There has been a rise in the creation of new cryptocurrencies in recent times. Data from the Coinmarketcap website shows that there are over 7500 cryptocurrencies already traded on various crypto exchanges.
The acceptance of these digital assets as a means of payment has increased their popularity among users. As a result, many crypto exchanges provide a platform for users to buy and sell their digital assets. Apart from providing a platform for trading cryptocurrencies, many crypto exchanges off other services like coin staking and coin swapping.
New traders on a crypto site may wonder what does swapping mean in crypto trading. To find out the answer to that question, please read this article on coin swapping. However, if you thinking of the best way to purchase Bitcoin check this link.
Coin Swapping
Coin swapping is a crypto term that means the exchange of a cryptocurrency for another cryptocurrency. Simply put, crypto sites that offer coin swapping services allow users to exchange one type of cryptocurrency for another type of cryptocurrency. For example, a user can swap the Binance token (BNB) for the Ethereum token (ETH).
Swap service providers power the coin swap service available on crypto exchanges. Some swap service providers include platforms like Changelly, Changenow, Swapy, Shapeshift, Flyp.me, among many others. Usually, before a coin swap can be processed, a small swap fee will be charged from users by the crypto exchange.
Types of Coin Swapping
There are two types of coin swapping available to users. They are:
- Traditional coin swapping
- Non-custodial coin swapping
Traditional Coin Swapping
This type of coin swap is commonly found on a cryptocurrency exchange. To use this coin swap method, users must own an account and register on a crypto exchange.
All coin swaps using this method are completed on the crypto platform. One disadvantage of this method of coin swapping is that it allows the exchange to control your digital assets after the swap is completed. Similarly, there may be limits placed on a user after the coin swap is completed.
Compared to the non-custodial swap option, traditional swap options require lesser swap fees from users.
Non-custodial Swapping
The non-custodial swapping method removes custody of your digital coin from the control of a crypto exchange. How does the non-custodial swapping work?
Users must select the digital asset they want and send the digital asset they wish to swap to a swap service provider. In return, the swap service provider sends the chosen digital asset to the user’s external wallet address. Non-custodial swapping services are offered by swap service providers like Changelly and Flyp.me.
In some cases, the non-custodial swapping option costs more than the traditional swapping method. However, the non-custodial swap option offers more privacy to its users when compared with the traditional swap option.
Swap Service providers
Swap service providers are crypto platforms that control or operate the coin swapping service on most crypto exchanges. Currently, there are numerous swap service providers in the crypto space. However, only a handful offer the best swap services. Some of the top swap service providers include crypto platforms like:
Changelly
This swap service provider was created in 2015 and currently backs over 150 digital assets on its exchange platform. The platform also allows users to purchase cryptocurrency using their bank cards.
Changelly requires users to create an account and register with their email addresses before accessing the platform’s service. Changelly charges a 0.25% fee on all transactions on its platform.
Swapy
Swapy supports over 70 cryptocurrencies on its platform. Also, this swap service provider supports over ten different exchanges. Like Changelly, Swapy allows users to purchase cryptocurrency using their bank cards. Similarly, users must create an account and register to use the swap service on this platform.
Changenow
Changenow is a swap service platform that was launched in 2020. Transactions on this platform are fast and are usually completed under 15 minutes. Furthermore, Changenow charges a 0.5% fee on all transactions carried out on the platform.
One unique thing about this platform is that it allows users to buy cryptocurrencies using their credit cards. Also, users are not required to create an account or register on the Changenow platform before using its services.
Benefits of Coin Swapping
There are many benefits available to users when they use the coin swap feature on their crypto exchange. Some of the benefits coin swappings offer include:
Expanding your Portfolio
Coin swapping allows traders to expand their crypto portfolio. Expanding your portfolio helps to protect your digital assets’ value in a bearish market and helps minimize the consequences of a drastic drop in a digital asset price. Similarly, this process allows traders to hold more digital assets and increases the likelihood of profiting off these digital assets.
Extra income
Apart from the swap feature, most crypto exchanges offer their users the opportunity to stake their digital assets and earn rewards. However, to use the stake feature on these exchanges, users are often required to swap one digital asset for another. As a result, the coin swapping feature can provide extra income for users on a crypto exchange.
Also, coin swapping can be used to change your digital assets to take advantage of favourable news on another cryptocurrency. If properly timed, the swap feature can provide users with huge rewards by increasing their digital assets’ value. However, we must state that the crypto market is very volatile. As a result, we encourage our readers to carefully consider their financial decisions with regard to investing or trading digital assets.