The following Bitstamp review will strive to show you how this young startup has flourished since its launch in 2011. From consistently high trading volumes, to becoming western Europe’s leading platform for trading Bitcoin and a limited selection of other major cryptocurrencies, Bitstamp’s fast progress has impressed observers, investors, and users alike.
When two 20-year-old Slovenian college-dropouts wanted to invest in bitcoin in 2011, they decided to launch Bitstamp. Software developer and part-time bitcoin miner Damijan Merlak and computer salesman Nejc Kodrič discovered a gap in availability of exchange services for European bitcoin users.
The only option available at the time was to wire funds to the now infamous Mt. Gox exchange in Japan. The process took days and often resulted in financial losses due to bitcoin’s high volatility.
The two childhood friends (pictured below) decided to set up Bitstamp as an alternative to Mt. Gox and as an easy option for Bitcoin users in Slovenia and surrounding countries. When Mt. Gox collapsed in early 2014, Bitstamp started to establish a more international clientele. It has since grown to become a major player in the industry.
Bitstamp provides support for what are commonly referred to as the ‘big four’ of cryptocurrencies. As such, Bitstamp may not be the exchange for you if you’re looking to day trade the numerous up-and-coming altcoins of the day. However, if you’re sticking to the more mainstream cryptos, Bitstamp could be a good shout.
List of coins offered:
Advantages of Bitstamp
- Offers a very simple buy/sell user interface, combined with advanced trading pages with detailed graphs, and trading parameters.
- Has significant trading volumes and therefore represents a good exchange for large purchases or sales.
- Supports the buying of cryptos using debit and credit cards (recently extended to multiple countries).
- Regulated by the CSSF (Commission de Surveillance du Secteur Financier) in Luxembourg – thus good standards for keeping users’ funds more secure.
- Supports trading of Bitcoin Cash & will allocate all owed BCH tokens to customers.
- Cheaper & more efficient than person-to-person exchanges such as Localbitcoins.
- Despite a significant theft of its reserves, Bitstamp has maintained a strong reputation and has not suffered from prolonged trading shutdowns. A similar reputation & clientele recovery happened with Bitfinex (major Hong Kong exchange).
Disadvantages of Bitstamp
- As with all centralized exchanges, private keys are controlled by the exchange operators.
- Unlike Coinbase’s free $10 credit for new traders, Bitstamp offers no such freebees (at time of publishing) to attract new users.
- Account verification takes more than three days. Similar wait times can be expected on Coinbase, CEX, and Kraken.
- Users are required to share an invasive amount of personal information when transactions reach a threshold (~10k usd)
- Although extra locations have been added, service is not available in all countries. Bitstamp competitor Coinmama offer similar credit card purchases to users anywhere in the world.
- Only supports only four cryptocurrencies & slow to add new major altcoins such as Bitcoin Cash & Ethereum. Compared to competitors such as Kraken, Bitstamp has been slow to add popular coins.
- A long list of unusual fees are applied to user accounts. However fees remain significantly cheaper than exchanges like CEX or Coinmama.
Security of Bitstamp
Like most first-generation centralised exchanges, Bitstamp holds users’ private keys on its platform. Users must trust the company to secure and safeguard their digital coins. This means users also must trust those in charge of their private keys to remain honest.
Meanwhile, users access funds through accounts using passwords and two-factor authentication (2FA). The history of cryptocurrencies has shown that you should avoid entrusting third parties with your private keys. It is therefore a good idea, immediately following a purchase, to move your crypto assets to wallets that are 100% under your control. Experts always recommend bringing your holdings onto exchange platforms only when you are ready to sell.
Bitstamp presents their security features from the moment you register an account. After you fill out the registration form, an email is sent containing a customer ID and password to your inbox. You use the ID as your username, and you should change your password immediately the first time you sign in.
Before you will be allowed to trade on the platform, you must also verify the account by providing your full name, postal address and date of birth. To authenticate this information, Bitstamp requires you to upload a government-issued ID and a no more than three-months-old utility bill to prove place of residence.
The document scans should be of high quality (colour images, 300 dpi resolution or higher), visible in their entirety and current (not expired). After you submit proof of ID, it takes three days for Bitstamp support to approve your application.
