Bitfinex is one of the more well-known cryptocurrency exchanges globally, offering large volumes of liquidity. The platform began operating in late 2012 and has continued to position itself at the forefront of innovations in the crypto asset trading space, making it a dominant player in the digital asset market. Bitfinex is famous for its low fees, top-notch charting tools, and advanced trading features, but its somewhat controversial history could raise eyebrows among potential customers.
This Bitfinex review will run through the history, features, pros, and cons of the Bitfinex exchange. In addition, we will also delve into the technological advancements and contentious episodes experienced by the exchange in recent times.
Bitfinex Exchange Overview
Bitfinex was founded in 2012 by a corporation known as iFinex Inc – owners and operators of Tether. The exchange currently operates out of Hong Kong. During its initial run, the firm had operated as a platform for ‘P2P’ margin lending that traded only Bitcoin. The exchange offers a large crypto ecosystem with over 170 digital coins. Its service offerings include margin trading, spot trading, paper trading, derivatives, and more. In addition, Bitfinex boasts a mix of trading features and tools suited to both expert and greenhorn cryptocurrency users. In essence, Bitfinex offers almost everything required for effective portfolio management in one place.
According to data obtained from CoinMarketCap, Bitfinex currently ranks as the 8th largest cryptocurrency platform globally, with an average weekly visit of over 920,000 customers and average liquidity of over 600. The crypto exchange also supports fiat currencies such as JPY, USD, GBP, and EUR. Before you get too excited, it is crucial to note that Bitfinex has had several regulatory challenges in its history and has also been a recipient of multiple hacks.
The exchange, alongside Tether – an associate company, has been fined on multiple occasions by the Commodity Futures Trading Commission (CFTC) and the US federal/state government agencies for throwing investors off the scent by hiding losses and overstating Tether (stablecoin) reserves. Bitfinex has also faced fines relating to unlicensed service offerings and illegal off-exchange dealings.
The British Virgin Islands-based crypto exchange suffered one of the most significant security breaches in history in 2016, with hundreds of thousands of BTC stolen from customer wallets. Despite the desirable and sophisticated trading features offered by Bitfinex, and its tireless efforts at ensuring the safety of assets, its shady history and security concerns question its integrity.
Now, let’s delve into the services offered by Bitfinex.
Bitfinex cryptocurrency exchange offers a wide array of services, and some of the more notables ones include:
APIs and Top-tier Charting Tools
Bitfinex offers Websocket and Rest APIs that facilitate full integration of its features on trader/user platforms or product offerings. In addition, users on the Bitfinex exchange are provided with advanced charting tools to elevate their trading experience.
Lending and Staking
This feature allows Bitfinex users to lend or stake crypto assets without using staking software easily or necessarily needing technical knowledge.
Margin Trading and Funding
Users of Bitfinex are allowed to offer funding across various assets and currencies via the margin funding feature or create a borrow order via the margin trading interface. The former allows digital asset owners or liquidity providers to send their digital and fiat assets securely to traders seeking leverage for trades; they earn interests in return. On the other hand, margin trading allows customers to operate with ten times (10x) leverage on trade by harnessing the platform’s P2P margin funding facility. The terms of borrowing, such as duration and interest, can be determined by the customer.
Bitfinex’s derivative site allows users to trade derivative products to help them mitigate volatility risks associated with digital tokens. The exchange offers perpetual contracts, and more derivative products are in development.
The paper trading option offered by Bitfinex was designed to help traders subject trading strategies to tests in an artificial market environment without using real funds. Paper trading is made available to users via a sub-account that emulates the trading functionalities of a master account.
Automated Specialist Trading
Bitfinex offers automated algorithmic trading strategies with customizable order types to customers via Honey Framework integration. This framework makes it even easier for users to leverage this feature without any developer know-how or prior coding knowledge.
