When dealing with currencies, both traditional and crypto, the concept of an exchange rate is at the core of every transaction. But what exactly is the difference between the “market exchange rate” and Coinsdrom’s “actual exchange rate”?
In this post, we’ll explain how these two rates differ, how they are determined, and why the gap between them can sometimes be large or small. Let’s break it down.
Market Exchange Rate vs Actual Exchange Rate: The Key Difference
The market exchange rate refers to the rate at which a currency (or cryptocurrency) is currently priced on the open market. This rate fluctuates constantly, driven by various factors such as supply and demand, geopolitical events, and market sentiment. Essentially, it’s the price that you would see if you checked a financial news site or a crypto price aggregator.
On the other hand, our actual exchange rate is the rate you see when you go through the process of buying or selling crypto on our platform. This rate, while based on the latest market pricing, includes additional factors that are unique to the way we operate as an authorized exchange.
Why Is There a Difference?
At first glance, the difference between the market exchange rate and the actual exchange rate might seem confusing, but it comes down to a few key factors:
- Time Delay
When a customer initiates a transaction on our platform, we don’t execute it instantaneously. After we receive the payment, we process the transaction. However, the market rate can change rapidly, especially in the world of crypto, where volatility is a major characteristic.
This means that between the moment a customer places an order and the moment it is settled, the market rate could shift, affecting the final rate at which the transaction is executed. This causes a small difference between the market rate at the time the order is placed and the actual exchange rate when it’s processed.
- Exchange Spread
As an exchange, we also need to maintain a profit margin. The spread—the difference between the buying and selling price—is a necessary aspect of our business model.
This spread is factored into the actual exchange rate and ensures that we remain sustainable and competitive in the crypto market. While our aim is to offer fair rates to our customers, we also need to secure profitability to keep the platform running smoothly.
- Market Volatility
Crypto markets are known for their volatility. The market exchange rate can shift dramatically within seconds, depending on sudden changes in the market. These fluctuations can lead to the actual exchange rate being slightly higher or lower than the market rate.
Conclusion
The difference between the market exchange rate and Coinsdrom’s actual exchange rate is a natural result of market dynamics, transaction processing times, and the need for the exchange to operate sustainably.
While this difference may seem like a small inconvenience, it’s part of how the exchange works to maintain fairness and competitiveness. By understanding these factors, customers can have a clearer idea of why exchange rates fluctuate and how they can navigate these shifts when buying or selling crypto on our platform..
