FTX, a centralized, global cryptocurrency exchange, is unique in that it offers innovative products such as derivatives, options and leveraged tokens. It supports over 300 cryptocurrencies, which is quite a large number when compared to some of its competitors.
However, the exchange has risks associated with cryptocurrency investing, such as token volatility and losses due to exchange hacks. As more companies become involved in crypto trading and investing, more people feel comfortable.
FTX Background
FTX was established in 2018 by Sam Bankman-Fried, the current CEO. He was previously a trader on Jane Street Capital’s international ETF desk and was also the current CTO Gary Wang who is a former Google software engineering engineer.
Alameda Research Ltd was founded by the couple in 2017. It is a leader in quantitative trading and cryptocurrency liquidity. Alameda helps FTX maintain deep order books and provides 24/7 OTC services.
Alameda also developed the exchange, which raised $8m in three funding rounds. Following the 2019 Seed and Corporate rounds, the Series B round was completed in March 2020. It attracted investment from Liquid Value Capital.
Binance was the Lead Investor in the Corporate round, while FBG Capital and Greylock Partners, Kenetic and One Block Capital were all Seed round investors.
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78% of retail investor accounts lose money trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trading forex or CFDs on margin involves a high degree of risk and may not be suitable for all investors. There is a possibility that you may suffer a loss equal to or greater than your entire investment.
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The exchange has strong support from a number prominent crypto venture funds. FTX’s core team is transparent and has made their LinkedIn profiles and names public. FTX Trading LTD is the owner of FTX Exchange. It was established in Antigua-Barbuda, but has offices in Hong Kong.
Opening a FTX Account
It is easy to open an FTX account. The exchange guides you step-by-step through the entire process from beginning to end.
You will need to create a strong password and enter your email address twice.
FTX requires all new customers to verify their identity before they can trade crypto or deposit. To explore the platform, users who are not verified can log in to their accounts.
Users who only provide basic information such as full name, birth date, and country of residence are restricted from the platform and subject to withdrawal restrictions. FTX’s complete verification process requires users to provide proof of address, share a government-issued ID and undergo facial recognition. After this, they are granted full access to the platform and unlimited withdrawals and deposits.
FTX Security
The exchange has remained in business since 2019 and has so far avoided any major hacks or malicious attacks. The team does not give any details about their security protocols, so we can assume they follow all established security best practices.
We know that the FTX team uses full SSL encryption on their site, and include two-factor authentication (2FA). This helps users protect their accounts using Authy or Google Authenticator or SMS verification.
The team also discussed their unique liquidation engine, backstop liquidity provider system and liquidation engine. These three-step solutions are designed to handle margin calls and limit clawbacks. The FTX liquidation engine uses smart and efficient values to manage liquidations and close positions before they turn negative.
Additionally, traders receive warnings to close any positions below a 4.5% maintenance margin. This prevents clawbacks and minimizes the negative effects of risky trades. FTX also shows an estimated liquidation price in its information box, which can be found on any market page. This helps traders stay informed.
To help customers avoid losses due to sudden market movements that could lead to the rapid liquidation of multiple positions on the exchange, the FTX Insurance fund was also created.
Anybody who uses 50x-100x leverage will pay higher fees that are allotted to the insurance fund. If the liquidation engine fails in its mission to address a severe market movement, the insurance fund can be used to compensate anyone who was left with an unpaid position. The FTX team has also reserved 5% of non-FTX-owned FTT tokens for customers in case the insurance fund is unable to finish the process.
FTX is therefore a safe platform. The team has incorporated sophisticated insurance mechanisms, and they are also led by Alameda Research founders, who acted in market making for BitMEX, OKEx and have a lot of experience in this sector.
In addition to partnerships with Circle and Paxos as well as FBG Capital and Proof of Capital, the exchange has entered into a strategic partnership agreement with Binance. Interestingly, the FTX team states that all withdrawals and deposits are subject to inspection by Chainalysis blockchain analysis firm Chainalysis. This may or may not be suitable for individuals concerned about privacy.
FTX Features
Trading Pairs
FTX offers 27 trading pairs that include cryptocurrencies. If you are interested in trading in fiat or traditional currencies, FTX has other options. It offers Bitcoin trading in currencies such as the Australian dollar, the U.S. dollar and the Euro.
