Crypto Exchanges have come a long way since 2009. The market has seen the rise and fall of the fair share of crypto exchanges over the years. This evolution of the exchanges has led to the birth of some of the most technologically advanced exchanges that operate 24X7 across the year whilst handling billions worth of assets on their platform.
If you are just entering the world of crypto trading and investment, navigating through the exchanges might seem a little overwhelming amongst all the options one can choose from. To help you out, in this article we will be comparing two of the top crypto exchanges you can choose from, Binance and FTX. Both of these exchanges are not more than 5 years old, but they were able to capture the market with their innovative products and features.
|COMPANY TYPE:||Cryptocurrency exchange, derivatives, NFTs, prediction market||Cryptocurrency exchange, derivatives, NFTs, Earn, DeFi|
|SPOT CRYPTOCURRENCIES LISTED:||170+||350+|
|MAKER/TAKER FEES:||From 0.02% / 0.07%||From 0.1% / 0.1%|
|FIAT CURRENCY SUPPORT:||Yes||Yes|
|DEPOSIT/WITHDRAW METHODS:||ACH Bank Transfer, Wire Transfer, PayPal, and Credit/Debit card||ACH Bank Transfer, Wire Transfer, PayPal, and Credit/Debit card|
Further on in the review we’ll take a closer look at each exchange individually, but first we want to give you an overview of our findings by comparing FTX versus Binance.
Currency and Products Offered
When looking at the types of product both the exchanges have to offer we can say that both have quite a lot of similarities based on their general offering. Where we see the major difference is that Binance is more focused on the spot market and have a wider offering of currencies there, whereas for FTX the major focus is on the derivatives market. Both the exchanges also have products that are unique to them such as Binance has Binance Earn, Crypto Loans, P2P market, etc. While FTX has volatility and prediction markets. Also, we see that both these exchanges are venturing into the NFT market and just released their NFT marketplace.
Both these exchanges have a very clean and user-friendly web and app interface. It might be a little hard for a complete novice to understand the interface but in case of a trader with some experience will easily navigate through the exchange. However, here we believe Binance has an upper hand due to its rich resource library called Binance Academy. Binance Academy not only helps users understand how the exchange works but also help users understand how the crypto market works and the latest trends in the market.
Both the exchanges charge very low fees on their spot trade market and the fees keep getting lower as the volume increases, however, here FTX takes the win as it charges 0.02% as maker fee and 0.07% as taker fee at tier 1 accounts. This is significantly lower than what Binance charges, i.e. 0.1% maker and taker fee. Matter of fact even after using native currency BNB for the trading user will have to pay 0.075% as a fee, which is still higher than what FTX is charging. Therefore, in this category, FTX is a winner.
Security is one of the biggest factors to decide which exchange to choose and we can gladly say that both the exchanges do well in this category. Both the exchanges use 2FA and keep the account funds and data safe. Both the exchanges insure their funds by putting a certain amount of fee away as an insurance fund. However, we see that FTX also do 3rd party transaction audits via Chainalysis and have never been hacked unlike Binance therefore we slightly favour FTX here.
What is FTX
FTX is a centralised cryptocurrency derivatives exchange that was founded in May 2019 by Sam Bankman-Fried (currently the CEO) and Gary Wang (currently the CTO). Originally it had its headquarters in Hong Kong, but in September 2021 its headquarter moved to the Bahamas. Over its 2 years of existence, the exchange has been able to rise to the level of top tier exchanges with a strong userbase and high daily trading volumes. As of 2022, the FTX has more than a million registered users and an average daily trading volume of billions of dollars.
FTX is largely focused on the derivative and prediction market offering a plethora of futures, options, and volatility products. It has more than 290 listed crypto assets on its platform trading daily. In 2020 the exchange gained a lot of attention for issuing President 2020 futures contracts such as TRUMP-2020 and others which allowed traders to speculate on the outcome of the U.S. presidential election.
FTX aims to cater for both retail and institutional traders and provides a range of products and services aimed at more dedicated traders. FTX also recently acquired Blockfolio, an app-based portfolio tracking service for USD 150 million. This move was done with an intent to increase the exchange’s global retail userbase.
Although FTX is more focused on its derivative markets it has more than 170 cryptocurrencies pairs offered in its spot market. These 170+ crypto assets are paired with 6 base currencies; namely BTC, USDT, BRZ, TRYB, USD and EUR. The exchange does cover the majority of the top crypto assets but still lacks some big cryptocurrencies in the spot market such as Monero, Tezos, and Vechain.
