Bitfinex Review: Is Bitfinex Exchange Legit Or A Scam?

bitfinexCryptocurrency exchanges are crucial determinants of the crypto niche’s growth and success. Like forex markets, the exchanges provide the community with the perfect opportunity to buy cryptocurrencies of choice and trade them.

Even with their central role in the crypto industry, many users operate in fear of getting attacked and losing their coins. Recently, Youbit and Coincheck were attacked and millions siphoned away. Youbit had to file for bankruptcy.

With every big attack since 2011 being perpetrated via the exchanges, the main question everyone is asking is “Is there a safe cryptocurrency exchange?”. One of the top options today is Bitfinex.  

This Bitfinex review examines the exchange to help you decide whether it is the right choice. We will answer the hard questions, including “Is Bitfinex safe?”.

What is Bitfinex?

Biftinex is a Hong Kong-based cryptocurrency exchange created in 2012 by Raphael Nicolle and is operated by iFinex Inc. Since 2014, Bitfinex has grown to become one of the leading Bitcoin markets with daily volumes of more than US$1.5 billion.

The high trading volume is a result of the aggressive team behind the exchange, unique features, and fiat currency support. By listing many cryptocurrencies, especially the top coins, the exchange has become an attraction, especially for experienced traders.

NOTE: Bitfinex is closely associated with the Tether company and greatly uses its native cryptocurrency referred as Tether (USDT). This is a token that is pegged to the USD at 1USDT=1USD.

The Tether company indicates that it has ample currency reserves to backup all the Tethers in circulation. There is no evidence of this claim and the community has been thrown into uncertainty after the Tether company stopped auditors who were verifying the claim.

With the bulk of Bitfinex liquidity coming from Tether, the community is very concerned that the exchange might turn out to be unsecure. The situation continues to escalate as US banks continue blocking payments directed to Bitfinex.

Bitfinex is a 4.5 Star Rated Exchange

Though Bitfinex was hacked in 2016 and $72 million worth of Bitcoins lost, the exchange learned bitter lessons and installed comprehensive safety measures. The new measures such as the use of cold storage adopted after the 2016 attack have convinced users to operate without worrying about getting hacked.

However, many Bitfinex users appear enthralled by the unique fees structure that helps them pay less when trading higher volumes. For traders moving more volumes, the high rating comes from the fact that it is possible to reach a 0% transaction fee on the exchange.

Despite the thrill of the unique features and low transaction fees, some people, especially new users, find the interface very intimidating. This, coupled with emerging concerns by banks, have pulled the rating down to 4.5 stars.

How does Bitfinex Work?

Bitfinex operates as a centralized exchange. This implies that the platform requires users to open trading accounts and deposit the tokens of interest before they can start trading them.

On the user interface, you navigate to and hit the icon “Deposit” to get a list of all the digital assets that can be deposited into the platform. Some of the supported cryptocurrencies include BTC, ETH, BCH, XRM, LTC and a number of ERC-20 tokens.

You can also make deposits in USD, JPY, GBP, EUR, and USDT. The support for fiat currencies is seen as a great attraction for users because they do not have to use third parties before starting to trade as is how it works in other crypto-only exchanges such as EtherDelta and KuCoin.

Once you have deposited your coins in the Bitfinex account, move ahead and select the preferred trading pair. You might also want to check or learn about various pieces of information including the graphical order book, candlestick charts, and recent trading data before making the first move. Check out the video below to learn how to trade IOT/BTC at Bitfinex.

To make trading more successful, Bitfinex uses various trading orders for users. These include limit orders, markets, and stop orders. Others include iceberg, fill/kill, and a post only order.

Bitfinex Trading Fees

Like other exchanges, the trading fees at Bitfinex vary depending on maker/taker status and the traded volume over the last 30 days period.

A maker adds liquidity to the Bitfinex order book by placing orders above or below the ticker price when selling or buying respectively. The taker does the opposite and takes away liquidity. The Bitfinex maker fees range from 0.0% to 0.1% while the taker is charged between 0.1% and 0.2%.

