The downsides of Binance Exchange - It's not just sunshine and roses

Binance has been making great strides lately and I've been recommending people try it out as opposed to Bittrex, because of it's much cheaper trade/withdrawal fees and their wide selection of cryptocurrencies. Unfortunately, as with most things, there are some downsides as well that you may want to know about before using the platform.

Cheaper trade fees can be higher trade fees

Don't get me wrong, the trade fees on Binance are really cheap! 0.1% compared to Bittrex's 0.25% is great, but you can actually reduce it to 0.05% if you opt to pay with the BNB token. Sounds like a great deal, right? But maybe you don't want to buy a BNB token, because you want to do a single or small trade? Then there is something you should know:

Binance doesn't trade most markets in fractional numbers for most cryptocurrencies.

What this means is that you can only buy whole numbers of most cryptocurrencies. You could for instance buy 15 IOTA, but not 1.5 IOTA. This is not a problem per se, but it does become a problem when you trade because of the way Binance collects the fees. Instead of collecting the fees out of BTC or ETH like Bittrex does, Binance collects the fees from the BNB token and if you don't have any of those it will instead collect the fees from the token you traded. What this means is that if you buy 1 IOTA, you will actually get 0.99 IOTA because it deducts 0.1% from te purchased IOTA.

The result is that you are left with 0.99 IOTA, that cannot be sold on the exchange because it simply doesn't allow fractional trading. This is often called collecting 'dust' on exchanges. You could withdraw it, and with IOTA the withdrawals are free fortunately, but if you want to withdraw another token the trading fee is usually too costly to make it worthwhile.

This can be a significant cost, actually. Depending on the cryptocurrency where this happens, it could cost several dollars of unsellable dust. Maybe one day it will be worth enough to sell? Perhaps, but not for now.

I now have 0.98 WaBi tokens on Binance, and 0.99 RDN that I cannot get rid of, worth about $6 together. When I calculate those costs into my trading costs, and consider the small trade that I made, it's quite a lot more expensive.

I have since bought some BNB tokens, but I am not satisfied with this result either. A single BNB token cost about $5, and the minimum amount you can buy is also $5. That is a lot of trading that I am paying up-front for. Still, it's a better solution than getting stuck with a ton of fractional crypto's that I cannot sell. Atleast now the fees will be paid out of BNB.

So if you trade on Binance, don't forget to buy a BNB coin to pay for the fees and avoid you some headaches!

Binance wallets are offline a lot and for long times

This is something I cannot confirm for sure, but I have noticed that a lot of wallets on Binance are suspended for long amounts of time. I had to wait about two weeks before I could withdraw my IOTA's back from the exchange, and noticed several other wallets were in 'suspended' mode also.

I know that Bittrex and other exchanges have regular maintainance on some of their wallets too, but I have seldomly run into this problem as often as I have with Binance lately. It has made me a little more wary of keeping my funds on there, because I do not like that I cannot take them out.

Conclusion

I still like Binance Exchange a lot and recommend it over Bittrex still, but if you don't know about the trading fees leaving fractional dust, or the wallet maintainance you may be well off knowing about this beforehand.

My recommendation is to withdraw as much and as often to your private wallet as possible, and preferrably only keep a little bit of BNB active on the exchange (to pay for future fees).

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