Advanced Trading Experience
One notable point about Bitfinex is that it ranks among the platforms offering the most liquidity and most minor slippage in the cryptosphere. High volumes are a vital factor for traders, as it ascertains what is known as a ‘low spread’ – the difference between ask prices and best bids.
Bitfinex crypto exchange is advanced and features a custom-made GUI, with over fifty (50) coin trading pairs and various advanced order types such as scale, limit, trailing stop, market, etc., to improve user experience. Some of the other advanced features offered by the exchange include an enhanced reporting framework, corporate accounts, institutional-grade connectivity, and the Bitfinex terminal for market research enhancement and the development of algorithmic strategies.
Over The Counter Services
The platform has a secure’ over-the-counter’ feature for traders willing to engage in larger trading volumes, going over a hundred thousand US dollars in value. This function helps govern more enormous transactions and facilitate major deals occurring through the trading platform.
Bitfinex’s past challenges
Bitfinex has had its fair share of financial crises and security breaches, and these incidents have continued to question the platform’s integrity. In 2015, the exchange was subjected to a massive cyberattack, in which close to fifteen hundred Bitcoins were stolen.
Another cyber-attack followed shortly in the April of 2016, wiping out nearly 120,000 Bitcoins from the exchange. This represented the second-largest Bitcoin theft in recorded history, surpassed only by the cyber attack of 2014 on Mt Gox that had cost nearly 750,000 Bitcoins. However, the crucial difference between these attacks was how the platforms responded.
Mt Gox staged a massive effort aimed at compensating its customer’s loss. Meanwhile, Bitfinex attempted to recoup its losses at the expense of its customers. It spread the losses across all of its customers’ accounts, although not all of them had been attacked. This meant that all unhacked accounts on the exchange saw 36% of their currency reserves cut off. After a year, customers had their losses compensated for after the involvement of represented IOUs from the corporation.
Bitfinex’s woes, however, hadn’t come to an end. In 2017 April, Wells Fargo, the trading firm’s associate bank, placed a freeze on the firm’s bank accounts. This left the Bitfinex platform in a dire state for weeks, bringing a barrage of customer complaints and anomalies in its pricing. Eventually, its accounts were restored, but since this incident, the firm was forced to suspend its operation in the US and no longer deals with American customers.
Currencies and payment methods
When it comes to deposits made in Fiat currency, Bitfinex accepts a host of different national currencies, ranging from the EUR, GBP, JPY, and USD. Deposits made through Fiat currency can only be facilitated through wire transfer. In addition to this, deposits through digital assets are free, and withdrawals are also relatively cheaper.
BItfinex Exchange Fees
Bitfinex’s fee structure involves a ‘taker-maker fee model.’ Under this model, customers who carry out existing orders are labeled takers, and traders that register new orders are labeled makers. For takes, the fee starts at 0.2% and can plunge to 0.1% for vast orders from makers. There are no fees for the massive orders placed through the ‘Over the counter.’ Also, wire deposits made through the banking system come with a 0.1% fee for deposits and withdrawal, which can go as high as 1%, depending on the transaction conditions.
Deposits made in cryptocurrencies, as mentioned previously, are entirely free unless the deposited amount is smaller than a thousand USD. Bitfinex withdrawal fees for cryptocurrencies also attract minimal fees, depending on the asset.
Bitfinex offers its services to customers around the globe, except for a few select nations: The USA since November 2017, Bolivia, Ecuador, Bangladesh, and Kyrgyzstan.
Pros and Cons of Bitfinex
The pros of the Bitfinex exchange platform include:
- Competitive trading fees
- High liquidity
- Support for multiple order types
- Ethical operations
- Bank transfers for withdrawal and deposits are accepted
The cons of the platform include:
- Operational transparency
- No support for US clients
- Shady history of hacks and regulatory fines
Customer support and reviews
Customers of this trading platform are granted access to a vast ‘knowledge base’ and a ticket-driven customer support system. Bitfinex has improved its overall service delivery and expanded its product offering, thereby earning the exchange moderately good reviews from its online customer base.
