- Editor Rating
- Rated 2 stars
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- TradesEditor: 73%
- FundingEditor: 49%
- ComplianceEditor: 29%
- PlatformEditor: 0%
- Help & SupportEditor: 42%
Bitfinex was founded in 2013, and has its office in Hong Kong. The platform is owned and operated by iFinex Inc., which is registered on the British Virgin Islands (BVI).
Three cryptocurrencies can be traded on Bitfinex and fiat trades are limited to USD. Next to Bitcoin, it is possible to trade in Litecoin and Darkcoin. The selection is therefore a bit small, but the liquidity is very good. On the BTC/USD pair bid-ask spreads can be as low as 0.10 percent. The trade fees are 0.10 percent when buying Bitcoin and 0.20 percent when selling the primary digital currency. To promote activity in Litecoin and Darkcoin, trade fees are even lower for these cryptocurrencies. The bid-ask spreads for these currencies are, however, also higher at 0.25 percent or more.
Traders get good control over their trades. Next to normal market and limit orders, traders can also use several advanced order types such as stop and trailing stop orders. For completeness, Bitfinex could consider adding conditional order types.
The funding options for Bitfinex are not too great. If you are a verified user, you can deposit or withdraw money through either wire transfers or EgoPay. EgoPay is a somewhat complicated and slow option. In order to get money in an EgoPay wallet, another account at another service is required. It is possible to use Payza to this purpose, which accepts bank/wire transfers and credit cards. Overall this route is very expensive. Just Bitfinex alone charges two percent on EgoPay deposits. And if a wire transfer is used in the end, it is nothing but a slower and more expensive alternative to the plain wire transfers accepted by Bitfinex. By default, these take three to five days to be processed. This time can be reduced by paying an additional fee, on top of the usually high fees for outgoing wire transfers.
Update January 26, 2015: EgoPay ceased its activities due to a hack, leaving only wire transfers as a funding option. This does not impact the funding rating much, although the exchange did suffer some losses as a result.
Bitfinex passed a public “Proof of Reseves” audit similar to Kraken, carried out by the CTO of Ripple Labs Stefan Thomas. Also in this case the audit concluded that Bitfinex had full reserves. The exchange did, however, not provide a new proof of reserves since April 2014, which therefore became obsolete. Instead, Bitfinex started to offer on-blockchain transactions per June 2015 allowing users to check their wallets on the blockchain. This offers some confidence in the exchange, but does not compare to audits executed by recognized professional auditors, not focusing on just reverses but also security and the governance surrounding this. The latter would be helpful knowing that the exchange lost 1,400 BTC due to its hot wallet being hacked in May 2015.
Unlike Kraken, Bitfinex is not registered with the U.S. FinCEN but operated from tax haven the British Virgin Islands. The recent hack in combination with being operated from a tax haven that provides a high level of secrecy, it leaves very little confidence in the (compliance) quality at this exchange. Bitfinex has even been accused of trading against its own customers in January 2015, although the exchange denied these accusations.
Bitfinex has a very strong trading platform. The exchange is very easy to use, and the low number of available cryptocurrencies to trade allows for easy navigation between all pairs. After selecting the desired pair, the user has the option only has to enter an amount and click a button to trade. The advanced order types that are available have been blended in nicely, and do not add any complexity to the trade screen. The order type is a limit order by default, and can be changed by selecting the appropriate type from a drop-down list. The website is responsive, and is thus also easy accessible through mobile platforms. Accounts can be secured with two-factor authentication. Bitfinex does not have any portfolio performance analysis tools, and does not offer much research amenities either. The exchange does, however, offer a tool that allows for the analysis of the crypto-markets of Bitfinex.
Sadly, Bitfinex’ platform does not perform quite as well as it should. There aren’t many problems while market volatility is low, but when the action increases this can easily overload Bitfinex’ trading engine. Higher volatility automatically means more traders trying to respond to the changes, causing delays and technical failures on the platform’s limited trading engine. Several traders have reported losses because they were unable to close their positions during high stress moments. In fact, in some cases even (pre-set) conditional orders appear to have failed. The problems escalated by the end of August 2015, with Bitfinex’ being forced to freeze all trading activity for several hours multiple times due to issues with the trading engine. Even withdrawals were frozen due to “data corruption issues”. The performance has been so bad that besides a ton of complaints on social media it even earned the exchange a new nickname: “Glitchfinex“. Since a broken platform is useless for trading the “platform” score has been reduced to zero until the exchange manages to stabilize its performance.
Help & Support
Bitfinex support is not very special. The exchange can be contacted by email only. There is a FAQ and guide available, but these are a bit limited as well and do not even cover all required information. Just one example would be the allowed leverage, margin call levels and stop-out levels. These can be found in the announcements, but should be added on an easy to find and fixed spot on the exchange. This could be due to the exchange still being in a testing phase, but this has been the case for two years and would therefore be a poor excuse.