In terms of fiat currency FTX facilitates deposits and withdrawals of many fiat currencies this allows more users from different geographical locations to buy and sell cryptocurrencies on FTX. These fiat currencies include USD, EUR, GBP, AUD, HKD, SGD, ZAR, CAD, CHF, and BRL, with TRY to be added soon.
FTX exchange has its native utility token called FTX Token aka FTT which is widely used in the FTX ecosystem. FTT is an Ethereum based (ERC-20) utility token and is listed on many cryptocurrency exchanges such as Binance, Huobi, Bitfinex and others. There are multiple uses of the native token. Some of them include a discount on the trading fee. FTT can be used to create leveraged tokens, and it also enables staking for validating transactions. Other benefits include increased airdrop rewards, bonus votes and IEO tickets.
FTX offers some of the most unique products that one can trade in the crypto market, some of the offered products are mentioned below.
FTX have a lot to offer in this field with one of the highest number of crypto asset products compared to any other product segment in the exchange. The exchange has more than 80 cryptocurrencies in its futures segment which is quite a lot when compared with other top exchanges. The unique thing about FTX’s futures is that it offers many lesser-known currencies in its futures market. This allows traders to have more options to gain exposure in these low market cap coins. Another feature of this segment is that it offers very high leverage to its customers. These futures contracts are divided into three types; maturity, perpetual and index.
This is one of the most unique products which FTX offers, as it allows traders and investors to gain exposure in some of the most popular stocks such as Tesla, Apple, and Facebook irrespective of your geographic limitations. This product mimics the actual stock on a real-time basis and allows traders and investors to diversify their portfolios.
Leverage tokens are ERC-20 tokens that mimic the underlying token’s movement but by a predefined leverage level. For example, if Bitcoin moves up by 1% then BULL/USD 3x Long BTC Token would move up by 3%, and if Bitcoin drops by 1% then it will move 3% in the negative direction. There are 3 types of leveraged tokens BULL, BEAR, and HEDGE. These tokens automatically rebalance themselves, i.e., the tokens will reinvest the profits and will sell some of the position to reduce its leverage in case of losses.
This market works like a betting market where the speculators bet on the possible outcomes of different global events. One such example was the US presidential election of 2020 where people could bet on Trump’s second term as president.
BVOL tokens are ERC-20 tokens that attempt to track the implied volatility of crypto markets. BVOL tokens get their exposure to implied crypto volatility using FTX MOVE contracts and BTC-PERP contracts. There are two BVOL tokens: BVOL and iBVOL. BVOL attempts to track the daily returns of being 1x long the implied volatility of BTC; iBVOL attempts to track the daily returns of being 1x short the implied volatility of BTC.
Types of account and Fee
There are 3 tiers of accounts in FTX with different features and limitations. These 3 tiers are distinguished based on different KYC requirements. Non-verified accounts can withdraw up to $9,000 a day, while Tier 2 account holders can withdraw an unlimited amount of crypto funds, and Tier 3 account holders can withdraw unlimited fiat via an OTC desk.
The exchange also has a different level of trading fees that it charges its users based on their 30-day trading volume as shown below:
Security and Insurance
Like any other top tier exchange, FTX puts a lot of emphasis on its security protocols. It has placed all the necessary protocols at various levels to protect its customers’ funds from hackers. Some of these protocols include:
- password strength and 2FA requirement;
- 2FA for withdrawals & withdrawal password;
- withdrawal lock after 2FA removal or password change;
- tracking and notifying users of any suspicious activity;
- subaccount functions (allowing others to access account with limited permission);
- whitelisting IP’s;
- whitelisting wallet addresses.
Given that there is a leveraged market with access to as much as 101x leverage the exchange maintains an insurance fund to protect its clients in case the auto-liquidation engine fails at any given point in time. Traders who take advantage of leverage of between 50x and 100x are required to pay slighter higher trading fees – which will be directly contributed to the insurance fund. FTX has set aside around 5% of non-FTX owned FTT tokens as a contingency.
On top of this FTX uses a third party blockchain forensic firm called Chainalysis to monitor suspicious cryptocurrency transaction alerts in the Chainalysis Know Your Transaction (KYT) product, the real-time anti-money laundering (AML) compliance solution for monitoring cryptocurrency transactions.
What is Binance
Binance is the world’s largest cryptocurrency exchange in terms of traded volume. It was founded in 2017 by Changpeng Zhao (a.k.a CZ), a developer who previously worked in creating high-frequency trading software. Binance was initially based in China but later moved its headquarter out of China as the government increased its restriction on cryptocurrencies, as now there is no fixed headquarters for Binance.
