In this article we’re going to talk about a somewhat strange exchange, namely BitMEX. What makes BitMEX different from other exchanges you can read in the rest of this article. Furthermore we are going to talk about the history of BitMEX, Cryptocurrencies on BitMEX, the costs of trading on BitMEX and the safety of trading on BitMEX.
Table of Contents
What is BitMEX?
BitMEX is not an everyday exchange like Binance, KuCoin or Bitvavo. BitMEX is a platform where derivatives are traded. In investment terms, a derivative is a derivative of stock. When you buy a derivative you do not own a share or coin, but you do speculate on it. At BitMEX you never own a cryptocurrency, but you speculate on the underlying value of, for example, Bitcoin. The advantage of a derivatives exchange like BitMEX is that you can work with levers when buying your contract options. A lever causes the value to move in a certain direction faster than normal. With a leverage of 10x, you can thus take on a position size of € 10,000 with a deposit of € 1,000. At BitMEX you can set a leverage of up to 100x (very high).
If you decide to start trading on BitMEX, it is very wise to first read up on leverage products and how they work. In addition, it is important to use a tight stop loss when working with leverage products. A stop loss is a feature where you automatically sell your position when the price of, for example, Bitcoin hits a certain level. This allows you, as a trader, to limit your losses and pick a new entry point for your next trade.
What is the history of BitMEX?
Bitcoin Mercantile Exchange (BitMEX) was founded in 2014 by Arthur Hayes, Ben Delo and Samuel Reed. BitMEX was founded with funding from family and friends of the three gentlemen and operates out of The Seychelles.
CEO Arthur Hayes studied economics at Wharton School of Business. Hayes has lived in Hong Kong working as a derivatives trader. He has also been a market maker for Deutsche Bank and Citibank’s ETF businesses. He also has extensive experience trading futures, forwards and swaps.
CSO Ben Dolo studied mathematics and computer science at Oxford University. With more than 10 years of experience developing high frequency trading systems for companies such as J.P Morgan and IBM, he clearly has the experience to fill his role as CTO at BitMEX.
CTO Samuel Reed completed his studies in computer science at Washington & Lee University. He has over 10 years of experience as a programmer in professional environments. He has previous experience as a CTO at technology companies ‘Tixelated’ and ‘Global Brand Solutions’. His specialty lies in building fast ‘real-time’ web applications, with which he has also regularly contributed to ‘open source’ projects.
Which cryptocurrencies are there on BitMEX?
As mentioned earlier, BitMEX is not an everyday exchange, but a derivatives exchange. At BitMEX you trade cryptocurrencies against dollars. In the list below you’ll find an insight into the cryptocurrency positions which can be taken at this moment and at which maximum leverage:
Bitcoin (100x)
Ethereum (50x)
Litecoin (33.3)
Ripple (20x)
Bitcoin Cash (20x)
EOS (20x)
Cardano (20x)
Tron (20x)
At bitMEX, traditional futures are traded on the above coins. These are traded quarterly. In addition to futures, Bitcoin and Ethereum offer their own derivatives. These “perpetuals” are the most traded markets on bitMEX and are also the most liquid products on the market.
With a perpetual product, you borrow bitcoins and sell them on the market for dollars. If bitcoin drops, you can buy it back for fewer dollars and have some left over. The other way around is also possible of course.
The perpetual follows the value of the Bitcoin through funding. Every eight hours a price is set that longs and shorts must pay to each other. In this way, the price of the contract can be influenced in order to accurately follow the real price of Bitcoin.
What are the fees and charges?
At BitMEX, it is only possible to deposit Bitcoin into your account. Depositing Bitcoin on BitMEX is free with a minimum deposit of 0.001BTC. Withdrawing Bitcoin on BitMEX is also free. In this, BitMEX is quite unique compared to other exchanges.
BitMEX charges different fees for buying and selling contracts. For example, the fee BitMEX charges for entering into a limit order for Bitcoin is – 0.025% and for doing a market order it is 0.075%. For the other currencies offered, these fees are slightly higher, namely -0.05% for a limit order and 0.25% for a market order. For limit orders you will receive money at BitMEX.
If you would like to consult the BitMEX website to find out the exact costs. Then you can click on the following link to get to the ‘Fees’ of BitMEX: BitMEX Fees.
Where can I find BitMEX Support?
In terms of support options, BitMEX offers its investors several options. BitMEX is very fond of their investors and therefore offers them 24/7 support through various channels. At BitMEX you have the option to send a support ticket, email or contact them via Weibo, Wechat, IRC and telegram.
In addition, BitMEX has an extensive knowledge base and FAQ where you can also find answers to a lot of questions and problems.
Is BitMEX secure?
When it comes to security, BitMEX has its affairs in very good order. BitMEX uses a multisignature deposit and withdrawal program. This means that all BitMEX addresses require multiple ‘signatures’ for deposits and withdrawals to be made. So even if BitMEX were hacked the hackers would still not have access to the value present in BitMEX wallets.
The combination of multisignature wallets with the offline storage (cold wallet) of the digital currency makes BitMEX a very secure option. In addition, every withdrawal of digital currency through BITMEX is manually verified by at least 2 BitMEX employees before the withdrawal is made.
As a system security, BitMEX uses ‘Amazon Web Services’. All BitMEX systems require multiple authentications. The different BitMEX systems are also unable to communicate with each other unless it is through approved and monitored channels.
If you want to read more about BitMEX security, you can recommend the following link: BitMEX security.
What are the pros and cons of BitMEX?
As mentioned earlier, BitMEX is not an everyday exchange. As a result, BitMEX advantages and disadvantages will differ slightly from the other exchanges. Perhaps the biggest advantage of BitMEX compared to all other exchanges is that you can take a lot more risk with BitMEX. In the overview below you will see the advantages and disadvantages of BitMEX listed.
Pros
- Derivatives exchange
- Many different order types
- High liquidity
- Free deposit and withdrawal
- Low transaction fees
- Very safe
- User-friendly
- Very safe
- Very strong team
Cons
- Risk of liquidation of your positions
- You do not own the digital currency
Conclusion
We believe that BitMEX is a very good exchange to trade for the more risk-tolerant, experienced cryptocurrency trader. Given the increased risk in trading, we recommend novice traders to stay away from BitMEX and start trading at an exchange like Coinbase, Binance or KuCoin.