Kraken Review - Exchange Features, Trading Fees, and Security
As far as cryptocurrency exchanges go, Kraken has withstood the test of time. Founded in 2011, just a couple of years after the first Bitcoin block was mined, Kraken officially opened its doors to traders in 2013. It’s worth noting that even in the early days of crypto, Kraken was already committed to rigorous internal testing and safety standards, having kept its exchange in a closed beta for two years before launching.
Jesse Powell, Kraken’s founder, had already stood at the helm of several internet tech and gaming companies before becoming inspired by Mt. Gox to found his own exchange. Powell’s theory at the time, which was proven correct in hindsight, was that if Mt. Gox were ever to be hacked, traders would need another place to call home. Surely enough, Mt. Gox went down in a flaming wreck after being hacked for over $300 million. Kraken, however, still stands and is stronger than ever.
What are the keys to Kraken’s longevity? So many exchanges have come and gone, and yet Kraken has firmly held its ground through a shifting crypto landscape. From a philosophical standpoint, Kraken has maintained cryptocurrency’s techno-anarcho spirit perhaps better than any other stalwart in the space.
In 2015, for example, the New York Attorney General’s office declared that any crypto exchanges operating within the state would need to comply with licensing procedures. Those licensing procedures gave the state unprecedented access and data to Kraken and its customers. Powell refused to give in, and in a landmark moment, pulled out of New York operations — opting to give up on New York entirely rather than betray its principles. In fact, Powell didn’t just stop at refusing — he refused with a choice description that many remember to this day.
In 2017, the cryptocurrency market picked up in earnest. Up until then, Kraken had mainly offered Bitcoin, Ethereum, and Litecoin, having made its name as the biggest fiat to BTC/ETH onramp in the industry (Kraken launched fiat to crypto services way back in 2013). As crypto flourished, more exchanges came online, creating an even more competitive market for Kraken. In response, Powell and his team began adding additional digital assets but never went overboard. That’s caused Kraken to seem slightly outdated, however, they’ve opted to stay within their strength as a fiat gateway rather than chase after the altcoin market as Binance, HitBTC, and now Coinbase Pro have done.
Kraken’s offerings run the gamut of blue-chip crypto assets with BTC, ETH, EOS, ADA, XRP, BCH, XLM, ZEC, XTZ, XMR, DASH, and REP amongst them. Together, many of those projects make up the most venerable — one might even say traditional — group of assets available on the market today. It’s most recent listing, ATOM, seems to be a departure from business as usual, but Kraken appears unconcerned with being at the cutting edge, preferring to simply provide a secure and simple user experience for its traders.
Opening an Account
Upon arriving at Kraken.com, the first thing you’ll notice is that the landing page is very much unlike anything you find in crypto. Wonderful illustrations and a refreshing color palette adorn the page which goes some way in hinting toward the quality of the user experience at hand.
Kraken is primarily concerned with providing a simple, unfussy way for people to invest in cryptocurrencies with fiat. To that end, Kraken immediately asks about your level of experience as a trader by providing several routes for you to experience the exchange. Depending on the level of experience you choose, you’re redirected to a different route.
As a beginner, you’ll be taken to a cryptocurrency tutorial and taught about safe crypto trading practices. If you’re already familiar with crypto and just want to buy assets unavailable at your usual exchange, Kraken will take you instead to its asset listing page.
Owing to these options, opening an account with Kraken is simple. As usual, you choose a username and a strong password. You’ll be given a couple of options about the account you’re opening — you can go with either a basic account or an advanced account. Basic accounts require little more than your basic personal details. Advanced accounts require uploads of your ID, social security, and other information (depending on your country).
After Kraken reviews and accepts your account application, you can set up 2FA and start funding from your linked bank account. Funding your account is simple and can also be done by transferring crypto from another wallet into the appropriate Kraken wallet.
Features and Services
Kraken is a full-service exchange offering many features not found anywhere else. Amongst those features are:
A dark pool which allows traders to secretly place large buy and sell orders without alerting the rest of the market. Dark pools allow traders the ability to hide their large orders, and intentions, by giving them space to anonymously trade.
