ShapeShift Exchange Review: Fees, Security and Usability
Cryptocurrency exchanges are marketplaces for crypto traders and investors. Like the regular market, exchanges have to be organized and well designed to navigate with ease when conducting their businesses/transactions. In that array, one of the most popular instant cryptocurrency exchanges that have caught the attention of most crypto experts is ShapeShift.
In this review, we will delve deeper into ShapeShift, looking at its usability, coins offered, transaction fees, security, as well as the pros and cons of the exchange.
ShapeShift is an instant cryptocurrency exchange that enables crypto users to buy or sell various cryptos (including altcoins) seamlessly. Erik Voorhees is the brains behind ShapeShift, which he founded in 2013 in Switzerland. Erick wanted to simplify exchanging crypto, making a platform that would be easier and more straightforward to use as a vending machine. Since its launch, the platform has grown exponentially to support 103 cryptocurrency pairs from the first 40 pairs.
Erick’s idea of a simple exchange platform was a prescient concept proved by ShapeShift’s fast growth. The growth is attributed to crypto traders seeking a platform to quickly and easily trade cryptocurrencies without leaving behind a digital footprint like other centralized exchanges such as Bittrex.
ShapeShift gained immense popularity in the crypto space by being the only exchange offering users the ability to instantly trade cryptocurrencies without submitting personal data to the company’s server. While this was a huge selling point allowing for anonymous trading, many users were concerned with the platform’s security.
Indeed, this feature was the platform’s biggest downfall as was the leading cause of the three security breaches experienced on the platform leading to loss of users’ coins. Nonetheless, ShapeShift overruled this feature in October 2018 and now requires users to submit personal information to trade on the platform successfully.
Unlike other centralized crypto exchanges, ShapeShift offers a more natural means to exchange cryptocurrencies attributed to its user-interface that is quite easy to navigate. Users’ are required to provide the pertinent crypto address to exchange crypto after setting up an account.
Transactions are instant, as crypto is not deposited on a centralized exchange. Instead, it’s relayed straight to users through a deposit address created by ShapeShift. With this, ShapeShift is a lot more like a non-custodial swap platform. However, note that ShapeShift only allows crypto-to-crypto exchange with users barred from exchanging crypto with fiat currency.
ShapeShift is available globally but blocked in some states in the US, including Washington and New York, due to regulatory issues. In August 2017, ShapeShift increased its business outreach by acquiring KeepKey – A Seattle-based hardware wallet. According to Voorhees, KeepKey’s acquisition was instrumental in reinforcing its foot in the hugely competitive crypto market.
The new KeepKey hardware wallet seamlessly integrates cold storage asset management into the system, meaning that cryptocurrencies can also be swapped in ShapeShift from the hardware interface.
ShapeShift Key Features
- Non-Custodial Exchange: As mentioned earlier, ShapeShift operates as a non-custodial exchange meaning that users cannot directly deposit money on the platform. The platform never holds users’ money, and funds are released as soon as users swap the platform.
- Over 50 Supported Cryptocurrencies: ShapeShift lists over 60 cryptocurrencies, as it will be listed below.
- KYC/AML Verification: Since 2018, ShapeShift users must register and verify their identity before accessing the platform.
- Regulatory Compliance: ShapeShift is a registered business in Switzerland with an open and transparent business model. The platform’s team is well known and has complied with the set regulations and met legal obligations.
- Exchange Time: Exchange time on the platform varies greatly. Users can swap their digital assets on the platform in under 10 minutes at certain times. However, sometimes it may take up to 30 to 50 minutes to process a trade.
- Trading Fees: ShapeShift trading fees are quite affordable. The platform charges a trading fee of 0.5%, which it accumulates via an exchange rate spread rather than a direct trading fee. Nonetheless, the trading fees are more expensive compared to Changelly, which charges a trading fee of 0.25%
- Fox Token: ShapeShift introduced its native utility token, referred to as FOX under the ShapeShift Membership loyalty program. The FOX token is used to reward members on the ShapeShift platform with even free trading. FOX token holders can trade for free on the platform. Users are awarded 100 FOX ($1 000 of free trading credit) on signing up.
- Supported Software and Hardware Wallet: ShapeShift directly supports several software and hardware wallets. It supports the Portis software wallet and multiple hardware wallets, including Trezor, KeepKey, and Ledger wallets. These wallets are connected directly from the platform using ShapeShift Classic.
