Is it Worth The Investment? [Updated For 2021]
Kraken is one of the first exchanges to be on the scene. At that time (2013), Bitcoin was the only tradable cryptocurrency, and Kraken continues to call itself the Bitcoin Exchange. Right now, though, Kraken has 76 crypto-crypto and crypto-fiat pairs and 20 cryptocurrencies to trade. In fact, it’s grown to become a full-fledged exchange for cryptocurrency. With it, investors have many options available, including more regulated exchanges. On top of it all, Kraken hasn’t been hacked before, which is a feat few other exchanges can claim.
Has Kraken proved that deregulated exchanges are safer than regulated ones? You can find out in our in-depth review. It focuses on the features and fees, and so much more.
What Is Kraken?
Kraken is an exchange that deals primarily with fiat-to-crypto and crypto-to-crypto options. It has developed a fairer and safer trading system because it uses digital ledger technology. This secure exchange from Kraken has become a highly popular place to buy crypto because many investors are highly concerned about the various scams and frauds relating to cryptocurrency. Just like the Coinbase exchange, located in San Francisco, Kraken was launched after the Mt. Gox hacking of 2011. Its vision was to build a much better crypto exchange.
Bitcoin trading on this site was launched back in 2013. Kraken then offered the ability to buy Ether back in 2015. From there, it became a top exchange for trading Ether-Bitcoin pairs and is still the second-largest exchange to provide this. Kraken focuses on transparency at all areas. You also get programmable and enforceable contracts and irreversible transactions. This offers more protection to the consumer and safeguards trader assets better than a regulated exchange can offer.
The main advantage of Kraken is its amazing security record. Therefore, it can attract hedge funds, banks, pension funds, and other traders who have deep pockets. Such large traders can trade with each other directly with the newest addition – an over-the-counter service. There was also a recent acquisition of the UK-based Crypto Facilities, which added more cryptocurrency indices and derivatives. These are essential risk management tools designed for professional traders. In addition to Ether and Bitcoin, traders can also buy Ripple futures. All of these are the top three coins out there, but Litecoin is also available on Kraken. In fact, Kraken offers a market cap of about $37 billion and is considered the 57th largest exchange listed on many sites.
A Brief History
Though Kraken was actually founded in 2011, it took some time for it to emerge as a platform to reduce a trader’s dependency on one exchange. The founder and CEO helped Mt. Gox at one time, and he had almost 70 percent of the Bitcoin trades through 2013 and 2014 until those two hacks caused him to go under.
Kraken’s founder understood the poor management of Mt. Gox in 2013, so he launched his beta version of Kraken. This startup quickly became one of the best options in the world. He never hoped for Mt. Gox to fail, but when the inevitable happened, he was there to deliver a better and safer exchange to take the place of it.
That same year, Kraken’s parent company Payward, raised about $5 million in a special funding round led by Hummingbird Ventures. This included Blockchain Capital and Digital Currency Group. Immediately, those funds were secured for legal compliance and security for Kraken. Then, in 2016, SBI Ventures led another funding round to help the exchange reach its potential. This round included support from many companies, including a foreign exchange broker from Japan called Money Partners Group.
At first, only Bitcoin and Litecoin were offered, but Kraken gradually expanded to include Dogecoin and Ether. Now there are nine popular cryptocurrencies on this exchange and 20 altogether.
How Does It Work?
You’re going to find that Kraken is a CEX (Centralized Cryptocurrency Exchange). It offers the security standards you know and enjoy from a decentralized exchange. Since a decentralized exchange doesn’t hold the user funds, personal information, and data, it’s not as susceptible to hacking. When Cryptopia, New Zealand’s exchange, was hacked, the CEO of Kraken, Jesse Powell, advised the traders to store all of their funds offline in non-custodial wallets and hardware. He also recommended that they manage their private keys separately. Powell said that people should only put the funds they use for trading in their Kraken account. This exchange is open and available 24/7. However, if you do choose to trade fiat currency and want to withdraw over $5,000 in crypto each day, you must provide identification to verify who you are on the Kraken exchange.
Is Kraken Safe?
We feel that Kraken is a safe exchange to use. It operates with the self-regulatory model, though it also cooperates with regulators for the future about digital asset exchanges. Kraken also claims that its traders are more protected because of its security measures:
- Cold storage wallets that have no linkage to the internet
- Secure exchange with no incidents of hacking
- High security for its encrypted data stored in data centers
- Large fiat reserves with cryptographically-verified proof of reserve audits
As an individual account holder, you can choose to activate these optional features:
- Master account lock
- Pretty Good Privacy (PGP) email encryption
- Two-factor verification
Kraken has a great reputation within the cryptocurrency trading world. Its security reputation is almost mythic because no one can crack its codes or gain access unknowingly. If Kraken did end up getting hacked, though, this unlicensed exchange doesn’t offer deposit insurance.
