Kraken Review - In This Guide, We Will Take You Through Of How To Invest In Kraken
The crypto market is getting increasingly crowded by the day and it has become quite difficult to find the best cryptocurrency exchange for you. Whether you’re a casual investor or just looking to buy and trade some digital currencies, it has become more important than ever to know the best exchange for your crypto needs.
In this comprehensive review, we’ll scrutinize the platform in its entirety, by looking at the cryptocurrency its supports, fees charged, the security options, how to trade on Kraken, etc.
What Is Kraken?
As far as crypto exchanges go, Kraken has withstood the test of time. Kraken was founded in 2011, a few years after the first BTC block was mined.
The exchange officially started offering its services to traders in 2013. It is important to note that even in the early days, the exchange was committed to rigorous internal testing and safety standards, having kept its exchange in a closed beta for 2 years before it was launched.
The founder of Kraken, Jesse Powell had stood at the helm of several tech companies before he was inspired by Mt. Gox to found his own cryptocurrency exchange. According to Powell, if Mt. Gox were to be hacked, traders would need another exchange to conduct their business.
Shortly after, Mt. Gox was hacked for over $300 million. Kraken however, has remained standing since then.
This may lead one to ask the secret behind Kraken’s survival through a shifting cryptocurrency landscape. From a philosophical perspective, the exchange has maintained digital currency’s techno-anarcho spirit better than any other stalwart in the space.
In 2015, for instance, the AG of New York declared that any exchange that wanted to continue operating within its jurisdiction should comply with the licensing procedures. The licensing procedures gave the state unprecedented access and data to the exchange and its customers.
Powell refused to comply with this regulation and decided to pull out all operations from New York.
In 2017, the crypto market picked up earnest. Up until then, Kraken only offered BTC, ETH, and LTC, after making its name as one of the biggest names in the crypto sector. The exchange launched its fiat to crypto services in 2013.
As the crypto market continued to flourish, more exchanges come online, thus creating competition in the market. In response, the Kraken team, led by Powell began adding more digital assets but never went overboard. This made the exchange to seem a little outdated, but it remained with its strength, which was offering a fiat gateway.
Kraken later added more digital coins, including EOS, ADA, XRP, BCH, XLM, ZEC, XTZ, XMR, DASH, and REP. Recently, the exchange added ATOM, which is clearly a departure from business as usual.
Additionally, the exchange is more focused on offering a user-friendly and secure exchange to enable its users trade, buy and sell digital currencies conveniently.
Trading on Kraken
Step 1: Open an account.
Go to the Kraken website and click ‘Sign Up’. Create a username and password. Then enter your email address. Click ‘Sign Up’.
You’ll receive an email from the exchange with an activation code. Enter the activation code, your username, and your password. Then click ‘Activate Account’.
You now have a Kraken account!
Step 2: Get verified
The exchange has 5 tiers (levels) of verification.
The verification process means proving that you are who you say you are.
Tier 0 is the starting level for all new Kraken accost after confirming their email address. Users with this level account can browse the platform, but they cannot deposit, withdraw, or trade.
Tier 1 requires users to first submit their full name, birth date, phone number, and country. Users with this level account can trade digital currencies, but they cannot make any deposits, withdrawals, or trade fiat currencies. These accounts are restricted to $2,500 per week and $20,000 per month maximum withdrawals.
Tier 2 requires you to provide your full physical address. Tier 2 accounts can deposit and withdraw up to $2,000 weekly. Additionally, members with this level account can trade fiat currency pairs and have increased crypto withdrawals of $10,000 per week or $50,000 per month.
Tier 3 level accounts open more features and limits and is required if you want to deposit or withdraw Canadian Dollars. To reach this level, you need to prove your identity and upload a photo or your address. After you complete the verification process, you’ll be allowed to deposit $50,000 per week and $200,000 per month.
For deposits and withdrawals, you can make $25,000 per week and $200,000 per month. As such, you can make several $25,000 a day.
Tier 4 account is the highest verification tier on the exchange. This level requires an extensive verification check, and it offers the highest account limits and access to all features. To reach this level account, you must first provide a signed application form and your KYC documents.
Users with this level account can access USD deposits and withdrawals, they have high limits, and can deposit and withdraw more than $100,000 a week and $500,000 a month in cryptocurrencies, as well as CAD/EUR/USD.
From tier 0 to 1, it takes 1-5 days for complete verification. This time frame is in line with the industry average.
Step 3: set up the 2-FA security feature.
On your account screen, go to ‘Security’ and click on 2-FA and then ‘Setup’. We highly recommend you use this security feature.
Now let’s move to actual trading.
