Poloniex Bitcoin Exchange Review 2018: How to Use Poloniex to Make Money
Wondering how to use Poloniex to start making serious money trading and lending Bitcoin, Ethereum, and other digital assets? Are you wondering if Poloniex is safe? Read this complete guide to using this major US Bitcoin exchange to learn everything you need to know before starting.
Poloniex is one of the largest, busiest, and most comprehensive crypto trading platforms. It has 50 million unique visitors per month, 100 digital assets on offer, and more liquidity than most competitors. It is the largest exchange by visitors and second by volume. It’s current 24-hour volume is 70,000 Bitcoin; roughly $1 billion USD (according to Coinmarketcap.com).
Serious traders are drawn to Poloniex for it’s range of altcoins, unique margin trading/lending options, low fees, and detailed charts. It doesn’t provide options for fiat currency (USD, EUR, etc.).
Ironically, the busiest exchange is also deeply mysterious. It claims to be based in Delaware, but that address is just an agent. Nobody knows much about the investors or management either. CEO Tristan D’agosta is active and reputable. In recent months, Poloniex has dedicated itself to becoming compliant with regulations.
Despite a hack in 2014, the company has recovered; however, its poor customer service has hurt its reputation in recent months. Still, users flock by the tens of millions to Poloniex for a trading experience like none other. An in-depth interface, deep order book, and trendy coin catalog are all major draws.
I’ve visited dozens of review sites, read every Reddit thread, and used the site myself to create this honest review. In it, you’ll learn everything you need to know about this US-based exchange.
Poloniex is safe, but they have been hacked in the past. There have been no major issues recently. The company is becoming increasingly compliant with regulations, but little is known about who is behind the scenes.
The CEO is known and respected, but little is known about who is behind the scenes. The community isn’t even sure where the company is based.
Ease of Use
Poloniex does not do fiat. You must already have crypto. The dashboard is complex, and withdrawals and trading require verification. Not a beginner-friendly platform.
Trading & Coins
Poloniex offers a dashboard, liquid markets, and margin options that are top notch. For serious traders, their range of altcoins and trading options are a major draw.
Poloniex’s support is overburdened right now. But even before its support was notoriously bad. Horror stories abound. Withdrawals and deposits are known to get stuck.
There’s no doubt that Poloniex is a great platform for trading and making money. But it has some serious drawbacks. For professional traders it’s worth the headaches.
Poloniex is a US-based crypto-only exchange that bills itself as “the world’s most active digital asset exchange”. It is a favorite among professional traders because it allows you to trade on margin*—a rarity on the market. Founded in 2014, it has constantly gained steam in the community since then. It draws 50 million visitors a month, and that number isn’t slowing down.
For as popular as it is, the company is shrouded in mystery. The CEO could just be a figurehead, nobody knows where it’s really based, and nothing much is known of the investor group. These factors often scare conservative newcomers away.
It offers detailed charts to analyze the market, an intuitive interface, a ton of rare altcoins, and unique trading/lending options. However, it does not offer any fiat currency. Its security isn’t as tight as others on the market, and recently its support is in serious question.
In general, Poloniex is seen as a great platform for serious traders, and a poor option for beginners.
* New Term: Margin Trading/Lending - Trading on the margin is when you borrow crypto from a lender to purchase more crypto than you’d be able to yourself. All proceeds first go to the lender until the loan is paid back. Conversely, margin lending is when you act as the lender and receive guaranteed returns on your investment from the borrower. For a detailed explanation, see the margin trading article on Investopeida.cash.
How Does Poloniex Work?
Poloniex is a traditional crypto exchange. It serves as a matching platform that connects buyers and sellers of digital assets such as cryptocurrencies (Bitcoin, Ethereum, etc.). A buyer is matched with a seller, and the exchange takes a small commission for its troubles (either .15%-.25%), depending on which kind of order you make (more on Poloniex fees later).
Poloniex offers no fiat currency options (USD, GBP, etc.). You must already have cryptocurrency. You can buy from a broker such as Gemini. Once you have crypto, you deposit it in your account, and the funds are available for trading or lending. All accounts on Poloniex must be verified. Once you are verified, you technically have 3 accounts: exchange, margin trading, margin lending.
What is Margin Trading?
A unique feature that Poloniex offers is its margin trading/lending options. Poloniex is widely considered the best margin trading experience on the market. You have 3 different accounts on Poloniex: exchange, margin trading, and margin lending. Each of the funds are separate but can easily be transferred into another account.
Margin trading is essentially trading with borrowed funds. You trade with other user’s money using peer-to-peer loans. The money in your margin account is used only as collateral to settle debts later on. If you make a profit, the funds are paid back to the lender.
This allows you to enter into larger trades and potentially make (or lose!) more money on a deal. For example, if you think a currency price will rise, trading on the margin is a good idea if you don’t have the funds. If you have $1,000 in your account and use it all to purchase a coin and the price rises 100%, you’ve made $1,000. But if you trade on the margin at 2:1 leverage (meaning you borrow 2x more than your account balance), you can now buy $2,000 worth of that coin.