Therefore, if your goal is to protect your digital assets at a regulated financial institutional level, Kraken might not be the best choice. It is not regulated. Make sure that you only add the funds you require for trading that day.
Kraken isn’t a regulated exchange. This exchange is a visible supporter of the self-regulatory model for all crypto exchanges. It does belong to the JADA (Japan Authority of Digital Assets) and the DATA (Data Asset Transfer Authority of the Federal Reserve). Also, Kraken doesn’t operate in New York because it didn’t apply for the BiLiense for digital asset exchanges, which is required in that state.
Kraken offers its users access to the variable fee schedule, which is based on the platform, the number of trades made a month, assets traded, and margins utilized. Therefore, users who buy, convert, or sell major cryptocurrencies through the Instant Buy Feature on Kraken pay fees of 3.75 percent of the total trade value. There’s also a small fee charged when you fund the order with a payment transfer.
If you place an Instant Buy Order with funds already in the account, you don’t incur additional fees from Kraken. Every cryptocurrency order includes a variable spread for when you execute it. Kraken doesn’t control these spreads. In fact, the broker doesn’t have control over any change in the market conditions.
Users of Kraken Pro are subjected to a variable taker-maker fee schedule, which is based on the total trade values within a 30-day period. When you execute a trade that offers liquidity to the market, you pay a maker fee. These start at 0.16 percent of the total order value, but they can be as low as zero percent. There’s also a Post Limit Order on Kraken to make sure that the order gets canceled or is executed with your maker price.
Taker fees are charged if you place an order removing liquidity from the market. This can happen if the order matches an existing one and they both execute at the same time. Every market order is charged a taker fee on Kraken. They start at 0.26 percent of the total order value and can be as low as 0.10 percent.
|30-Day Volume in USD||Maker Fee Percentage||Taker Fee Percentage|
|$0 to $50,000||0.16 percent||0.26 percent|
|$50,001 to $100,000||0.14 percent||0.24 percent|
|$100,001 to $250,000||0.12 percent||0.22 percent|
|$250,001 to $500,000||0.10 percent||0.20 percent|
|$500,001 to $1,000,000||0.08 percent||0.18 percent|
|$1,000,001 to $2,500,000||0.06 percent||0.16 percent|
|$2,500,001 to $5,000,000||0.04 percent||0.14 percent|
|$5,000,001 to $10,000,000||0.02 percent||0.12 percent|
There’s also a minimum deposit instituted by Kraken, and it varies based on the cryptocurrency type you transfer into the account. Minimum cryptocurrency orders on Kraken also change with the crypto you buy or sell. On top of cryptocurrency trading, Kraken also allows access to forex trading, margin services (interest calculated every four hours), and futures trading.
You might be able to pay fewer fees with the Kraken’s maker-taker schedule, especially if you use a strategic order type to make sure that the fees are paid. However, the variable percentages could be confusing and put off new investors.
It’s easy to sign up for and sign in to your account on Kraken. Here is a step-by-step guide to buying crypto on the Kraken site:
Register with an Account
Before you can trade on Kraken, you must register on the site. The sign-up page requires you to enter a password, username, and email address. At this time, you can also create a PGP public key and Master key. You are going to get a verification email with a special code. Make sure you copy/paste it on the verification page to finish the sign-up process. Then, you can choose to set up your two-factor identification with a Yubikey hardware device or through various authenticator apps.
Verify Your Identity
You can’t start trading until you’ve verified your identification. There are three different levels. A regular phone number offers basic access, and you can withdraw up to $5,000 daily. If you want to trade fiat, you must upgrade to the Level 2 Verification. To do that, you need proof of residence, government ID, and a confirmation photo to prove who you are. The Pro version requires Level 3 Verification. You’ve got to provide everything from Level 2 but must also include AML verification and financial statements.
Fund the Account
You can choose to deposit money from a cryptocurrency wallet or through a bank transfer.
There are three order forms available when you go to purchase cryptocurrency: Simple, Advanced, and Intermediate. The simple order form allows you to choose between limit orders and market ones.
