDT), the largest stablecoin in the world. This digital asset allows users to hedge against volatility in the market from traditional cryptos. Tether has a value of $1 and the company behind the exchange claims it is backed by different assets.
The exchange revealed in 2018 that it will be relocating to Switzerland.
It was reported that Bitfinex was built atop of a former exchange called Bitcoinica, which was launched a year prior to Bitfinex. Bitcoinica had a lot of issues, as it was hacked twice in just a few weeks and lost 61,000 BTC, which would be worth $600,000,000 million today.
Bitfinex is one of the most liquid exchanges on the market, usually having high volumes and low spreads (the difference between the best bid and ask prices).
Now we will continue our review by looking into all of the features provided by Bitfinex.
Supported Currencies and Available Countries
One of the main characteristics of Bitfinex is the fact that it has a large number of trading pairs. This is very useful for individuals and enthusiasts who want to have a diversified crypto portfolio. Furthermore, this was very useful for traders and investors that enjoyed the Initial Coin Offering (ICO) boom.
The exchange supports more than 200 cryptocurrencies, meaning that
traders are able to trade with top coins, such as Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Ethereum Classic (ETC), Bitcoin Cash (BCH), Dash (DASH), Ripple (XRP), TRON (TRX), Zcash (ZEC), NEO (NEO), Monero (XMR), as well as more exotic coins, such as Augur (REP), Bitcoin Gold (BTG), Golem (GNT), Qtum (QTUM), Status (SNT), Bytom (BTM), Verge (XVG), Storj (STORJ), Basic Attention Token (BAT), 0x Project (ZRX), FunFair (FUN), and Tezos (XTZ).
Four fiat currencies are also supported: USD, EUR, GBP, and JPY.
The platform can be accessed by most countries in the world except for:
• United States of America;
The web interface of Bitfinex can be used on most major PC and tablet operating systems, including Windows and Mac, as well as mobile devices that work on Android and iOS.
User Interface and Experience
Bitfinex developed its interface for experienced traders, featuring advanced trading options and chartings. Because of this, its platform might seem confusing to novice traders, so we only recommend expert traders to use this exchange.
The GUI can be customized by the user to fit its trading needs, having a diversity of order types. Advanced charting functionality and API access are also included.
Bitfinex also developed a mobile app that can be downloaded and installed on both iOS and Android devices. Both apps are rated positively on their respective app stores, and it seems that the company is constantly providing new updates for them.
Users have a variety of trading types, including:
• Over the Counter (OTC);
• Limit Order;
• Market Order;
• Stop Order;
• Stop-Limit Order;
• Trailing Stop Order;
• Fill or Kill (FOK) Order;
• Immediate Or Cancel (IOC) Order;
• Scaled Orders;
• “Reduce Only” Order;
• One Cancels Other (OCO) Order Option;
• Hidden Order Option;
• Post-Only Limit Order Option.
Shorting on Bitfinex
Users on the exchange can also short their positions, betting on future crypto price movements.
Margin trading is also available, offering 3.3x leverage through the site’s P2P (Peer to Peer) margin funding platform. The amount, duration, and interest of the borrowing conditions can be set by the user or through Bitfinex.
Margin trading is specifically useful for traders that want to increase their profits. Although this is highly risky, it can be very profitable for trading experts that know where the market is headed. When using margin to trade cryptocurrencies users should also utilize stop-limits orders to reduce their exposure.
In addition to the aforementioned services, users can also lend their virtual currencies. This will provide margin traders with some funds in exchange for a small interest. Lenders can offer their funds for any period they want and for the interest rate they desire. This can be a very good way to earn some extra income with funds that are stored in the platform.
It is worth mentioning in this Bitfinex review that the exchange has set up an over-the-counter market (OTC). This is a great solution for traders that want to handle large trades. This would reduce massive orders in the spot exchange, which could negatively affect volatility.
All the trades performed through the OTC market would provide access to larger liquidity. This is a feature that is available for Binance traders.
How to Get a Bitfinex Account
In order to register on the website, you have to follow a few steps:
- Go to the site and click on the “SIGN UP” button from the top right of the page;
- Enter your username, password, time zone, email address, and agree to the terms to continue;
- Click the “Open Account” button after completing the captcha and agreeing to the terms;
- Wait for the confirmation from the Bitfinex team;
- Click the “Confirm Email Address” link.
How to Use Bitfinex Exchange
1. Log into your Bitfinex account;
2. Click the “Deposit” link on the top right;
3. Select your crypto and agree to the fee terms;
4. Select any of the wallets (exchange/margin/funding) according to your account;
5. Click on “Click to generate address;”
6. Click “Copy to Clipboard” and paste this address in the wallet from where you will be transferring your funds;
7. In order to deposit fiat currencies, verify your account by submitting the required documents.
How to Make Buys
1. From your account, click “Trading” from the top left;
2. Select the pair you want to trade with;
3. Go to the “ORDER FORM” and select the “Exchange” tab;
4. Select your type of order (eg. Market) the amount you want to buy;
5. Click the “Exchange Buy” button to place the order.
1. Click the “Withdrawal” link on the top right;
2. Select the crypto you want to withdraw;
3. Enter the wallet address you want to send your funds, withdrawal amount, and select the wallet (exchange/trade/funding) from which you will withdraw the funds;
4. Click the “Request Withdrawal” button.
For crypto operation on Bitfinex you do not have to go through verification; just confirm your email address. But for fiat operations, you will have to present the KYC (Know Your Customer) identity documents (passport, driving license, etc.).