Bitstamp has experienced one minor & one major security incident since its inception. In February 2014, it was the target of a compromising distributed denial of service attack. The exchange suspended withdrawals for some users for two days to prevent hackers from accessing private keys and cashing out.
The attackers blackmailed Bitstamp and demanded 75 bitcoins in ransom. The company refused to pay and cited a policy of non-negotiation with criminals.
A year later, in January 2015, an attacker breached the exchange’s security and stole about 19,000 bitcoins. The thieves used Skype and email communications with employees to introduce malware into Bitstamp’s system.
The malware retrieved the private keys of the company’s hot wallets. The news only surfaced six months later when someone leaked an internal report about the hack. Bitstamp declined to acknowledge its authenticity. Instead, they successfully requested the document be taken down from the platform on which it was published.
Bitstamp charges three types of fees—on deposits and withdrawals, for trading, and for various services. Depositing and withdrawing is free for all cryptocurrencies. However, withdrawing using BitGo Instant will cost you 0.1%. Also transferring Ripple IOUs between accounts costs 0.20% of the value involved.
It is free to deposit using SEPA, but you will be charged 0.90 EUR to withdraw using the same channel. International wire transfers cost 0.05% to deposit, with the minimum fee set at $7.5. Withdrawals cost 0.09%, with the minimum set at $15.
Charges for using credit cards to make purchases vary depending on the amount involved. It costs 8% for amounts less than $500, 7% for amounts between $500 and $1,000, and 6% for purchases above $1,000 but less than $5,000. It costs 5% for purchases above $5,000.
Withdrawing funds from your Bitstamp account using a credit card costs a flat fee of $10 for amounts not exceeding $1,000. For transfers exceeding $1,000, you are charged a fee of 2%.
Trading pairs cost a percentage ranging from 0.10% to 0.25%, depending on the volumes involved. The higher the amount traded, the lower the percentage cost you incur.
Bitstamp charges for a long list of service and operational fees. The list includes declined cash withdrawals ($0.55), a monthly account fee ($1.95) and a dormancy fee ($5).
Web & Mobile Interface
Bitstamp operates through website and mobile applications. The bulk of its traffic comes through the web. Most user reviews of Bitstamp give the website a very good score. Credit is usually attributed to large simplified buttons for buying / selling, and depositing / withdrawing. I’m not surprised that beginners love the easy-to-use buy/sell features. ust look how straightforward this is compared to competitors like Kraken:
Bitstamp – easiest Buy/Sell process
Bitstamp offer advanced trading views
Users also have the option to develop their own software to access and manage their accounts. Bitstamp has made third party apps possible by offering a custom API.
A rating on downdetector.com indicates that the most reported issues with Bitstamp’s website are downtimes (66%) and transfer outs (33%). Users have also pointed to problems with logging in, especially with not receiving verification codes.
The exchange offers a mobile app for both Android and Apple. Mobile users can place orders, make deposits and withdraw funds. However these mobile applications have received more negative feedback than positive.
Major issues raised by users-reviews include slow customer support, difficulty in executing orders —especially those involving Ripple —and poor trading chart experience.
Invasive customer ‘vetting’
Personally, I have stopped using Bitstamp after support made a very invasive request for personal information. It’s true that most exchanges will ask for a passport & utility bill to verify real names and locations – as required by law. However, Bitstamp seem to take advantage by requesting customers give out information on competitor usage. Also, further requests are made that could very well compromise customers’ banking security & privacy. Take a look for yourself
I’ve read many users complaining on forums after receiving similar invasive requests from Bitstamp. I always give credit to exchanges that strive to make the vetting process as smooth as possible for their clients (Kraken does this much better than Bitstamp). Unfortunately, this is a big negative.
Please note: most users do not receive this request. Indeed, there appears to be a transaction/withdraw threshold (~10k usd) after which accounts get flagged for some extra “KYC” à la Bitstamp.
Bitstamp is a promising exchange with only a few issues that let it down. It doesn’t offer a wide range of cryptocurrencies which could be a downside for some users. Aside from that, the user interface is pretty solid and the mobile app is a nice addition. Overall, Bitstamp is a fairly decent option for trading cryptocurrencies.