With the advanced form, you can focus on trailing stops and stop-loss. It’s in your best interest to learn about them because they can help you a lot. For example, you can use market depth to find out what price the market is currently. Once you click on the price, there is more detailed information.
Withdraw Your Funds
You’re going to experience a simple withdrawal process. Just follow the prompts on your screen. However, you should have a deposit address if you plan to withdraw to your preferred cryptocurrency wallet.
Kraken does offer a mobile app called Kraken Pro. It’s available for Android and iOS users. That way, you can always keep track of your funds. Kraken claims that it’s an alternative to the site and offers simple login, the ability to view the portfolio, access to various crypto markets, and a mobile-friendly design.
The app offers the same resources as the website. Therefore, users can buy, trade, and sell, even if they’re not at their laptops.
On top of that, Kraken offers a separate app to trade futures (Kraken Futures.) There is a mobile version of the Kraken futures trading website, too.
Extra Services Available
While you can sell, trade, and buy fiat and crypto, other services are available to you on the Kraken site. These include:
Kraken Futures is a great extension to the main site. It allows customers to trade the top cryptocurrencies with a leverage of up to 50x. However, we feel that the service is complicated to use, so it’s only recommended for more advanced traders.
Trading futures offers many advantages over directly trading assets. Futures tend to have lower transaction fees, allow you to benefit from the decreases and increases in price, and provide more financial leverage. Currently, there are five cryptos available with Kraken Futures. They include:
- Ripple XRP
- Bitcoin Cash
Cryptowatch is the trading terminal offered by Kraken. It can provide data and analyze it on more than 4,000 cryptocurrency markets. You can use it for free, but there’s also a premium service. This offers many advanced benefits. Here are just some of the advantages of Kraken Cryptowatch:
- See market trends and price movements for different crypto on various platforms
- Set volume and price alerts for your chart to help track currency movements
- Analyze chart data easily for Bollinger Bands, RSI, and MACD.
With the paid version, users have even more services. The primary one is that you can trade on various exchanges from this terminal.
Staking is another service offered by Kraken. It encourages you to keep money on the platform. With Staking, you can buy assets that gain rewards with time. It’s similar to having a savings account at a bank that draws interest. With the more assets you own, you can see better rewards over time.
To start the process, visit the Staking tab from the homepage. Choose to stake the three assets (Tezos, Cosmos, and New Dot). When you stake assets, you can check them anytime to see the rewards you’ve earned. Plus, you can un-stake them anytime. If you’ve got funds just sitting in the wallet on the site and not making money, you can choose to stake them.
You can receive customer service on Kraken 24/7/365. The team is available for online chat whenever you want. To connect with the support team, just visit the website and tap the chat icon at the bottom of the screen. If you don’t want to bother live chat support, Kraken does provide a comprehensive help center that can answer many common questions.
Right now, customer service isn’t available through email or phone. We want to see Kraken offer more customer service choices to avoid a limitation there. Still, live chat is seen as top-of-the-line for most people, and it’s faster than email.
Education on Kraken
With Kraken, there are a few educational resources for new investors. We feel that they’re unique and can help you learn about the markets before making that first investment. Some of the tools Kraken provides for educational purposes include:
- Crypto Guides – There is a full beginner’s guide created by Kraken’s team. It focuses on the most common assets to trade. This includes AAVE and Ethereum, but the straightforward guides on Kraken offer you a great crash course of the basics for each of the offerings available.
- Video Lessons – Many people prefer to learn through videos. If you like that better, Kraken provides a full section of just video lessons. These can cover almost every topic, such as the basics of the cryptocurrency market, futures trading, and many others. Plus, Kraken also gives you a complete set of various webinars. They feature guests like Greg Di Prisco, the head of Maker Foundation, and Pierre Rochard, a Bitcoin strategist.
- Podcasts – Those who want something even more unique are sure to appreciate the podcasts on Kraken. You can get a behind-the-scenes peek at what goes on at Kraken. Most of the time, these podcasts come out once a week, and you can find out about future updates and more.
The education tools provided by Kraken are all free to use. This means you don’t need to log into the account at Kraken to utilize them.
Ease of Use
Kraken supports various cryptocurrency investment needs that go beyond just buying or selling tokens and coins. We feel that it’s easy to get started using Kraken, and the experience is intuitive. There are plenty of features to love about Kraken, but these are a few of the favorite options this broker has utilized to make it easier to open your account:
Quick Signup and High-Level Protection
If you want a crypto broker that’s easy to use and nice to beginners, we feel that Kraken is a great choice. You can open an account in minutes. However, there is an account verification process. It’s simple, but it can take more time to complete. Though there are different options for verification, each one has its own benefits and drawbacks.