It can take up to 6 or 8 weeks for the verification process to be completed.
Bitfinex Exchange Fees
The fee system of Bitfinex is based on a maker-taker structure, which applies to the trading volume of a 30 day period.
Derivatives order execution:
- Fiat deposit: 0.1% fee;
- Cryptocurrency deposit: Free for deposits above $1,000. Nominal (less than $1) fees apply otherwise;
- Tether (USDT) deposit: Free for deposits above $1,000 equivalent. 20 USDT otherwise.
- Fiat withdrawal through bank wire: 0.1%;
- Fiat withdrawal through express bank wire: 1%;
- Fiat withdrawal through high frequency/volume bank wire: 3%;
- Cryptocurrency withdrawal: depends on crypto, usually less than US$1 equivalent;
- Tether (USDT) cryptocurrency withdrawal: 20 USDT.
Margin trading fees
- Charge on fees collected by margin trading providers: 15%;
- Charge on fees collected by margin trading providers when opened by a hidden offer: 18% fee;
- Charge on funding that is borrowed and returned without being used in a margin position: Up to 1 full day’s interest.
Bitfinex users have two available payment methods: bank wire and crypto.
Through bank transfers, users are able to deposit the following fiat currencies: EUR, JPY, GBP, and USD. No credit/debit card payments are supported.
Bitcoin deposits can take up to 30 minutes or more depending on the network traffic.
Fiat deposits have no minimum or maximum limits. When making fiat withdrawals, there is a minimum amount limit of $200, and a fee limit of US$20. No trading limits are available on Bitfinex.
Bitfinex has been embroiled in a slew of hacks and controversies that make their security implementations questionable.
The Exchange used the seriously flawed code of Bitcoinica to base its platform on. As we mentioned at the start of our Bitfinex review, prior to its closing, Bitcoinica suffered multiple hacks.
This may explain why, in 2015, the website suffered a hack of 1500 BTC. But the following year in August 2016, it lost, even more, 100,000 BTC, in another hacking incident – an amount estimated at around $1 billion by today’s standards.
More problems ensued as the exchange was incapable of handling the losses without making its customers to suffer. In order to cover for the losses, the platform took 36% from its users’ balance, including those that were not affected by the attack. Bitfinex gave customers in exchange for a revenue share token called BFX. The swaps were forced, and many users were not happy with the predicament, many claiming that the platform faked the entire ordeal to get their money.
It was alleged that one year later, all clients received full compensation if they held on to their BFX tokens.
After this, Bitfinex had issues with its banking partners, Wells Fargo and a Taiwanese bank, as the both of them ceased relations with the exchange in 2017, which over time snowballed into one of the biggest crypto news of 2019. Unable to secure a normal banking relationship, the exchange deposited $1 billion with a Panamanian payment processor called Crypto Capital Corp. It was alleged that in 2018, Bitfinex knew or suspected that Crypto Capital had run away with the money, but never informed investors of their loss.
In April 2019, New York’s Attorney General, Letitia James, accused Bitfinex using money from Tether’s reserves in order to cover up a $850 million loss.
US dollars and US customers were no longer accepted by the exchange because of banking issues.
Bitfinex claims that 99.5% of client funds are stored in a cold wallet that uses a multi-signature function in which the keys are geographically distributed in various secure locations.
Users’ accounts have 2FA and U2F, as well as PGP email encryption. The accounts are also monitored and have implemented advanced verification features, such as:
• analysis of the saved login data;
• system that discovers IP address changes and averts session hijacking;
• email notifications with a link to instantly freeze your account in case of suspicious account activity;
• IP address monitoring.
The support team of Bitfinex can be contacted on a 24/7 basis through a ticketing system. To access this, scroll down and go to the “Support” section. Tickets are responded within 12 hours, but some have reported that it sometimes takes more for them to respond. There is no live, chat, or phone number.
The site also features a Knowledge Base that covers almost subjects related to account functions and trading.
Bitfinex Exchange Reputation
The crypto space is full of speculations regarding Bitfinex and Tether’s involvement in price manipulation. There have been many users that have pointed out a correlation between the two entities and bitcoin price fluctuations, pumps and dumps, as well as fake volumes.
On April 24th, 2018 the exchange was accused by New York’s attorney general’s office of covering $850 million losses:
“Our investigation has determined that the operators of the ‘Bitfinex’ trading platform, who also control the ‘tether’ virtual currency, have engaged in a coverup to hide the apparent loss of $850 million of co-mingled client and corporate funds.”
The company denied these accusations, but users are now wary of the exchange’s trustworthiness.
Many sites or individuals have published their own review detailing their experiences with Bitfinex. The general opinion is divided, so we cannot determine if the exchange is truly bad or good.
Bitfinex Review: Verdict
Bitfinex is an exchange for advanced traders, with a wide variety of crypto options and relatively low fees, but you have to take into account its past security issues and its surrounding controversies before going on with this exchange. We hope that our Bitfinex review has helped you in deciding if it is a suitable exchange for you.
Featured image: bitstat.top
Note: This post was originally published on 8 October 2019 and has been totally updated for the completeness and veracity of the content on 16 November 2020.