- Purchase Crypto with USD: US customers can now buy crypto (BTC, ETH, and DAI) with USD directly from their bank accounts on the platform, and a fee of less than 1% is charged.
ShapeShift Supported Currencies and Pairs
ShapeShift supports several significant cryptocurrencies and several lesser-known tokens, including 1ST, AE, ANT, ATOM, BAT, BCH, BNB, BNT, BTC, CVC, DASH, DGB, DGD, DNT, DOGE, EDG, ELF, ETH, FOX, FUN, GNO, GNT, GTO, ICN, IOST, KCS, KNC, LINK, LTC, MANA, MCO, MKR, MLN, MTL, NMR, OMG, PAX, PAY, POLY, PPT, RCN, REP, RLC, SAI, SALT, SNGLS, SNT, SPANK, STORJ, SWT, TRST, TUSD, USDT, WINGS, ZIL, and ZRX.
ShapeShift doesn’t charge transaction fees but charges crypto mining fees instead. The platform makes a profit through the spread between the bid and asks the prices of cryptocurrencies. Nonetheless, the fees charged on the platform have been quite controversial, with some users claiming that the transaction fees are expensive.
ShapeShift has refuted the claims stating that it only charges the miner’s fee, and therefore the charges differ due to different algorithms and hash rates. Below are some of the listed trading fees:
- BCH Bitcoin Cash Miner Fee: 0.0002 BCH
- BTC Bitcoin Miner Fee: 0.0025 BTC
- DOGE Dogecoin Miner Fee: 2.0 DOGE
- ETH Ether Miner Fee: 0.001 ETH
- ETC Ether Classic Miner Fee: 0.01 ETC
- LTC Litecoin Miner Fee: 0.001 LTC
- XMR Monero Miner Fee: 0.02 XMR
- XRP Ripple Miner Fee: 0.5 XRP
- ZEC Zcash Miner Fee: 0.0001 ZEC
ShapeShift Pros and Cons
- Non-custodial Exchange – ShapeShift functions like a non-custodial exchange. Therefore, it enhances users’ security through anonymous trading.
- Competitive transaction fees – ShapeShift transaction fees are quite affordable. The platform charges 0.5% in spreads with a negligible flat miner fee.
- Membership Rewards -Through the loyalty program, members are rewarded with FOX token that can be used to pay for the transaction.
- Quick and instant transaction- ShapeShift allows for instantaneous transactions. Exchanges are generally hassle-free.
- Scalability issues – ShapeShift suffers from immense scalability issues. Sometimes, transactions can take up to 30 to 35 minutes. This is quite slow compared to other exchanges.
- Varying transaction fees – Transaction fees, liquidity, and cryptocurrencies listed on the platform varies each day considerably.
- Security concerns – The platform was hacked in 2016 with over $200 million worth of coins stolen. While no user lost their funds, users still have doubts about the security of their currencies.
- Doesn’t support fiat trading
Is ShapeShift Safe?
ShapeShift’s security reputation took a deep in 2016 following the hacking incident that saw the platform lose $200k. The CEO, Erick Voorhees, came out to give an honest explanation of the event, stating that the hacking attack was an inside job. He also insisted that no clients’ funds were stolen. Following the incident, ShapeShift has reinforced the platform’s security.
In 2018, ShapeShift implemented the KYC/AML verification in an attempt to enhance users’ security. With the integration of the platform with hardware wallets such as KeepKey, users can improve their coins’ safety by storing them offline. Indeed, ShapeShift has not been hacked since the security improvement; therefore, it’s safe-at least for now.
ShapeShift combines non-custodial functionality with ease of use to make crypto exchange seamless and uncomplicated. With over 50 supported cryptos, the platform is ideal for traders with a comprehensive portfolio requiring instant token swap. The fact that the platform supports anonymous trading is quite a selling point, given that investors are moving towards anonymity with increased mainstream crypto-adoption.
In essence, ShapeShift is perfect for crypto traders looking to exchange digital assets and also settle payments with different cryptocurrencies. Nonetheless, the company needs to improve in particular areas of concern, such as enhancing security, clearly outlining the transaction fees and deposits or withdrawal limits.