Bitfinex offers a 24-hour customer support service, operated chiefly via email. Usually, they provide email responses in about 12 hours or more – that’s probably not quick enough!
The exchange has also faced mounting criticism over the years, mostly surrounding the transparency of its workflow. The security architecture adopted by Bitfinex is not widespread knowledge, making it almost impossible to access the integrity of the exchange’s security infrastructure in real-time.
Bitfinex vs. competition
Take Binance, for instance. Both Binance and Bitfinex are similar in their working models, with both of them giving clients access to a vast store of digital currencies. However, despite its shortcomings, Bitfinex has an advantage in this regard, with its platform being way more sophisticated than Binance’s. However, Binance had only been initiated in 2017 and, given its short run time, has maintained a much stronger reputation.
Given its history of hacks, controversies, and legal troubles, Bitfinex has elicited concern from the cryptocurrency community. Another advantage of Binance is its lower fee structure. Unlike Bitfinex, the firm has its fees anchored at 0.1%
So Binance and Bitfinex’s better choice in the broader background seems to be Binance. The only advantage that Bitfinex offers to traders is its advanced trading features.
New developments as of 01 Feb 2022
On February 01, 2022, Bitfinex announced an upgrade on its cryptocurrency payment processor – Bitfinex Pay (Release V1.3). This update also included the integration of WalletConnect. This feature allows users to leverage QR technology and choose from as many as 100 compatible crypto wallets to facilitate their payments.
Other features of Release V1.3 include:
- Support for AVAX, MATIC (ERC-20), DOGE, MATIC Mainnet (MATICM), LTC, and SOL to merchant’s invoices and verification forms.
- Credit Card payment feature for users with a minimum of intermediate identity verification.
- Support for GBP and EUR base price to accelerate the adoption of Bitfinex Pay among stores accepting both fiat currencies.
- OWNR integration as a 3rd party card payment processor
The exchange also announced that it had rolled out a new Lite mode update for its mobile App.
The update is geared toward simplifying the exchange’s features for novice users, and it is available on both iOS and Android versions of the Bitfinex mobile App.
If you’re a non-American trader looking for an advanced platform with large volumes of currency to trade, then Bitfinex is quite one of the best options out there. For newbies in the crypto market and trading space, we would certainly not recommend Bitfinex, especially the web version, due to its sophisticated user interface that might seem too complicated to new entrants. However, with the new Lite mode on the mobile App, newbies may begin to explore the existing features offered by the exchange within a much simpler interface.
Meanwhile, for the more experienced traders, the platform does have a wide range of advantages, ranging from its high liquidity to advanced functions such as margin funding & trading and advanced order types.
Suppose you’re one of those people worried over security, given the platform’s history of hacks. In that case, the only reassuring factor here is the reimbursement that Bitfinex has provided for its customers in such cases. Some analysts even argue that the platform’s history of hacks may have helped raise its security levels, making it less susceptible to hacks in the future.
FAQs on Bitfinex
Does Bitfinex do KYC?
Yes, the exchange does KYC and utilizes a standardized Anti-money Laundering compliance measure, coupled with Counter-Terrorism Financing laws and KYC regulations.
How long does it take to withdraw crypto from Bitfinex?
Usually, blockchain withdrawals will be completed within a maximum processing period of 12 hours. The platform does not guarantee instantaneous withdrawals, but regular withdrawals should be completed within 1-2 hours.
Can I withdraw fiat from a Bitfinex Account?
Yes, fiat can be withdrawn from Bitfinex, as the platform supports USD, JPY, EUR, CNH, and GBP. However, your account must be verified entirely before fiat withdrawals can be initiated.
Can you use Bitfinex in the United States?
According to Bitfinex’s service terms and conditions, United States residents or citizens are prohibited from using the exchange.