Step 4: get trading.
On your account screen, go to ‘Funding’ and make a deposit.
Fund your account by making a fiat currency ban transfer. In some cases, you’ll be charged some fees depending on the fiat currency you’re using and your location.
For instance, deposits made in EUR are free, as long as you live in the EEA. Deposits made in USD in the US will cost you $5.
Next, click on the trading tab and ‘New Order’.
There are three trading options, they include Simple, Immediate, and Advanced.
As a new trader, you should select Simple. The exchange offers different kinds of trading, and it can get very complex. If you’ve been trading for a while, you can explore more options.
But as for now, just use Simple.
Next, select the digital currency you intend to buy and the digital currency you intend to pay with. You can purchase digital currencies using a Limit or Market order.
A market order is placed at the market level and it is executed immediately.
A limit order is set at a predetermined price and quantity that is different from the current market price. This trade remains open until it is either executed or expires.
For expiry options, you have Good-Till-Cancelled, which remains open until it is executed or canceled. You can also choose daily, weekly, monthly, or custom expiry.
Stop-loss is a simple limit order that is executed once it reaches and limits the loss you have on your account.
Take profit is the opposite of stop loss. This is executed once your profitable position has reached a certain price limit.
Settle position is an order that you’ll use if you want t settle an open margin traded position.
If you have a specific stop/take profit level in mind, you can set a conditional close.
Margin trading is a feature offered by this exchange that is not offered in other large fiat gateways. You can trade on margin with leverage up to 5 times. While this is not close to the leverage that one can expect from a broker, it will still provide you with a nice edge.
Margin requirements vary based on your verification limits and the currency you are using to deposit the initial margin.
However, if you want to trade your favorite altcoin on margin, you may be slightly disappointed. There are few crypto/fiat pairs that you can margin trade on. These pairs include:
- XBT/EUR, XBT/USD
- ETH/XBT, ETH/USD, ETH/EUR
- ETC/XBT, ETC/ETH, ETC/USD, ETC/EUR
- REP/XBT, REP/ETH, REP/EUR
- XMR/XBT, XMR/USD, XMR/EUR
After the exchange raised $100 million, it went on an expansion drive and purchased the London based Crypto Facilities. This allows traders to trade crypto with leverage.
The exchange decided to re-brand the product Kraken Future and it was included in the exchange’s roster of instruments.
Unlike the exchange’s standard margin trading, these instruments allow you to trade up to 50x leverage on certain crypto pairs.
The futures differ from the traditional margin instruments because they are based on the asset’s price at some future time. These future times are known as ‘Expiry times’ and they allow users to hedge market risk or take a future view regarding an asset’s price.
After this new service was launched, you can now trade 6 different assets.
The exchange offers three types of contracts. These include Perpetual, Monthly contracts, and Quarterly contracts. These are based on the expiry date.
As is the case with other futures exchanges, you’ll have a continuously rolling futures contracts without a fixed expiry date.
Perpetual futures resemble other margin or spread betting instruments and will be similar to the spot price.
If you’re a trader that doubles as a developer, you can use the advanced Kraken API.
You can access the public API for simple instructions such as pricing, volume, and order books.
Alternatively, if you’d like to develop a trading bot, access the Kraken API via private access. You’ll be allowed to execute trades. This is what algorithmic traders use if they are trading based on technical indicators.
To avoid being abused by traders, the exchange’s API has specific rate limits that determine how many requests can be placed in a particular period. This is based on ‘Call counters’.
Kraken Dark Pool
This is another interesting feature that the exchange offers to its users. This offers a platform for traders who want to place orders hidden from the public order books.
This feature was launched in 2015 and allows traders to operate anonymously. After placing an order, other traders will not see this order. Kraken matches the order with other traders on the opposite side of the trade.
Traders use the Dark Pool feature for many reasons. For instance, a large order placed on the public pool could affect market prices because people could start Panic buying or selling. This means that the order may not be executed, which is a loss to the trader.
This feature is mostly used by crypto whales and large institutional investors.
Deposit On Kraken
As mentioned above, this exchange is a fiat gateway, meaning you can deposit using several fiat currencies. The exchange accepts deposits in the account in USD, GBP, EUR, and CAD.
You should note that, unlike other exchanges, Kraken requires some KYC procedures to be completed before you can deposit some funds into your account.
In the exchange’s terms, you’ll require a minimum with the intermediate tier.
If you’re verified you can deposit some funds into your account.
You can also fund your account with the digital currency you desire. With a starter account, you can deposit any amount of funds.
First, this platform has very competitive fees and is relatively transparent. Nonetheless, information regarding the fees charged on the exchange is scattered across the website, making it somewhat difficult to assess them.
