Wheat from the chaff

For a while now the two main 'altcoin' Exchanges have been @poloniex and @bittrex. I've been around long enough to see the rise and fall of altcoin exchanges like Cryptsy, Mintpal and more recently Bter.

I had thought over the last few years we had gone some way to separating the "wheat from the chaff" with (at the beginning of 2017) Poloniex and Bittrex emerging as trusted Exchanges. However with the explosion in growth of the cryptocurrency userbase; both Poloniex and Bittrex are struggling to make the transition from small businesses to medium sized enterprises.

Same shit, different exchange

First to start to show cracks was Poloniex. From 'Temporarily disabling' deposits and withdrawals on numerous coins for weeks on end with no explanation. To the site going down with complete radio silence. Poloniex fell below Bittrex in the pecking order of trusted Exchanges in my eyes.

However of late it is Bittrex that is beginning to even more alarming strain. And unfortunately I've found some of my own funds caught up in the Bittrex blender.

Not public enough...

Despite being a Bittrex user for a number of years, a few weeks back I was getting prompted to verify my account whenever I logged in. However I was able to ignore the prompt and use my account as normal. I only use Bittrex to trade and don’t hold significant funds on the exchange for prolonged periods of time. I usually deposit funds, make my trade, then withdraw.

However a few weeks back, I deposited some funds, made my trade, only to find I couldn't withdraw them. Bittrex wanted some basic verification.

I provided the information they requested (name, date-of-birth, address) only to greeted with this message:

We could not match your information to our public record providers. To complete the verification process, you must apply for an enhanced account.

In practice this meant overnight I went from being a user that could withdraw up to 100 BTC per day to a user that could withdraw nothing, including the funds I had recently deposited.

Biting the bullet...

As much as I loathe giving out my details to these Exchanges, I decided to verifiy my account. The "enhanced verification" involved sending a selfie with some kind of government documentation. So I did that only to receive the following:

Name Mismatch... We failed to automatically process your documents due to your name from your basic application not matching what is found on your documents.

So I raised a ticket, explaining the minor name discrepancy. Yet three weeks and two chases later, not a word for Bittrex. All this time, my deposited funds being stuck on the Exchange.

Mom and pop Exchange

There is really no point in me ranting about the lack of communication, support services or professionalism of crypto Exchange services in 2017. In reality they operate closer to a bedroom businesses than multinational corporations. Basic concepts like replying to emails or investing in recruiting and training up support staff seem lost on the Bittrex hierarchy.

All I can say is if you’re using Bittrex, be cautious.

Especially if you have yet to verify your account. You run the risk of your money getting caught in their ‘blender’ and it potentially taking months to get it out.

I’d say that the fact that Bittrex is accepting deposits yet refusing withdrawals from some accounts should be a red flag for anyone using the Exchange. It has the hallmarks of an Exchange with liquidity problems. However only time will tell whether this is the case.

Want Crypto? Pick your poison

I’ll keep you posted on the progress of my Bittrex ticket and how long it takes to resolve. However if you want a flavour for the prevalence of the problems on the Exchange do a twitter search on #BittrexTrouble.

I used to recommend new people use Bittrex and Poloniex to buy some of the lesser known cryptocurrencies. I stopped recommending Poloniex a few months, even though they appear to have got their act together recently.

I can however no longer recommend Bittrex.

I’d advise people to consider shopping around and consider using services such as Shapeshift or Blocktrades. However it is a trade off. You’ll likely pay a mark-up using these services so keep an eye on the price actual you’re paying for your trade.

Unfortunately it's a case of picking your poison at the moment.

If Poloniex and Bittrex are working for you, then you could be better off using them. However be prepared for your funds to get locked up at a moments notice... that may be a price not worth paying for a good exchange rate.

Professional Players needed

To my mind the 'altcoin' Exchange market is ripe for disruption and I'm sure someone will eventually fill the void with a service that a multi-billion dollar sector warrants. 'Bitcoin' Exchanges, like Coinbase and Bitstamp, though not perfect by any means operate to a higher degree of professionalism. The 'altcoin' market will only grow in the medium term and the outfits running the Exchanges seem ill-suited to making the transition to keep up.

It would be great to see decentralised exchanges, like Bitshares take a foothold in cryptocurrency. However at the moment the liquidity and traction simply isn’t there on any of these exchanges.

We are very much the wild west days in cryptocurrency. The moment your coins leave your possession, even for the length of time it takes to send to an Exchange, trade and send them back; consider them lost. You need to be comfortable with the possibility that (at any moment) you may struggle to get your coins back or worse may not see them again. It is ironic that the most robust protocols invented to store our value (e.g. the blockchain) are currently supported by some of the most ropey and insecure services.

But we are where we are.

Is any centralised cryptocurrency exchange safe to use at the moment?