Margin lending is when you act as the lender and not the trader. You lend your assets out and get a percentage return on the loan. This is very appealing to conservative crypto users, since it doesn’t require you to actually do any trading and carries minimal risk for small returns. You offer your funds up at a certain rate, and margin traders fill your offer.
This is of course a simple overview. For a full description, see Poloniex’s guide to margin trading on their site.
Is Poloniex Safe?
Poloniex was hacked in 2014 and reportedly lost approximately 12% of its total Bitcoins ($50,000 USD in 2014 rates). All accounts were deducted 12.3% at the time in an effort to stem the damage and stop people from making a run on their BTC. CEO, Tristan D’Agosta, said:
“Because there is not enough BTC to cover everyone's balances, all balances will temporarily be deducted by 12.3%. Please understand that this is an absolute necessity—if I did not make this adjustment, people would most likely withdraw all their BTC as soon as possible in order to make sure they weren't left in that remaining 12.3%”
However, the response from the community was mostly positive. Poloniex made an open and honest attempt to repay everyone, and claims all of the BTC has been repaid. Since the hack, they have slowly rebuilt their image.
The vast majority of customer deposits are held offline in cold storage. They run 24/7 auditing programs to monitor the exchange to catch any suspicious activity. Since 2014, their security track record has been clean and the community now generally approves of their security measures. However, the fact that not much is known about who backs the company is a major downside.
Verdict: Community trust is OK and security measures are fine. They’ve mostly recovered from the 2014 hack (they repaid everyone). Is Poloniex safe? Yes.
WARNING: It doesn’t matter how secure an exchange is, when you store money on an exchange, your private keys are out of your control. Always store funds you don’t immediately need for trading on a wallet where you control the keys. If Poloniex is ever hacked, your money is gone.
Poloniex Fees Explained
Unlike flat-fee rival Bittrex, Poloniex employs a dynamic maker-taker fee schedule. According to the company, this encourages robust liquidity (meaning the exchange is busy and it’s easy to change your currency into another asset). You either pay .15% if you are a maker or .25% if you are a taker, and the more volume you trade, the lower your fees get (users rarely trade enough to get a discount). Let’s look further into those terms.
What Are Maker-Taker Bitcoin Fees?
All trades happen between two parties, the maker and the taker. Makers are users who place order on the book (to buy or sell) and takers are the ones who match the orders. Makers are given a discount because their order increases the liquidity (they make the market busier) and takers pay more because they decrease that liquidity. However, since liquidity means more competition and lower rates for takers, the higher fee is offset.
In theory, a maker-taker schedule encourages liquidity and a better market for traders.
Poloniex Margin Trading Fees
15% of the interest from margin loaning is taken as a fee. It’s important to calculate this into your interest rate when loaning your coins.
Withdrawals and deposits are all in crypto, so they are subject only to the blockchain’s minimum fee.
Prior to the end of 2017, Poloniex allowed users to have an unverified basic account. This allowed you to withdraw up to $2,000 USD per day. As of now, that option is not available to new registrants. If you wish to trade and withdraw currency, you must verify your account. This is in accordance with KYC and AML regulations in the USA.
Once you have verified your account, your limits will be the equivalent of $25,000 USD per day in digital assets.
What We Like/Dislike
So far, we’ve only covered the inner mechanics of the site and not its reputation. Poloniex is a massive exchange with 100 assets on offer, and it offers an in-depth trading experience. There’s a reason that 50 million people visit each month. As far as trading crypto goes, there’s not much to dislike.
Warning: Poloniex, like everyone else, is suffering from overload. Support is buried under a barrage of requests, and they are even worse than normal. The web is buzzing with animosity towards the exchange. For example:
More on this in the review section.
How to Exchange on Poloniex
If you’re new to trading on the platform, you need to know how to exchange crypto on Poloniex. Getting set up isn’t nearly as easy as it used to be, and the verification process is reportedly a nightmare. Hopefully these issues will be resolved soon.
Step 1) Set Up Your Account and Log in
Go to Poloniex.com and click Create an Account in the top right corner.
After you enter the information, you will receive a confirmation email. Click the link and get ready to trade. Kind of.
Step 2) Get Verified
Getting verified is a doozy on Poloniex. Due to overload of new registrants (and poor support since the dawn of time), Poloniex’s verification may take several weeks.
First, go to Profile in the top right hand corner.
Once verified, you will be able to deposit currencies, trade, margin trade, margin lend, and withdraw up to $25,000 USD worth of digital assets per day.
Step 3) Deposit Crypto
Once you are verified, you can deposit crypto. To do that, click Balances in the top right hand corner of the exchange page.
Use the search function to find your asset and click the Deposit button.
Poloniex Reviews: Scam or Legit?
Warning: The reviews you are about to read may not be suitable for children.
Even before the recent Bitcoin craze, Poloniex was not in high favor around the community for its support. Forum users trash talk Poloniex as if its a rival political candidate. Some simply complain about the length of time it takes to get verified. Others go as far to say it’s a complete scam and they’ll never use it.
I certainly don’t think Poloniex is a scam, but with users constantly complaining about impossible verification standards, frozen withdrawals, and exchange lag, it’s hard to really give it a nod from me.