While we talked earlier about security features on Kraken, we feel that it is important to bring it up again as a favorite feature. With its unique security features, you can keep investments safer when you compare that with other exchanges. Kraken stores about 99 percent of its tokens and coins in an air-gapped, offline, cold-storage facility. It also retains reserves so that users can withdraw their investments quickly and effortlessly. On top of that, the Kraken servers are in cages that are monitored 24/7 by armed security personnel. This broker also schedules tests for an attack to make sure that no one can gain access to your investments or personal information.
Staking helps you earn more returns on cryptocurrencies and fiat that you often hold in your account. Kraken features an all-in-one platform to help you stake, sell, and buy the most popular of cryptocurrencies. You can buy crypto like Polkadot, Tezos, and Ether directly from the exchange on Kraken and then stake them within a few moments. Ultimately, you can get going immediately and start collecting your rewards, either biweekly or weekly, depending on that particular asset.
Simple and Advanced Order Placement
Kraken is the only exchange we know about to offer three order placement levels and systems. If you want something easy and straightforward where you can buy/sell crypto, the beginner ordering system on Kraken is something to appreciate. It limits you to the basic information necessary to execute your trade. Those with more experience can use the advanced system for orders. This gives you more information, execution choices, and leverage options.
We understand that you’ve got questions. You’re trying to decide if Kraken is the right cryptocurrency exchange for you. While we covered many topics, there are a few things that people continuously ask. Therefore, see if they are answered in this FAQ section.
Are Dark Pools Illegal?
Dark pools are actually legal in the UK, US, and other countries. These are private exchanges that allow large traders to anonymously exchange large share blocks. With such a lack of transparency, large traders can buy/sell significant amounts of derivatives and securities without tipping the market and placing their orders in public order books.
What’s a Decentralized Exchange?
A decentralized exchange doesn’t use intermediaries to hold customer accounts and funds. People trade directly with each other, and the funds are then transferred directly between crypto wallets. Trader IDs and money are at a lower risk of getting hacked. However, a downside here is that there’s less liquidity.
What’s a Centralized Exchange?
On a centralized exchange, it holds and accepts the user’s deposits. Most exchanges use ID verification to comply with AML (Anti-Money Laundering) and KYC (Know Your Customer) rules. Because they hold personal identification information and client money, centralized exchanges are at higher risk for cybercriminal activity.
Should You Use a Cold Storage Wallet when Trading on Kraken?
Hot or online crypto assets can face the risk of getting hacked. Cold storage means that you store the crypto assets on a USB drive or in a paper wallet so that they’re offline. Make sure that you follow the right measures to protect both cold and hot crypto assets:
- Store and generate private keys offline
- Use biometric ID
- Use two-factor authentication before accessing the wallet
How Can You Access other Exchanges with Kraken Cryptowatch?
With Cryptowatch, you can trade in over 700 markets and on 25 global exchanges. There are two ways to gain access:
- Connect from your main trading screen
- Connect from the order page
What’s the Difference between Auto-trading Robots and Exchanges?
Many trading bots (automated trading algorithms with pre-programmed features) are now being developed for use with cryptocurrency trading. The easiest way to connect a trading bot to a crypto exchange is through an API. Most bots for forex trading are plug-and-play. However, the ones with APIs require technical knowledge to get them configured. You can find popular and proprietary bots that connect to the Kraken exchange using an API. However, you assume all risks of using such a trading bot.
Ultimately, Kraken has a very popular following for traders who prefer unregulated exchanges. Ideally, a decentralized crypto exchange provides the safest and fairest trading environment. With more hackers targeting crypto exchanges, Kraken offers a great security record, and it’s the best testimonial for the broker.
This exchange is making significant investments with trading tools for institutionalized cryptocurrency investing. However, what does it do for the average trader? About seven percent of all cryptocurrency assets are held through institutions. Therefore, most traders are regular individuals. Kraken is getting ready for the pick-up of crypto trading, but could it do more to ensure the happiness of its traders?
Many people prefer a regulated platform that offers the safety of deposits and various trading tools. Remember, a regular person might not have the sophisticated risk management systems of a bank. Still, we believe that Kraken is a contender for the crypto exchange world. It has a great service, and it has been around for many years.
In fact, it’s accessible for beginners, but it has many incentives for experienced traders who need an exchange. With various fiat and crypto available, you can experience many benefits from using the Kraken exchange.