The Crypto world is tremendous. With about 10,000 active cryptocurrencies, the crypto market is towering with new crypto coins and projects daily. Moreover, the Ethereum chain forms the corpus of the Decentralized Finance (DeFi) tools, rendering a vast range of financial services. The need to convert one crypto to another arises from all these developments. But can you swap your crypto?
This blog explains the concept of the crypto swap, the difference between crypto trading and swapping, and the methods to perform the same. So, let’s understand.
What does it mean by Crypto swap?
Crypto swap means to exchange one cryptocurrency for its equivalent value in another coin or token. The exchange is direct, and the crypto-fiat conversion is not required. Hence, the process is time-saving and reduces transaction fees. So, why swap your crypto?
People swap cryptocurrency for several reasons:
- Diversifying the investment portfolio
- Explore other blockchain projects
- Pay blockchain-specific transaction fees
- Passive Income
How does a swap work in crypto?
After buying cryptos with fiat(currency), you can use the crypto swap. All you need to decide is the crypto you wish to swap with and the swapping platform. Moreover, the swapping is direct without any intermediate fiat exchange involved.
How do crypto swaps make money?
Although crypto swap is risky, you can still make profits given the highly volatile crypto market.
The following are the two methods to gain profits:
- Swapping and holding: This method of crypto swap involves first identifying the coins from popular projects. Next, you can purchase less popular coins from crypto swap sites for bargain prices. Hold them for a specified time until their prices rise (along with the popularity of the project); swap or sell them later to gain profits.
- Margin swapping: Margin swapping involves subsequent coin swaps. Moreover, the volatility of the market forms the basis of margin swapping. Also, extensive knowledge and a close watch of the value differences in the crypto market are necessary to perform margin swaps.
What are the different ways of swapping crypto?
The following are the ways to swap crypto:
1. Centralized exchange
Centralized exchanges are platforms owned and managed by a central organization. These exchanges are easy-to-use, so beginners began buying or trading crypto on these platforms. Further, they also offer crypto-swapping services with different trading pairs at a cost.
However, these exchanges are vulnerable as they store your private keys on centralized servers. Also, the trading pairs’ decisions and price fluctuations make these exchanges highly volatile.
2. Decentralized Exchange
A central organization does not govern a decentralized exchange; instead, the self-executing contracts regulate them. Moreover, it is a peer-to-peer marketplace where transactions occur directly among crypto traders (without intermediaries). Also, many DEXs run on the Ethereum blockchain, such as sushi and uni swap crypto.
Generally, it is easy to recognize a DEX with “swap” embedded in their names. Furthermore, the DEXs directly swap a cryptocurrency for another cryptocurrency rather than the fiat way. Thus, DEXs save time and money.
The advantages of DEXs are:
- Security of private keys
- Swap any coins
- Anonymity of transactions
The following are the different DEXs:
- Sushi swap crypto,
- Uni swap crypto
- Totle swap crypto
- Swap trek crypto
- Easy swap crypto
- Trustswap crypto
- Money swap crypto
- Any swap crypto
3. Non-custodial Wallets
Non-custodial wallets give you complete control of the private keys and the funds. Moreover, these wallets don’t store private keys on centralized servers. You send the platform one cryptocurrency, and they send the required crypto back to your wallet address.
However, it would help if you had some technical know-how to use them.
4. Ledger (Wallet)
A ledger is a hardware wallet for storing cryptographic assets and performing secure transactions. You can also use a ledger to securely swap crypto. After swapping the crypto, the platform sends your crypto assets to your Ledger account. Moreover, it offers to swap a variety of cryptos. A ledger is the most secure way for swapping cryptos as it stores the private key offline.
Is WalletSwap a good investment?
WalletSwap is a decentralized mobile wallet to send, receive and swap Ethereum tokens and Binance Smart Chain. Moreover, the platform works with several blockchains and tokens. It visualizes the development of an ideal wallet that boosts interchain compatibility and allows users to access the defi technology. Wallet Swap(WSWAP) is the official crypto of the platform. Furthermore, the one walletswap price equals $0.00000003
Crypto Swap vs Exchange? What's the difference
Although people use the terms crypto swap and exchange interchangeably, they are different.
Trading or exchanging is converting one cryptocurrency to fiat and then buying other cryptocurrencies from the fiat you obtained. However, as two transactions are involved here, if you trade on exchanges, you have to pay commission fees on both.
On the other hand, a crypto swap means transferring one cryptocurrency to its equivalent value in other cryptocurrencies. Moreover, here as there is no intermediate transaction from coin to fiat transaction involved, the overall fees are less.
Crypto swap sites allow swapping amongst various “trading pairs.” How to read trading pairs? A crypto pair involves the base currency and the quote currency. You can represent the cryptocurrencies in three letters separated by backslash ‘/’, E.g., AAA/BBB. Moreover, the base currency means the first currency in the crypto trading pair(before the backslash). And, the quote currency means the second currency in the crypto trading pair(after backslash).
In short, the quote currency is the currency you own and wish to exchange, while the base currency is your target currency. Crypto swaps often are done with stablecoins like USDT and USDC. The most popular trade pairs are ETH/BTC, BTC/USDT, and ETH/USDT.
What is Swap trade?
People often use the term swap trade. However, there is no such term as a swap trade. Swapping and trading are two completely different concepts in cryptocurrency. Swapping is transferring one cryptocurrency to another cryptocurrency for building an investment portfolio, reducing losses, or using crypto as payment. On the other hand, crypto trading is buying or selling cryptocurrencies on exchange to gain profits.
How Much Does it Cost to Swap Crypto?
Swapping crypto demands a specified transaction fee. A transaction fee is a charge you pay for buying, selling, or exchanging cryptos. Further, it consists of two parts: Exchange fees and Network fees. Exchange fees are the amount that the crypto exchanges charge for performing your transaction; for the financial momentum of the websites. Next, network fees are the money you pay to utilize the network hosting these crypto swap exchange.
Moreover, different blockchains refer to fees with different terms. For example, Ethereum charges gas fees, and Bitcoin charges network fees. Generally, the fees range from 0% to 1.5% per trade, depending on whether you are a buyer or seller.
How Long Does Crypto Swapping Take?
Crypto swapping transfers one cryptocurrency to another without the intermediate crypto-fiat exchange required. Thus, the overall time required for the transaction reduces as no approval from intermediate third parties is required. Moreover, the time required depends upon the cryptos assets in your swap. E.g., BTC to ETH requires 10 minutes, and ETH to USDT requires less than one minute.
Unlike traditional crypto trading, a crypto swap converts one cryptocurrency to another. Crypto swap replaced the traditional inefficient method of exchanging coins through fiat, thus, easing the time and transaction fees involved. Further, finding the best crypto swap exchange depends on several factors, such as the volume of your digital assets, the transaction fees, security, and the platform.
In short, crypto swap holds many benefits: time-savvy, security for your funds, and growth of your assets. However, whether you swap through centralized or decentralized exchanges, consider crypto’s ever-changing value.