What the Bad Reviews Say
Without using profanity, most bad reviews focus on:
Here are just a few of the poor reviews from around the web:
Poloniex does beg that you bear with them while they resolve their support issues. They give you fair warning. At least they are trying.
What the Good Reviews Say
It seems that a lot of the negative experiences are just bad luck. Many users claim they have no issues. It makes sense, though—users who experience no issues will get right to trading; those who don’t will make a thread complaining.
Good reviews focus on:
One highly respected YouTube review channel praised “Polo” solely for its margin trading. This further drives home the fact that Poloniex is great for advanced traders. For beginners, it might not be worth the hassle to fight for an account.
The Best Poloniex Alternatives
If Poloniex’s lack of fiat, increasingly strict regulations, and poor customer support track record scare you off, there are plenty of alternatives around the web to choose from. At the time of writing, almost all Bitcoin exchanges are suffering from overload. Expect delays.
Hong Kong-based Binance is one of the leading exchanges on the web. If anything, it is certainly one of the most unique. It doesn’t require the strict verification that Poloniex or Bittrex do, and gives you access to a flood of digital assets. It also has amazing giveaways! The intuitive interface is available in basic or advanced view. Another major positive is their very low fees.
And of course, their awesome monthly competitions and free giveaways.
The “E-Bay” of Bitcoins, LocalBitcoins is the leading peer-to-peer exchange on the market. Buyers and sellers agree on a price and the platform acts as escrow. Everything is done 100% anonymously. It’s a good alternative for those who value their privacy and don’t want to deal with the verification nightmare that is Poloniex. Scams are a serious issue. Be wary.
Bitfinex is another Hong Kong-based exchange. It has the highest volume of any Bitcoin exchange in the world. It offers margin trading with leverage higher than most other exchanges. Aside from this, it also offers interesting tokens for speculation. The only downside is the lack of currencies (BTC and only 7 others).
Comparison - Poloniex Vs. Bittrex
Poloniex and Bittrex are two of the largest, most liquid, and currency-rich exchanges. They each have a range of currency pairs for trading and very low fees. Both are great places to make money for serious traders. However, they have a few key differences, and one gets the clear nod over the other.
Let’s check out the basics of Bittrex first.
Bittrex bills itself as the “next-generation digital currency exchange”. That means it has some of the best features on the web.
Bittrex was founded by a former engineer at Amazon, and features a team with 5 decades of experience in web security. It was founded in 2014 by Bill Shihara and others after they grew tired of constant security breaches in the crypto world. The founding team has over 50 years of combined experience working for giants of the industry including Microsoft, Amazon, and BlackBerry.
It allows users to trade confidently knowing all industry leading security features are used on their platform. It features hundreds of trading pairs, flat and low fees, and an intuitive and detailed trading interface. Not to mention it has highly regarded customer support and widespread community trust (both under strain currently).
Its reputation has taken a hit in recent months, but it has never been hacked and support continues to be active on social media.
Verdict: Both Poloniex and Bittrex are great places to make money, but in general, Bittrex comes out on top. The only reason you should choose Poloniex is if you want to margin trade or lend. Or if you’re lucky enough to not have any verification issues and don’t agree with Bittrex’s strict regulations.
During my research, I noticed that users were asking the same questions about Poloniex. I’ve put all of the questions and answers here to make it easier on you!
Q: Is Poloniex safe?
A: Despite the 2014 hack, Poloniex is a safe exchange. Its support issues might mean your account gets frozen, but your currency is safe. They have a renewed commitment to security and regulation.
Q: Does my account have to be verified even if I have a legacy account?
A: Yes. Last year, Poloniex started requiring all new registrants to verify their accounts. Those who already had accounts (known as “legacy accounts”) were grandfathered in. That’s no longer the case. You must verify your account immediately or functionality will be suspended.
Q: Does Poloniex accept USD deposits?
Q: Does Poloniex take credit card.
Q: Does Poloniex have an app?
Q: What are the fees for using Poloniex?
A: Poloniex has a maker-taker fee schedule. If you place the order, you pay .15%. If you fill the order, you pay .25%.
Q: Is there a minimum deposit on Poloniex?
A: Some coins require a minimum deposit. It is written on the deposit page under each currency’s address. Read the explanation of minimum deposits on Poloniex’s support section.
Q: How long does verification take?
A: Your guess is as good as mine. Good luck and may god have mercy on your soul.
Poloniex is one of the best exchanges in terms of actually trading. But its support and verification issues are major strikes against it. It offers great trading options, detailed charts, and a good range of coins. However, actually being able to trade and get your money is a nightmare.
Community sentiment is in agreement that Poloniex is a good platform for advanced traders. The altcoins, low fees, and margin options are well worth the hassle if you plan to do some serious trading.
But if you are a beginner, someone who doesn’t plan to trade much, or a user who doesn’t plan on using their margin options, then it’s not worth the hassle. Anyone using Poloniex needs to be warned that there’s a chance your account gets frozen and support contacts you next year sometime.
Verdict: Poloniex offers a great trading experience, but its support makes it not worth the risk unless you plan to do serious volume margin trading/lending.