Though all deposits into the Bitfinex account are free, wire transfers are charged an additional fee of 0.1%. Besides, all withdrawals attract a fee that varies from one cryptocurrency to another.

Once you open an account and deposits funds, it is important to be actively trading because an activity fee will be charged on dormant ones. If the account remains inactive for 12 months, an inactivity fee of $5 per month is charged.

To avoid the inactivity penalty, it is advisable to remain active even if it is only making a small deposit or withdrawal. It is also vital to withdraw your funds from Bitfinex to the wallet which is considered safer.

Bitfinex Security: Is the Exchange Secure?

The biggest concern for traders using the exchanges is security. In one of the attacks carried out on Bitfinex in May 2015, the hacker took away 1500 BTC from the exchange’s hot wallet.

The hacker exploited a vulnerability in a Bitfinex multi-signature wallet. Though the exchange reimbursed all the lost coins during the 2015 attack, it remained vulnerable and suffered another more severe attack in 2016 where hackers made away with $72 million worth of Bitcoins.

After the attack in 2016, the platform enhanced its security to prevent further hacks. Here are some of the features and strategies used to make the platform secure.

  1. Use of a cold wallet: Over 99% of the clients’ funds at Bitfinex are stored in a cold wallet. The funds are distributed across the globe using a multi-signature function for greater security.
  2. Bitfinex client’s accounts are secured with a 2-factor authentication: This feature is very important in ensuring that even if an attacker manages to go through the first verification, it will be very difficult to break through the next.
  3. The accounts are also monitored progressively using advanced verification tools: The monitoring of this is aimed at following the traders’ accounts to identify and address all suspicious activities. Some of the advanced tools for progressive account monitoring include:
  • Saved login data analysis.
  • Intelligent systems to detect IP addresses changes.
  • Email notifications on every login.
  • Limiting access to accounts to specific IP addresses.
  • Monitoring withdrawal patterns to identify suspicious activities

These strategies have been very effective because no other hacking attack has been reported at Bitfinex since the attack of 2016. These efforts make Bitfinex one of the most secure exchanges in the market today.

Bitfinex Customer Support and Mobile App

Bitfinex goes to great length to guarantee users of the best customer experience. The exchange has installed multiple lines of support to ensure that traders can get answers to their queries promptly. These forums include:

  • 24/7 email enquiry
  • Knowledge base
  • Active forums for users to ask their questions
  • Support ticket for all users logged in the platform

The introduction of mobile applications to the Bitfinex platform took the user experience to another level. The Bitfinex mobile app helps users to make direct deposits easily.

When users open the Bitfinex mobile app, it is like they are carrying the entire exchange in their pockets. This means that you can access all the features, deposit, trade, and make withdrawals even when away from a computer.

Summary

From this Bitfinex review, it is clear that Bitfinex is one of the exchanges destined for greatness. The diverse features and a long list of tradable coins make the platform very effective for diverse traders.

Here is a summary of pros and cons for using Bitfinex:  

Pros

  • High liquidity.
  • Competitive fees.
  • It has a supported mobile app.
  • Advanced trading features.
  • It has advanced security features that help make users’ assets secure.
  • Bitfinex has a very aggressive team that progressively reviews the security to keep the platform secure.

Cons

  • The hacking overtones of 2016 have refused to go away completely.
  • Some banks have started blocking payments destined for Bitfinex.
  • The interface is intimidating for beginners.
  • Account verification easily gets backlogged at times by taking up to eight weeks.

Even with these features, many people still ask the question “Is Bitfinex trustworthy?”. No matter the targeted coins or the volumes you want to trade, the fact that funds are kept in cold storage makes traders feel very secure.

If you are looking for a great exchange that guarantees user experience, Bitfinex leads the way as others follow. We were especially enthralled by the advanced monitoring strategies that make it easy to constantly get updates.

For new traders, it is important to start by learning how to use the exchange. Make sure to learn the different types of orders, margin trading, and how to optimize profitability.

However, this review insists that you should never overly trust any exchange. No matter the security features that have been installed at Bitfinex, you should not use its inbuilt wallet as the permanent wallet for your coins. Make it a habit to always store the tokens in cold storage, like you can do with Ledger Nano S.

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