Bitstamp Review – Exchange Features, Trading Fees, and Security
Like many things in Europe, Bitstamp is an old institution. Old in Europe usually means a 500-year old building or a wall built by the Romans in the BC era. In crypto, old means something from three or four years ago.
Bitstamp is Europe’s longest-standing cryptocurrency exchange. Founded in 2011 by Nejc Kodrič and Damijan Merlak, Bitstamp is, by crypto standards, a historic institution. Seeing as how Bitcoin itself only dates back to 2008, Bitstamp’s introduction only three years later puts it in the rarefied air of crypto veterans.
Don’t come to Bitstamp looking for a huge array of digital assets or trading pairs, because that isn’t what’s on offer there. Instead, Bitstamp is kind of like 2017 era Coinbase, but targeted at Europeans. Rather than flooding its exchange with every crypto under the sun, Bitstamp prioritizes high quality offerings and services, even if they are relatively few.
Much like Coinbase and Gemini, Bitstamp has focused its efforts through the years on creating the most compliant trading environment possible. After floating through a few jurisdictions including stops in Slovenia and the UK, Bitstamp finally landed and headquartered itself in Luxembourg after the tiny country offered it a safe haven.
Kodrič and Merlak founded the exchange with a thousand Euros, a couple laptops, and a server between them. Like most cryptocurrency properties and services at the time, they didn’t expect or foresee the riches that were headed for crypto’s earliest adopters. Instead, they were in it to geek out and give Europeans an alternative to Mt. Gox, which primarily served American and Japanese traders.
Since the beginning, Bitstamp sought a positive regulatory environment in which it could take off its shoes and stay awhile. The UK offered it an unregulated environment which didn’t suit the exchange’s desire to become a bridge between the traditional investment world and the chaos of crypto.
Prior to arriving in Luxembourg, Bitstamp began self-regulating itself according to best practices in related industries. In 2013, the exchange became the first to require full KYC compliance, which, at the time, was nearly heretical.
Over the years, Bitstamp quietly solidified its position within the market without making too much noise. Unfortunately, no news travels quite as quickly as bad news, and in 2015, Bitstamp became well known on account of being hacked for 19,000 BTC.
Hard times are what make or break a company. In Bitstamp’s case, the 2015 hack helped the exchange become what it is today. Immediately following the hack, the exchange shut down operations for an entire week while it conducted an investigation and security audit.
In 2015, Bitstamp was the world’s third-largest Bitcoin exchange and accounted for 5% all of BTC transactions. Unlike Mt. Gox, however, Bitstamp housed most of its BTC in offline cold storage – an uncommon technique at the time that paid dividends when the hack occurred.
By 2018, Bitstamp had cemented its position in the crypto universe strongly enough to entice interest from several investment groups. In the latter part of that year, Kodrič went public with the news that Bitstamp had been acquired by Belgian investment group NXMH.
Remember, Bitstamp is all about delivering a basic but very solid trading experience to a mainly European audience. That may be changing soon as the exchange has signaled its intentions to expand globally. As long as you don’t need advanced trading tools, margin trading, or endless digital assets to choose from, you’ll like what you find at the exchange.
Bitstamp doesn’t offer a ton of features for you to choose from, but it is very good at the features it does offer.
- Low fees compared to other exchanges. While Bitstamp doesn’t stand out too much from other exchanges, one place it does set itself apart on is fees. Bitstamp is a low fee exchange compared to the competition. SEPA deposits are free of charge while withdrawals cost a mere 0.90 EUR. International deposits and withdrawals are 0.05% and 0.09% respectively, and deposits/withdrawals for crypto are free. The latter is nearly unheard of, which makes Bitstamp an awesome choice for moving BTC around.
- Solid security. After being hacked in 2014 and 2015, Bitstamp had had enough. The exchange replaced its entire hardware system and became the first to implement 98% cold storage and multisig wallets. Accounts holding USD are also FDIC insured, and the exchange is compliant with most major financial laws in both Europe and the USA.
