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).
Come battle me through @STEEMPUNKNET!
Whoa, I had no idea Binance worked like that. Is there any particular reason why Binance chose to do this?
It seems to apply mostly to crypto's that are worth a few dollars or less each.
It wouldn't be so bad if they would just collect the fee in BTC or ETH, instead of the token you trade! No idea why they do that.. but the subreddit is full of complaints about how people have collected lots of untradeable 'dust'. It can add up if you have a bunch of them , and each is worth a few dollars.
There are some workarounds.. the BNB markets do allow for fractional trades. Maybe they do this on purpose to stimulate BNB trading? However on the BNB markets a new problem is introduced... you have to trade atleast 1 BNB worth of tokens minimum. So To get rid of 0.98 RDN you first need to buy 2.02 RDN and then sell 3 RDN, in order to stay above the minimum trade amount.
I hope they fix this eventually! No sense in withdrawing my 0.98 RDN to try and sell it elsewhere if the withdraw fee is like 0.6 RDN..
This system works this way either by mistake, or they are very clever people
It simply increases the value of BNB token since every trader will hold BNB if they want to avoid those downsides mentioned above.
As you already mentioned the issues of buying in whole numbers can be addressed by using BNB as the payment coin and I have not faced the frozen wallet issues that you are speaking about.
Even inspite of these I would rate Binance very high considering that they have done all this in a couple of months. Give them couple of more months and they would be much better. I wrote a detailed post about Why I like Binance and why I would prefer it to other exchanges.
Today on Binance was added Nav at 11:45,
but on other exchanges it was already pumped on 20% before 11:45
This is happening every time almost on every exchange, does someone know is it cuz of some loophole on exchange whitch can gives u earlier info about new coin be added to exchange or this is just selling inside to some vip clients??
You are so undervalued! Great information. I sometimes used binance, but I haven't really noticed this. Hmm I should pay more attention to it!
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That's so kind of you to say!!
As for Binance, I think we should just consider the cost of 1 BNB token to be the cost of being able to trade on Binance. That way you never have the fractional tokens, and probably keeps the hassle to a minimum.
I'll have a look into @ocd as well! Thanks!! Of course I accept gladly :)
Yeah for now I have always used bnb because the fees just goes lower hehe.
Wow, that nomination for @ocd really paid off! Thanks so much!!!
In the new year I have plans to step up my blogging game another notch and introduce some branding and better formatting and stuff like that. I feel like that is the main thing my blog needs to be improved right now. I will be trying out the ocd-resteem when I feel confident enough about the quality of my posts, but feel free to disagree and nominate me whenever! I tend to be overly critical of my own creations ;)
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Hi @Futurethinker, I got such a kick out of the success that your OCD nomination got me that I went full steam ahead with improving the quality of my blog. I've changed some things around, mainly on my profile cover pic but I also introduced the same 'branding' to my newest blog post, as well as some other small layout-related things.
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If you have suggestions on how to further improve my blog, or get noticed more by curation guilds like OCD, they would be most welcome as well!
For the past 6 months Steemit was more of a tryout period for me, when I started I had my doubts, but Steemit has been very good to me, so in the new year I would like to start taking it more seriously too in return! Any help is much appreciated!
This is really good and helpful advice. I have been meaning to get set up with Binance for a while now and it's good to be aware of these quirks. Really appreciate it!
You're welcome, glad to be of help :)
Thanks a lot for the recommendation! I have used binance before, but the fees were indeed insane.
Well, the fees are pretty good as long as you use BNB tokens. Or if you trade high enough amounts so you're not left with fractional bits!
How much fees you can pay with 1 bnb token?
Quite a lot.. I saw one user on Reddit who calculated it apparently and he said you can do about 0.65 worth of BTC of trading with 1 BNB token. But the price of BNB fluctuates as well as the price of BTC of course.
But I think it's fair to say that you can do several thousand dollars worth of trading before going through the single BNB token. So one token will get you pretty far actually
I've bought some coins on Bittrex that I just want to hold (OMG, LSK, etc), do I need a separate wallet for each? I've yet to withdraw anything (and I know I need to) so this is new territory for me. I don't have any hardware wallet, and I'd prefer to do paper anyway.
Hi! It kind of depends what coins you have. A lot of coins like OMG are Ethereum tokens, so you can all store them on the same address as your Ethereum (if you have any - you need a little bit to pay for transaction costs so if you don't have any but do have Ethereum erc20 tokens you should get a tiny bit of ETH too so you can pay to move the coins). Lisk is it's own blockchain and will require a seperate wallet to store them on.
Usually the rule of thumb is you need a wallet for each crypto, unless they are an ERC20 token (and now there are NEP5 tokens which are the same but on the NEO blockchain).
But the good news is there are a few all-in-one wallet solutions as well. I know that the Exodus wallet is popular for pc desktop users, and I have heard that many Android users use Mycellium or Jaxx wallets. Those will probably store most, if not all of your coins.
I don't use any of them myself (tried them once) so I don't know too much about them though. I am too paranoid to store anything elsewhere than my hardware wallet! But if you take good security measures (clean pc, make sure to encrypt the passphrase and store it on an usb, etc.) you should be fairly safe. Everybody has their own pricepoint for when it becomes worth it to get a hardware wallet, but when I think about crypto I think about their prices in tenfold. If I hold $1000 I treat it as if it is $10.000, because it very well might be.
I actually ordered a second hardware wallet a few days ago, so I can split up my funds for more security. Not so much from hackers, but I am starting to worry about the $5 wrench-hack, where a hacker can simply get a $5 wrench and beat you until you give him the ledger with passphrase that will defeat even the hardware ledger's defenses.
