More and more crypto traders are making the switch to FTX. Is FTX really such a good exchange? And is your crypto in safe hands? In this FTX review you can read all about this exchange.
What is FTX?
- FTX is a crypto exchange founded in 2019. FTX’s mission is to develop a platform that is user-friendly enough for beginners and robust enough for professionals.
- FTX offers many coins and different trading instruments and tries to innovate especially by adding new instruments of interest to professional traders.
- FTX has partnerships with major companies inside and outside the crypto world. For example, it works with Circle, the company behind the stablecoin USDC.
Who is behind FTX?
FTX was founded by Sam Bankman-Fried, an American investor and crypto-enthusiast. He not only owns FTX, but also Alameda Research, a large crypto investment company.
Bankman-Fried is 29 years old and has built up assets of several billions within a short period of time. Before he came into contact with crypto, he worked – how could it be otherwise with such a name – for a bank and traded in stocks.
Bankman-Fried has gathered a strong team around him with people who have earned their spurs at companies such as Optiver, Google and Facebook.
FTX trading options
On FTX you have the choice of the following trading options.
With spot trading you trade in a crypto currency. You actually get to own this crypto currency. The nice thing is that you can immediately set a stop-loss or a take profit, which allows you to lock in profits right away.
- FTX crypto trading
It pays to place a limit order because you pay 0.05% less in fees.
With futures you speculate on future price changes. There are two types of futures.
With perpetual futures you follow a crypto currency indefinitely. You can put a leverage on this. Going short is also possible, or in other words you can make money on a drop.
Large levers are possible, but watch out for this. If your future is liquidated (no longer worth anything), you immediately lose all your money.
A nice strategy can be to follow a coin for a longer period with 2-5X leverage. With these futures you must keep a margin, or cash that you can deposit if the coin moves in the other direction than you suspect.
The other variant is a kind of futures contract. People pay an amount of money for e.g. one Bitcoin at a fixed date in the future. In the picture you see a future for Bitcoin with an expiration date of 25-03-2022. The price of this is $49269, while a bitcoin changes hands for $46500 at the time of writing. So one expects a rise.
- Leveraged Tokens
With leveraged tokens, you also follow the “underlying” asset, but for a shorter term. Leveraged tokens are more suitable for day trading. Leveraged tokens react very quickly to market movement.
For example, if Bitcoin rises by 1%, you often have a 3-5% profit to grab on the leveraged tokens. With leveraged tokens, you don’t need margin, so you can deploy your capital much more efficiently. The leveraged tokens are great for day trading, but not for following the market over a longer period of time.
On stock exchanges you have complicated instruments with which you can gamble on the volatility of the price. FTX also offers these instruments for the Bitcoin market.
Prediction involves betting on world events. Currently, only two markets are open. For example, you can bet on Trump being elected president of the US in 2024.
I expect that in the future there will be more possibilities, for example betting on sports results.
Offer of coins on FTX
On FTX you will find hundreds of different crypto currencies. A small disadvantage is that there are coins that you can’t ‘really’ buy or FTX. You buy a kind of perpetual future. This only has value on FTX. You can’t take this crypto off FTX and put it in your wallet. One of the coins for which this applies is Cardano (ADA).
Most coins on FTX can be withdrawn.
Next to the coins you will also find tokenized stocks, a kind of shares on the blockchain. You can choose from several dozen stocks and indices. With these tokenized stocks you even get dividends and voting rights. This makes it a cheap way to invest in these stocks.
Trading crypto costs money, of course. Ideally, you would like to have these costs as low as possible, so that there is as much return as possible.
Cost of trading
For low costs, FTX is the place to be. A novice trader pays 0.07% in costs for a market order. If you take the trouble to place a limit order, you will only pay 0.02%.
This is really peanuts. If you buy €1000 worth of crypto, you will lose 20 cents in costs.
These costs apply to futures and to the spot market.
You reduce these costs even further if you sign up through this link. So are the costs still not low enough for you? You trade almost for free if you hold a lot of FTT on the exchange or if you trade large amounts.
There is no serious exchange that charges lower fees. At Binance, you’ll easily pay 0.1%. Coinbase and Kraken are even more expensive.
You only pay extra for leveraged tokens and for borrowing money. If you choose to trade in leveraged tokens, you will pay a fee of 0.1%. On a daily basis, you pay 0.03% in fees.
The cost of borrowing money is a bit more complicated, but this is clearly shown when you go to do this.
Costs for withdrawals and deposits
- Depositing crypto is free at FTX.
- Quite unusually, withdrawing crypto is often free as well. You only pay when making small BTC transfers or when transferring Ethereum or an ERC-20 token (e.g. Link). If you have 25 FTT staked, you get a free withdrawal.
How reliable and secure is FTX?
It’s one of the biggest nightmares as a crypto investor. You have your money on an exchange and it goes under. Or the exchange gets hacked. How big is this chance with FTX? Fortunately very small.