Alternatively, institutional and high-net-worth individuals can opt to trade on Kraken’s OTC (over-the-counter) exchange. OTC trades take place away from Kraken’s traditional exchange and offer 1-on-1 personalized service, deep liquidity, and expert desk opinions.
Kraken repeatedly ranks amongst the top cryptocurrency exchanges in service and security metrics. That’s probably got to do with their 24/7 customer support desk. Boasting several hundred on-call specialists, Kraken’s customer support staff is available day and night via both a live chat and a resolution center.
Kraken’s advanced trading platform features a coveted margin trading option powered by Kraken’s powerful Trade Engine. Offering leverage up to 5x, a pro trading interface, advanced APIs, high borrow limits (up to $500,000), and low rollover fees, Kraken ranks with Bitmex as the best of the best margin trading platforms. Kraken’s margin trading offerings are also quite diverse, with BTC, ETH, BCH, XRP, ETC, XMR, REP, and USDT primed for leveraged trades. Finally, Kraken’s margin trading fees are, as of the time of writing, the lowest of any exchange available.
Kraken futures trading is a standout feature not easily found on mainstream crypto exchanges. Kraken directly competes with Bitmex, the undisputed leader of margin and futures trading, but considering Kraken’s stellar reputation, many traders are inclined to side with their platform. Futures trading allows traders to specify an asset buy or sell at a later date without actually holding the digital asset in question. Traders generally use futures to hedge risk. Kraken lets traders handle ETH, XRP, BTC, LTC, and BCH futures contracts.
So, what about the fees? Exchanges can boast all the features they want, but if the price isn’t right, then nobody, especially not high volume traders, will come knocking. To that end, Kraken has introduced a novel volume-based fee schedule. It’s simple — the more you trade, the less you pay in fees.
Kraken takes your past 30 days of exchange activity and then considers its volume to determine the maker or taker fee. Fees begin at 0.16% — 0.26% for makers and takers respectively and go all the way down to 0.00% — 0.10% for traders bringing over $10 million in monthly volume to the exchange.
Interestingly, fees plummet if you trade stablecoin pairs.
Kraken’s margin trading fees truly are amongst the lowest available.
What’s an exchange without good security? It’s a well in which you throw your wealth, never to be seen again. Thankfully, Kraken leads the way in terms of exchange security. In fact, Powell has gone on the record several times to warn traders to never store their cryptocurrency assets on any exchange, including his own.
In ICORating’s lauded cryptocurrency exchange security audit and ranking, Kraken ranked #1, scoring top marks in user account security, web security, DoS attack prevention, and domain security, Kraken keeps 95% of its assets safely locked up in offline, air-gapped cold storage that is also geographically distributed. That last bit is an amazing detail that goes to show the security team’s dedication to keeping digital assets safely under its control.
Kraken’s security team has implemented 24/7 surveillance on the exchange and domain itself so that nothing comes in or out without being monitored.
The Good and the Bad
After taking a deep dive into Kraken’s offerings, it’s hard to find anything not to like. Let’s be clear about one thing, however. Kraken isn’t aimed at the retail investor crowd as much as it is targeted toward experienced traders and institutional investors. Kraken has spent years cultivating its offerings toward a more advanced crowd and, as such, has crafted margin trading, futures trading, OTC trading, and dark pool offerings that will make pro traders salivate.
That, combined with Kraken’s second-to-none security rating and time-tested excellence, put the exchange in a class all of its own. Now, not everything is gravy in Kraken’s world. Just like anyone else, Kraken’s got issues of its own.
What stands out to the negative is Kraken’s paltry digital asset offerings. In a crypto market jumping with exciting new properties, Kraken’s decision to stay with a drab selection of assets is questionable.
Additionally, some traders may not enjoy the volume-based fee schedule. Retail investors, in particular, won’t benefit from the arrangement that seems specifically targeted at pro traders.
These qualms aside, Kraken makes no bones about who it wants on the exchange. Beginners looking for a simple fiat to cryptocurrency onramp for BTC or ETH will be happy, as will advanced traders who need a high-volume exchange with excellent liquidity and institutional amenities like OTC trading.
TOTAL RATING - 4.0
Kraken has been a pillar of excellence in the cryptocurrency market for years. However, that doesn’t mean they don’t have room for improvement.
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