- Enviable customer support. There’s a bit of a conundrum going on in regards to customer support at Bitstamp. Anecdotally, it appears most of its clientele are completely happy. They cite quick response times between 24–72 hours after creating support tickets, and a staff that is more than willing to go the extra mile to get problems sorted out. However, if you check-in at Trustpilot, you’ll see an entirely different picture. With 199 reviews in total, Bitstamp garners a measly poor rating, though the same can be said for most crypto exchanges.
- Easy account setup. Getting an account going on Bitstamp is simple. Just go through the usual hoops in regards to providing an email address and password, and you’re mostly ready to rock. You can deposit and withdraw crypto without providing additional KYC information, but if you do wish to trade with fiat currency, you’ll need to provide several identity-related details.
- Fast fiat to crypto. With Bitstamp, it’s easy to buy cryptocurrency with a credit or debit card. You can also buy BTC, ETH, LTC, XRP, or BCH with an international wire transfer, SEPA, or with crypto. You’ve got plenty of options for getting in the game; the way you choose is up to your preference.
Crypto Gateway Exchanges Compared
The idea of a cryptocurrency gateway is quite simple. Basically, people need a way to get into the crypto environment, but they probably don’t have a Bitcoin holding dating back to the old days. That’s why gateway exchanges like Bitstamp, Kraken, Coinbase, and Gemini exist.
They don’t offer a vast array of digital assets, but do offer the building block assets upon which the entire ecosystem depends. These so-called Blue Chip assets are the foundation for most of the crypto market’s value and are known by, more or less, everyone. Bitcoin, Litecoin, Ethereum, Ripple, Bitcoin Cash, and Tether (depending on who you ask) are the fundamental assets all around.
Each of the aforementioned exchanges has a strong point. In the past, it would have been easy to say that since each serves a different geography set, they can’t be compared. However, the latest gesture for crypto exchanges is to go global. No one is satisfied with retaining a specific regional share anymore.
To that extent, the question becomes – which crypto gateway exchange offers the most simple and direct trading experience? Gateway exchanges are essentially built for complete beginners since advanced traders tend to migrate to exchanges with richer features. That makes simplicity and streamlined UI the real prize when comparing exchanges.
With ease of use the main feature that takes the cake, Coinbase wins hands down. The Coinbase app has been around for several years and was the most downloaded Apple app in 2017. No one else comes close – not even Bitstamp.
A better comparison would be to take a look at Bitstamp versus Kraken. Both started out primarily serving European audiences before Kraken began prioritizing its American presence. Between the two, Bitstamp rates higher in terms of ease and beginner-friendliness, whereas Kraken excels in terms of digital asset choice.
The Good and the Bad
Bitstamp puts a lot of emphasis on its longevity as a crypto exchange. That can’t be disregarded – other exchanges that started out at the same time were wiped off the map by unbelievable hacks totaling into the billions of dollars.
However, given how long Bitstamp has been around, it is a bit surprising that it’s still trading around the same five cryptocurrencies over the past several years. Since other exchanges make it even easier to buy Bitcoin, Ethereum, or Litecoin than they do, there isn’t much incentive for using Bitstamp other than if you happen to end up there after a Google search.
That isn’t to put Bitstamp down. They do some things really well like staying compliant, keeping 98% of their funds in air-gapped cold storage, and keeping customer support locked down. The thing is, the crypto exchange game has leveled up in recent years. Are Bitstamp’s offerings enough to make it any more enticing than its competitors?
We would wager that they aren’t, but that isn’t necessarily Bitstamp’s fault. Bitstamp is a lot like a Honda Civic – reliable, gets you where you need to go, doesn’t cost much to use, but at the end of the day, it’s just another car that doesn’t particularly stand out.
After having been acquired by NXMH, we expect Bitstamp to start looking a lot more like Binance or Upbit, but only time will tell.