A cryptocurrency exchange is an online platform that allows users to buy, sell or transfer these digital coins. Cryptocurrency exchanges operate as intermediary, matching buyers and sellers that wish to transact in cryptocurrency and fiat currency. On some exchanges, it is not possible to buy cryptocurrencies using fiat currency, liquid cryptocurrencies, such as Bitcoin, must be used instead. For example, a pairing of BTC/ETH indicates that the Ether digital coin can be purchased using Bitcoin, if a fiat currency pairing does not exist, e.g. USD/ETH, then it is only possible to purchase ETH using Bitcoin.
Exchanges will often require a user to undergo a verification process in order to validate his or her identity. Upon completion, a newly verified user will be able to credit their account and begin operating in the digital marketplace. Users can choose to transact through the use of a market order or a limit order. Placing a market order will execute a buy or sell transaction immediately at current market price, whilst a limit order will direct an exchange to trade a digital coin below the current asking price or above the current bid price.