Since its launch Binance has been rapidly growing. It was able to be one of the top three exchanges in less than 150 days of its launch. This unprecedented growth is the result of multiple factors; some of them including a successful ICO, superior infrastructure that was able to handle high volumes, a huge offering of cryptocurrencies for clients, and the launch of BNB token. Due to these factors and more Binance was able to become the top cryptocurrency exchange based on traded volume and still holds that position.
Up until recently, Binance was a crypto-to-crypto exchange, meaning that traders can not deposit or withdraw any fiat currency on the exchange. This recently changed and now the exchange offers fiat as part of its currency offering too.
Binance has the highest number of cryptocurrencies that any exchange offers to its clients. It currently has more than 350 cryptocurrencies in the spot market. This is an advantage Binance has over other exchanges, as it offers clients a plethora of currencies to choose from. These currencies further have more than 23 base currencies making it a truly diverse marketplace for traders and investors. This allows better arbitrage opportunities and diversification opportunities to traders.
Currently, Binance support approximately 60 fiat currencies either through credit and debit card deposit or through its P2P marketplace. This allows the client to enter the crypto market easily as one can choose their local currency to buy crypto and not worry about converting it into USD or any other international currency.
BNB is Binance’s native cryptocurrency that has been a game-changer for the exchange. It was one of the first native exchange tokens to be launched and had a pivotal impact on the operation of many exchanges. BNB was initially issued as an ERC-20 token but was later transferred into the Binance Chain network. There are many uses of BNB tokens within the Binance ecosystem, some of them include a reduced trading fee, staking, BNB vault, etc.
Binance has a huge arsenal of products to offer its clients. Binance has been very active in providing its userbase with different types of products to help them capitalise on new market opportunities. Some of these products are mentioned below.
Binance’s Future market can be broadly classified as USD stable coin market and Coin market. The main difference in these markets is that the former has a base currency of various USD stable coins such as USDT and BUSD but the latter has only USD fiat currency as its base. These can be further divided into perpetual contracts and quarterly contracts. Currently, Binance has more than 130 cryptocurrencies listed on its futures market.
Binance offers its users “European-style” Vanilla Bitcoin Options contracts. The options are priced and settled in USDT. It is offered with the intent to give users more choices to diversify their portfolios and manage their market exposure. Users can both buy the options for hedging and trading, as well as write and sell options as an issuer.
Similar to FTX, Binance also offers leverage tokens that mimic its underlying token but by a predefined leverage level. The design of these tokens, as mentioned in the Binance academy website, is inspired by FTX’s leverage tokens but Binance offers users up to 4x leverage tokens.
Binance launched an innovative new offering to its users which they call Binance Earn. This includes products that allow users to earn passive earning by using the assets that they intend to hold for long periods. Binance Earn allows users products such as staking, opening a savings account, liquidity farming, BNB vault, etc. All of these methods also give the users the option to invest in a fixed or flexible method, i.e. if the user would like to invest the fund for a fixed amount of time where she cannot redeem her funds before maturity or in a flexible manner where the fund can be redeem whenever requested.
Types of Accounts and Fees
Binance has 10 tiers of accounts which are distinguished by the VIP level. A user can upgrade the VIP level by two methods, either by achieving a set trade volume in the margin or spot account or by buying and holding a certain number of BNB tokens. Adding to that if the trader uses BNB as the base currency for trading then they receive an additional 25% discount on trading fees. The following table shows how the maker-taker fee changes as one rises in the account hierarchy.
Security and Insurance
Binance, being the biggest exchange pays special attention to its security and the safety of funds. It offers a number of security safeguards for the safety of its users’ funds. Some of these safeguards include 2FA login and fund transfer, wallet and device management, restricted sub-account creation and email/mobile notification to alert the user of any malicious practice.
In May 2019 Binance was a victim of a malicious attack where it lost $40 million worth of funds, however, due to its fund insurance it was able to navigate through the critical time with ease. This fund is called Secure Asset Fund for Users (SAFU) that Binance introduced in 2018. The SAFU function acts as insurance. The reserve SAFU pot is funded by taking 10% of all trading fees that Binance generates. As the transaction volume increases on Binance so will the value of the fund making the exchange safer as it grows.
Both FTX and Binance are highly ranked exchanges with top tier technology working round the clock to provide a safe and best user experience. They have a lot of similarities and at the same time, both are unique in their offerings as well. Both exchanges have a huge userbase and are continuously growing and evolving since their inception. Based on our four deciding criteria we see FTX as a better exchange. However, we believe that the decision to choose the best exchange is also dependent on what style of trading or investing you do, in case you like to trade low market cap coins or want to buy and hold coins and earn passive income then Binance is a better choice. If you are more of an active trader and would like to get exposure in not only crypto but also volatility and other stock assets then FTX is a better choice for you. Therefore, the final decision is always up to the user.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.