Overall, trading fees are within the limits of fees in other popular exchanges, but this exchange stands out for high-volume traders because they are offered some of the best rates.
Like many crypto exchanges, Kraken has a volume-based fee schedule for traders, and it is one of the few exchanges that offer 0% fees for high-volume traders.
For traders with a 30-day trade volume under $50,000, the platform charges 0.16 for makers and 0.265 for takers. However, this is reduced to as low as 0.10% for high volume traders.
Traders who trade with stable coins are charged different fees. For instance, makers and takers are charged 0.20%, down to free, assuming $1 million+ in monthly trade volume.
Additionally, the margin fees are different, and they range from 0.01% to 0.02% for opening a position. They are also charged an additional 0.01% to 0.02% rollover fees every 4 hours.
For SEPA bank transfers in EUR, the deposits are free, ad withdrawals are charged a fee of 0.09 EUR.
For US domestic wire transfer in USD, users are charged a flat fee of $5 for deposits and withdrawals.
For US domestic wire and ACH transfers USD deposits are charged a flat $5 each.
For Canadian domestic wire, transfer deposits are free on the exchange’s end, but you may be charged an additional fee by your bank.
For digital currency deposits and withdrawals, the exchange has a complicated fee schedule, with most digital currencies being subject to different deposit and withdrawal fees.
Only a few digital currencies have a minimum deposit and/or withdrawal limit. Overall, the withdrawal fee for most digital currencies is quite low, except USDT which has a high fee of $5.
Moreover, you may be charged a standard network charge for any deposits you make, and this also depends on the cryptocurrency.
How Trustworthy Is Kraken Exchange?
Since Kraken was launched in 2011, the exchange has managed to create a name for itself in the crypto sector.
As far as exchanges go, Kraken is relatively open about its operations, and it has a status age. This page highlights any current issues with the exchange or any digital assets that have been supported.
The status page also provides some statistics regarding the website, API uptime, and a brief history of previous developments.
Additionally, the exchange performs internal audits regularly, which demonstrates that they do indeed have all the funds accounted for, and this provides a comprehensive guide on the audit process used, as well as how users can verify their balance.
How Safe Is Kraken?
When it comes to security, few can say otherwise. To date, this exchange is one of the major few that has never been hacked. In a time when almost all exchanges have been attacked, this is a rare achievement.
To achieve this faultless security record, the exchange stores its uses’ assets in air-gripped cold storage that are geographically distributed in several countries.
Additionally, the exchange’s servers are monitored 24/7and they are under the protection of armed guards. A team of IT experts also tests for potential vulnerabilities regularly.
For its users, the exchange offers different options to help them better secure their accounts. Some of these security features include 2-FA, using Google Authenticator, coupled with an SMS or mobile phone recoveries.
These security features ensure that your digital assets are protected even if your device is stolen. Additionally, Kraken allows its users to set a Master Key. This feature requires users to first authenticate any recovery attempt.
Moreover, the exchange offers account lock settings with its Global Settings Lock (GSL) feature. This security feature allows you to lock down your account, and prevent any successful hacker from trading or withdrawing from your account.
Overall, Kraken is among the most secure cryptocurrency wallets. The exchange provides its users with extra options to secure their accounts.
Pros & Cons
Kraken has covered almost all bases to ensure that its customer support is the best. The exchange has 24/7 support throughout a variety of channels, and this enables it to resolve most issues raised by its customers.
Like modern websites, the exchange offers a comprehensive FAQ page, where it covers everything about the exchange. You can learn basic trading, how to secure your account, as well as the definition of different terms.
Beyond the FAQ, the exchange has a live chat that is found on different pages. This feature allows users to quickly solve basic issues quickly.
Kraken is among the few exchanges that offer this option. However, you may have to wait a while to get a representative.
Moreover, the exchange maintains the presence of effective support on different platforms, including Reddit, Twitter and Facebook. Users can ask different questions through these platforms, and they get responses quickly.
However, most responses are sent directly to the internal ticket system.
Most issues are solved through the internal ticket system. Users are required to submit a support request. They can also escalate an issue if it is urgent.
Generally, the exchange’s customer support system responds within 24 hours, but during peak times, the response may take a bit longer.
In summary, Kraken is one of the oldest and most popular exchanges in the crypto market today. Since it was launched in 2013, the exchange has managed to stamp its position as a leading crypto exchange by offering different trading services and styles, low transaction fees, and having great customer support.
Additionally, the exchange offers different security features to enable users to secure their accounts and offers trading options for beginners who would like to begin.