FTX Mobile App
FTX offers mobile apps for iOS and Android. The iOS app has a rating of 4.8 stars while Android has a rating of 4.1 stars.
Digital Wallet Options and Security
FTX lets users use their digital wallets to transfer cryptocurrencies onto or off its platform.
FTX claims it has implemented industry-standard security measures in order to protect customer information and assets on its platform. It claims it also has “full outside backing” for assets stored in hot wallets that are connected to the Internet. You can also choose to use separate passwords when withdrawing funds.
Advanced Trading
FTX offers products like margin trading, over the counter trading and derivatives. These products may be appealing to traders with high risk tolerance. Margin trading is a way to borrow money to increase the potential returns as well as the risk of losing your capital. Futures and derivatives are products that are tied to future prices of assets.
Supported Cryptocurrencies
FTX allows users to trade in a variety of cryptocurrencies. Perpetual swaps are available for 15 assets and over 45 tokens can also be traded with leverage.
FTX also offers spot trading, Bitcoin options and unique altcoin indices. The following cryptocurrencies are available for trading on FTX.
- Bitcoin (BTC).
- Ethereum (ETH).
- Litecoin (LTC).
- Binance Coin (BNB).
- Tether (USDT).
- FTX Token (FTT)
- Bitcoin Cash (BCH).
- XRP
- Tezos (XTZ)
- ChainLink (LINK).
- EOS
- Ethereum (ETC).
- PAX Gold (PAXG).
- Huobi Token (HT)
- Tron (TRX)
- Dogecoin (DOGE).
- UNUS SEED LEO (LEO).
- Bitcoin Satoshi’s Vision – BSV
- BitMax Token (BTMX)
- Cardano (ADA)
- Algorand (ALGO).
- TomoChain, TOMO
- OKB
- BiLira (TRYB)
- MATIC
- Cosmos (ATOM)
FTX supports more than 20 perpetual swaps, with futures trading for coins available. These include BTC, ETH and LTC.
There are 45 leveraged tokens available, including BULL/USD (3x long BTC), BEAR/USD (3x short BTC), ETHBULL/USD (3x long ETH), ETHBEAR/USD (3x short ETH), LTCBULL/USD (3x long LTC), LINKBULL/USDT (3x long LINK), BNBBEAR/USDT (3x short BNB), and LEOBULL/USD (3x long LEO).
FTX supports Bitcoin options trading, as well as BTC MOV contracts. Anyone looking for simpler trading can use spot markets that support BTC, ETH and BNB as well as USDT, PAXG and XAUT.
FTX vs. Binance
Both Binance and FTX offer cryptocurrency exchanges with relatively low fees compared with competitors. Also, like FTX, Binance has a partner exchange for U.S. citizens – Binance.US.
There are however some key differences between the platforms.
- Binance introduced a live chat option as part of a customer service upgrade in 2021. FTX does NOT offer a live chat option.
- Binance’s fees may be slightly more than FTX’s. Binance users can expect to pay maker/taker charges ranging from 0.02 to 0.10%, while FTX fees range between 0.00% and 0.07%.
- Binance only supports a few hundred cryptocurrencies. FTX has over 300.
Fees and Charges
There are no withdrawal or deposit fees when using FTX. Futures settlements are free of fees as well. OTC trading, or trading within your wallet, is also free of charge as all costs are included in the quoted price.
The creation and redemption fees for leveraged tokens are 0.10% and the daily management fees are 0.03%. Trading fees will increase by 0.02% if you use leverage 50x. Opting for 100x will result in trading fees that are 0.03% higher. This is paid into an insurance fund.
It is worth noting, however, that MOVE contracts fees are based on the price for the underlying index and not the price for the MOVE contract.
Conclusion
FTX is one of the most well-known and largest cryptocurrency exchanges on the market, which is impressive for one that has been around for three years. This exchange is also a prominent advocate for cryptocurrency regulations. Officials at FTX say that they will continue to comply with regulators. The exchange offers both novice and advanced traders low trading fees as well as features that are attractive to them.
This makes FTX a great choice for crypto traders looking for a quality, value-driven cryptocurrency exchange that meets their needs.