I don't have that much yet at all... but like I said, I treat it as if it is worth tenfold! :)
Sometimes I feel like one of those doomsday preppers, with all these paranoid precautions
p.s. always get wallets from the official download site, there are a lot of fake phishing sites out there.
excellent, thanks for the info. Can I get a paper wallet for every type of crypto, or do some coins not offer a paper wallet?
If you only plan to trade those currencies and not hold them forever, then you only need an ETH wallet or a Bitcoin wallet, or maybe a few other ones, but not one for every coin you buy and sell. (that would take forever to set up because there are about 1377 cryptos out there right now) To check them out, a good place to look is here: https://coinmarketcap.com/
If there are specific ones you want to hold offline for a very long time, then look into each coin to see if they have paper wallets.
excellent, thanks!
To be honest, I never used a paper wallet! I know it's easy to set up and generate an address, but it's think it's going to be a bit of a hassle to move the funds if you ever decide to do so.
I think most crypto's offer a paper wallet option, but I'm not sure, never looked into it much honestly.
The added problem is: be sure to trust the paper wallet address generator!
The whole thing with the wallets is kind of the biggest hassle with crypto currently! Hopefully soon some new projects that are being worked on arrive soon. Some projects, you will only need 1 address which holds the whole bunch, and also lets you trade from inside the wallet. That's the one we're all waiting for!
wow, that would be amazing. Is there a coin associated with that project? If that's even a thing that makes sense lol
Ohh, there's a bunch of those projects actually!
OmiseGO is actually one of them, lol! :)
Others I can think of from the top of my head are Loopring and Ethos, but I know there's a lot of others.
I think it's even possible to just store it all on a Bitshares account too.. a BTS address can store BTC and ETH and allows for trading too.
These DEXes everybody are talking about are in most cases also 'wallets' which will let you trade, I believe. So, one passphrase.
so far my investing has been based solely on people I watch on YouTube and which coins they think have a bright future lol
edit: and i've put none of my own $ into it, it's all been from what I have generated at steemit over the past year.
Be very careful with that though, there are many people hyping coins because they have them. I really do mean it when I say you should really look at each project critically and see if it's really a great project.
I started out trading just following recommendations too, and at first it seems like it works but at some point you'll follow a terrible recommendation, and you'll hate the Youtuber for it! It is better to just, as they say, do due diligence and research to eliminate all doubt.
On the other hand.... every 'bad investment' that I did because a Youtuber told me to do it, ... if i had just held they would have been worth more in dollars than when I got rid of them! Al crypto goes up it seems.. just a matter of when and how fast
I have noticed this problem too. I still like the ease of use on the site but it is a little tricky trading small amounts of coins. (and since I'm new, I only have small amounts I'm able to use to trade with) I did buy some BNB but even that is fractional now (below 1 BNB) but it still shows that I get the discount when trading. (for now?)
I have a lot to learn about their system and on bittrex also. (I have some Dash trapped on Bittrex because of Dash's (or Bittrex?) network transaction/withdrawal fees being higher than what I have.)
There are a lot of little things (mistakes) I have been learning but it's been interesting so far.
Thanks for a good summary of the current issues with Binance!
I think a fractional BNB is probably still tradeable for ETH or BTC if you get above the minimal trade amount.
But yeah, there's a likely chance that somehow some funds will end up being left abandoned. I guess this is the cost of trading that might be offset against Bittrex's higher withdrawal fees.. but still..
The flipside is that BNB is actually not a bad token to hold. I have looked at it before and considered buying it, so it's not terrible to end up holding it. It's just that I'd rather choose to do it out of my own free will, at my time of choosing rather than be forced into it like this.
And with SBD as high as it is, I shouldn't complain about having to buy a single $5 BNB token really. It's more of a principle thing! :)
I agree, they really need to be better on explaining the fees and minimum amounts so things don't get lost in the weeds of tiny fractions of crypto. (I have about 5 or 6 cryptos with super tiny amounts of them leftover after trading them, like you said, dust, that I can't really trade unless I buy more, etc.) For now, it's just mostly trial and (lots of) error. But that is mostly their fault for not communicating in better ways. While it can be fun to guess how (some) things work, it's not exactly pleasant when it comes to financially related things.
Totally! Pretty much every exchange I tried, it's cost me one way or another. Either by hidden fees or mistakes through wonky mechanisms. I guess I'm glad I'm learning these things at an early stage..
and besides, it's kind of fun too. Reminds me of way back when the entire internet was like this (except it didn't cost any money then)
New to Binance -- and had pennies of Ether remaining after a BTC buy without BNB. Now I know better. But, anyway, just a heads up that I used that Ether dust to buy BNB not even knowing there might be a limit. Just clicked. Well, I now have .27 USD equiv of BNB. Thought you'd want to know that the fractional is possible. I'll now use that .01999 BNB to buy more BNB, so I don't have to pay .1% to get a large amount of BNB.
What I have done (in fact today did) is trade my dust into USDT then buy bnb or something from there. The dust that is only a few cents I am not too worried about, but it is annoying to the part of me that wants a nice clean wallet
Ohhh! I must look into that to see if I can sell less than 1 token for USDT. I hadn't even tried that!
But I don't think Binance has an USDT market for every coin, just a handful ? So this might work for some coins but not others.
I admit my frustration is only partly due to the money lost on dust too... It is some kind of minor OCD where I want a clean wallet to show up!
If they offered a 'trash' option, which would let you throw away your coins (donate to charity), I would use this to get rid of them probably. But I'd rather they just open up micro-transactions on the BNB market so you can sell all of your dust for BNB (which you can then easily turn into something else eventually).