Security of the exchange
FTX has been around since 2019 and there is no known case of a hack or any other problem at FTX.
Furthermore, FTX has obviously taken the necessary security measures. Most of the crypto at FTX is on cold wallets that are not connected to the internet. This is a best practice when it comes to the security of the coins.
FTX has a responsible disclosure policy. This means that a hacker gets money if they report a vulnerability in the system. This increases the security of the exchange because you can make money risk-free if you find a vulnerability.
Also important; the smart contract for the FTT tokens has also been verified by independent experts.
Because exchanges are so secure, the most vulnerable place on an exchange is often your own account. Furthermore, you can do everything you can to secure your account, such as
Two factor authentication with Google Authenticator, a security fee or by SMS
A withdrawal password – an extra password that you only use when withdrawing your crypto
Whitelisting of addresses
In short, the security of your account is fine. The only thing missing is the possibility to set an anti-phishing code. So always pay attention if you get an email that seems to come from FTX.
Registration and Licensing
FTX is part of FTX Trading LTD, a company based in Antigua and Barbuda. Its headquarters are in the Bahamas.
Some tokenized stocks (a type of stock on the blockchain) are also traded on FTX. This is done under a German licence from CM-Equity and DAAG.
Sounds a bit dodgy and vague? Then take a look at where an exchange like Binance is located. Of this exchange you will find no address and registration details at all.
The fact that banks want to cooperate with this exchange also says it all.
Also important, there has been an audit according to American rules. In short, you can assume that the exchange is healthy.
In the event of a major cryptocurrency crash, such as May 19, 2021, it is possible that many traders will be liquidated. There may then be insufficient money to pay out the people who do stand to profit, for example because they had gone short.
FTX has backstop funds that they can use to compensate for this damage. This fund is huge. There are as many as 6 million units of FTT in it. These are currently worth over $400 million. Separately, there is another $15 million USD (real dollars) in it. In short, enough to cover all the losses.
Now, not everyone will be trading futures very hard, but if you do, such a fund is quite reassuring.
Another extra tip: create a sub-account if you are going to trade with leverage, so that you know what your maximum losses are.
FTX Pro’s & Con’s
Time to summarize the most important pluses and minuses of FTX:
- Very low costs: Especially if you place limit orders (thus adding liquidity) you really pay very little.
- Withdrawals often free: You only pay for small withdrawals of BTC and for withdrawals that go through the Ethereum network. All other crypto withdrawals are free.
- Good trading volume: FTX is one of the largest exchanges when it comes to trading volume and there is therefore sufficient liquidity.
- Reduced risk in futures trading: The backstop fund of FTX prevents a lot of damage if you trade with leverage.
- Wide range: There are more than 100 coins you can trade on FTX, as well as dozens of tokenized stocks.
- Various possibilities for leverage trading: Whereas Binance (soon) no longer offers the possibility of trading with leverage for the Dutch, this is possible with FTX. In fact, you have ample opportunities with futures contracts, long-term futures contracts and leveraged tokens (for day trading).
- Ability to deposit euros: At Binance, for example, it is no longer possible to deposit Euros directly. At FTX it is possible. Nice and easy.
- Handy app: The app for FTX works flawlessly, no matter what function you want to use. The app also gets exceptionally good reviews in the App Store and on Google Play.
- Sometimes only futures: FTX does allow you to trade all the major coins, but sometimes you can only do so via futures. One example is Cardano (ADA). The disadvantage of this is that you do not have the underlying and can not withdraw to your wallet. If you really want to own Cardano, it is better to buy it from Bitvavo. It is a pity that FTX does not support withdrawals for such a large coin.
- No English interface or support: The exchange has no Dutch interface. You also have no possibility to ask the helpdesk a question in Dutch.
- Interface looks a bit different: The interface of FTX is quite nice and clean. If you are used to another exchange, such as Binance, it may take some time to get used to this interface. Occasionally you have to click a bit to find a button which you can see right away in the other exchanges.
Conclusion FTX review 2022
As you’ve read in the FTX review, I’m pretty positive about this exchange.
If we go back to the mission, they definitely succeed. FTX’s exchange is very user-friendly. The interface is very clean and includes some conveniences, such as immediately setting a stop-loss when purchasing your crypto.
However, the biggest advantage of FTX is that the costs are very low. I usually place limit orders and then I pay no more than 0.02% in trading costs. You also pay the same low cost if you trade futures.
Another bonus: you do not pay any withdrawal fees at all for most coins. You only pay these for BTC and ETH (or tokens that run on ETH). Now withdrawal fees are not a deal breaker with many other projects, but it’s still a nice bonus.
Equally important is that the exchange is reliable and secure. FTX is just registered (albeit in Antigua and Barbuda). FTX just accepts fiat payments and has good security measures in place to prevent hacks. Another bonus is the insurance pot that prevents you from making a loss on the futures.