In this post, we’ll be reviewing the worlds largest cryptocurrency exchange, it is, of course, Poloniex, otherwise known as Polo. I’ve been a customer for around 6 months so I’ll give you the good, the bad and the ugly. We’ll also look at what some other people have to say about it as well.
Full disclosure before we start, I’m not a financial advisor or planner. All of the information in this post is my opinion as a cryptocurrency enthusiast and shall be taken as such. I haven’t been compensated or paid in any way by Poloniex for this review and all of this information I’m giving here is from my perspective as a customer of theirs.
Poloniex, otherwise known as Polo is the worlds largest digital cryptocurrency exchange. They have a huge selection of altcoins such as Monero, Litecoin and Etherium. One of the things I like about it the most is their based in the United States.
One of the things that confuse new users the most is that this website doesn’t use any type of fiat currency. No Euros, US dollars or Russian rubles. They only deal with cryptocurrencies.
So if you want to start using this service, it’s necessary you purchase your Bitcoins with a Mastercard or bank transfer made up in person to transfer your balance into the Poloniex account. Once you have any type of cryptocurrency balance in your Poloniex account, it’s possible to then do margin trading, margin borrowing and obviously exchange them for other altcoins.
One of the largest problems with not using fiat currency is it makes it very difficult for traders to trade out of their positions. So for example, I’m holding some bitcoin and I’m nervous that the markets are going to dip and that I want to sell it. If I can’t exchange it obviously for US dollars which is the currency I’m used to using, this obviously means I have to transfer my money out of the exchange in order to convert it into US dollars. The way that Poloniex gets around this is they use “Tether” and Tether is tied to the US dollar, so Tether is another cryptucurrency but the value of one Tether is supposed to always equal one dollar and if you look at the pricing history it typically does stay within a 1% range of the US dollars so it might go from 99 cents to one $1.01 and the nice thing about using USDT or Tether is when people are trading on platforms such as Poloniex that don’t offer fiat currencies if at any time they’re feeling uncomfortable in the market and they want to hold US currency for some reason, they can just switch any of their alt coins into USDT and be protected by any of the movements in the cryptocurrency marketplace.
In my experience as a user over the last 6 months, one place that Polo is way stronger than its competitors is with margin lending and what happens is when margin traders want to borrow money to increase their leverage, they need someone to lend them that money and because Polo allows user lending it is possible to login to a real-time marketplace and offer your Bitcoins to margin traders. Now the rates for this obviously fluctuate but I’ve been able to get up to 49% returns when the markets are really hot and last month or last week when the market crashed and everything was going down that’s when the margin traders disappeared and for maybe a week I wasn’t able to lend out any of my Bitcoins.
Just to give you an example of this, right now on Poloniex you can lend out Bitcoin for .06 cents per day. You can start with a 2-day contract which is really nice because that means on an annual basis, you’re earning a 23% interest on your Bitcoin which is also paid back to you in Bitcoin.
I’ve used other platforms for lending such as Bitfinex but I’ve also found that Bitfinex isn’t good at renewing the contracts and I’ve also had some problems on their website filling some of my lending requests even when the rates have been right. I’ve found Poloniex the most stable and I’ve found me having consistently the best returns out of all of my margin trading lending.
As far as margin trading on the website goes, you’re only able to margin trade up to 2.5x when all of the other websites like Bitfinex for example or Cex.io will let you trade up to 3.3x, that’s not a huge difference for me but I guess if I’m going to margin trade and I do want the leverage then I mind as well switch to a 3x or to a 3.3x leverage instead of the 2.5x. I don’t do too much margin trading so that hasn’t been a huge issue for me but it’s definitely worth noting. One big advantage for margin traders is because it’s a peer to peer loan system it means that the margin traders are always going to pay the market value for their loans.
Some of the exchanges already have their own financing setup so you just pay a fixed interest rate and that fixed interest rate will nearly always be higher than what the current market rate is. Poloniex is just matching lenders with people that want to margin trade and they’re taking a small percentage in fees. So typically you’re going to get a much better interest rate if you’re a margin trader going on Polo than for example Cex.io or one of the other exchange platforms that don’t offer margin lending.
Unfortunately, there’s no mobile app for Polo, I haven’t found that to be a problem because I just used their mobile version of their website on my iPhone and I’ve had no problems.
So what are the negatives of using Poloniex?
I’ve been reading the forums and I’ve seen a lot of people complaining about users not being able to withdraw funds. There is a limit of $2,500 per day if you’re not verified to the second tier. So if you are planning to transfer a large number of funds, I would actually get pre-verified before I was trying to withdraw funds. I definitely wouldn’t withdraw the funds and then try this process especially if I knew I was going to be over those limits.
There are other users that are also complaining about transactions that have failed, but I think if you take a look at any of the exchange platforms right now, they’ve been experiencing such exponential growth that they’re under legitimate pressure just to scale their operations.
Some people have been complaining about technical support taking a couple of days to get back to them. Other people have been complaining about lost accounts. From what I’ve seen I don’t think there’s any fraud in there. I just think all of the exchanges right now are dealing with the volumes and dealing with so many things going on there, they’re trying to service the customers.
From all of the information I’ve read and all of the posts that I’ve seen I don’t have any reason to believe that Poloniex is trying to fraud its users. As a customer for the past 6 months I have been very happy with Polo, I’ve never had any issues putting money in or out of my accounts, the trading platform for me has been very reliable although I have seen in severe market corrections like that Etherium crash where it went down to $10 that they will just take the website offline. I think that’s common with a lot of exchanges and I’m not sure what the right answer is in those high frequencies, high volatile markets when things start to happen like that.
So in summary, I’ve been a customer for Poloniex for the past 6 months, I’ve had a lot of success lending out bitcoins to margin traders and I’ve also had a lot of success trading altcoins on the platform. It’s been fast and reliable and for that reason, it’s one of my 5 favorite cryptocurrency exchanges.