Lesson 1
6 min

The difference between a cryptocurrency broker and an exchange

The difference between a cryptocurrency broker and an exchange

  • A cryptocurrency broker is a firm or an individual that acts as an intermediary between the cryptocurrency markets to facilitate buying and selling of cryptocurrencies

  • Cryptocurrency brokers enable buying and selling for customers at prices set by the broker

  • A cryptocurrency exchange provides an online platform for buyers and sellers who trade cryptocurrencies with each other based on current market prices

  • Cryptocurrency exchanges act as intermediaries and charge fees for trading

  • Sound knowledge on trading processes and cautious handling of cryptocurrencies are essential when trading on an exchange

In this article, you are going to learn about cryptocurrency brokers and exchanges.

Trading cryptocurrencies

Cryptocurrency trading, as a practice, appears complicated. Everyone seems to have different opinions on how to trade. In the widest and most basic sense, cryptocurrency trading means that investors speculate on the price movement of cryptocurrencies. 

If you want to start cryptocurrency trading, you have several options. You can trade cryptocurrencies using a cryptocurrency broker or a cryptocurrency exchange. Bitpanda is Europe’s leading trading platform for digital assets with focus on cryptocurrencies.

The Bitpanda platform offers both a broker and an exchange. Bitpanda is the Bitpanda broker for users who are just learning how to start with buying Bitcoin and other cryptocurrencies. Bitpanda Pro is a cryptocurrency exchange for more experienced traders with some experience, professionals and institutions.

What is a cryptocurrency broker?

In the traditional sense, a broker is a firm or individual person who acts as a financial intermediary for persons who want to exchange money for a product or a service.

A cryptocurrency broker like Bitpanda provides online financial services for users who want to buy or sell cryptocurrencies. For providing this service, a broker charges these users premiums for using the platform. 

Suitable for beginners

Cryptocurrency brokers offer the most suitable environment for users just getting started with cryptocurrency markets and beginners who are looking to buy Bitcoin, Litecoin, Ethereum or other cryptocurrencies. Exchanging fiat currencies for cryptocurrencies, and vice versa, takes place between the buyer or seller and the broker platform. 

Buying and selling cryptocurrencies on a broker holds a number of advantages for users: users can buy and sell cryptocurrencies at prices set by the broker. A cryptocurrency broker is also suitable if you want to buy a small amount of cryptocurrencies.

Bitpanda is a cryptocurrency broker that is easy to use and offers users extensive support via the Bitpanda Helpdesk. Users can exchange fiat currencies including euro, Swiss franc, British pound and US dollar for Bitcoin, Ethereum, Litecoin and other cryptocurrencies directly. 

In order to use Bitpanda, all you need to do is to sign up using your email address, verify your account and choose from a range of payment methods to deposit fiat funds, then you can start buying and selling digital assets. 

Vast range of services

In the scope of facilitating trades, cryptocurrency brokers may also provide the service of holding cryptocurrencies for their customers. Bitpanda also supports users who prefer not to hold their cryptocurrencies using a third party wallet to buy and sell cryptocurrencies inside their Trezor and Ledger hardware wallets, thus promoting user trust. 

When looking for which crypto broker to choose, you should also ensure its credentials represent a high level of competence. Your broker should have state-of-the-art security systems in place and operate in compliance with national current regulatory measures for financial services providers. You should also make sure you can access your crypto broker platform 24/7 via desktop and mobile app. 

Differences between cryptocurrency broker and exchange 

What is a cryptocurrency exchange?

If you are interested in trading cryptocurrencies directly with other buyers and sellers, you may want to look into using a cryptocurrency exchange. In contrast to a crypto broker, a cryptocurrency exchange provides an online platform for buyers and sellers who trade cryptocurrencies for other digital currencies or fiat currencies with each other, not a broker, based on current market prices. Therefore, the exchange of fiat currencies and/or cryptocurrencies takes place directly between buyers and sellers, with the exchange operator providing the platform. 

Cryptocurrency exchanges are suitable platforms for more advanced holders and traders of cryptocurrencies who want to take advantage of price fluctuations through speculation, hoping to make gains and to avoid losses.  

For advanced holders and users of cryptocurrencies

Before you consider trading cryptocurrencies on an exchange, there are a number of factors that you should consider.

Sound basic knowledge of how cryptocurrencies work

It cannot be stressed often enough that reading up on crypto trading and learning how to trade in theory is essential before you actually start trading. Too many losses have been incurred by inexperienced traders solely because they lacked the necessary fundamentals of trading or did not understand how a cryptocurrency exchange works.

You should have sound basic knowledge of cryptocurrencies if you want to start crypto trading and then start researching the exchange that is right for you. Exchanges that do not actively support traders and those interested in crypto trading with information like educational lessons, news and blog articles may not be reputable or suitable especially for beginners. 

So if you are a beginner or entirely new to crypto, we recommend you read the articles in the beginners’ section of the Bitpanda Academy. If you are thinking of starting to trade cryptocurrencies on an exchange like Bitpanda Pro, familiarise yourself with the trading platform and do your research on which trading strategies may be appropriate for you. 

Fiat markets

Besides investigating which payment methods are offered by a crypto exchange, you should also find out which crypto exchange can be used in your location. For instance, Bitpanda Pro supports users in 54 countries and offers access to crypto-to-fiat markets in Europe with all major fiat trading pairs including Bitcoin and Euro, Ethereum and Euro, Bitpanda Ecosystem Token (BEST) and Euro and many more. 

Intuitive user interface

Trading happens all day, everyday and if you don’t want to miss out, you should ensure that you always have access to your exchange. Bitpanda Pro offers users of the cryptocurrency exchange an interface that is fully responsive and automatically scales to any device (notebook, desktop, smartphone or tablet). Extensive user support is available via the Bitpanda Helpdesk. 

State-of-the-art trading APIs

In order to work towards maximising trading success, savvy traders utilise API trading technology and trading bots that facilitate automated trading. Bitpanda Pro offers a state-of-the-art trading API with easy integration for users to connect their trading bots for optimising trading strategies, download of historical market data and place orders via REST and Websocket APIs.

Regulation and compliance

As always in the world of cryptocurrencies, make sure that you are protecting yourself against scams and money laundering which are both frequent occurrences in the crypto sphere. Bear in mind that a cryptocurrency exchange that ensures high transparency and compliance is also bound to work towards providing users with reliable access and to use state-of-the-art safety measures. Bitpanda Pro holds a PSD2 payment service provider licence and is fully compliant with the provisions of the EU’s fifth anti-money laundering directive (AML5). At the end of the day, you want to be certain that all your assets are safe before, during and after trading, whether you choose a crypto broker or exchange.

Are you ready to buy cryptocurrencies?

Get started now


This article does not constitute investment advice, nor is it an offer or invitation to purchase any crypto assets.

This article is for general purposes of information only and no representation or warranty, either expressed or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of this article or opinions contained herein. 

Some statements contained in this article may be of future expectations that are based on our current views and assumptions and involve uncertainties that could cause actual results, performance or events which differ from those statements. 

None of the Bitpanda GmbH nor any of its affiliates, advisors or representatives shall have any liability whatsoever arising in connection with this article. 

Please note that an investment in crypto assets carries risks in addition to the opportunities described above.