Crypto Betting Exchanges Are Coming – Why Are They Better Than Sportsbooks?

Crypto Betting Exchanges Are Coming – Why Are They Better Than Sportsbooks?
Samu Lampiranta
By Samu Lampiranta
Sports & Casino Expert
Updated Sep 14, 2022
Read time 7 min
Crypto Betting Exchanges Are Coming – Why Are They Better Than Sportsbooks?

Cryptocurrencies have changed the online gambling world significantly over the past few years. Not only have the number of gambling sites accepting cryptocurrencies been growing rapidly, but we’ve also started to see games designed solely for specific cryptocurrencies. 

The next frontier for cryptocurrencies might well be conquering the betting exchanges. Read on to learn how crypto exchanges work, and compare betting exchanges and traditional sportsbooks. 

What Are Crypto Exchanges? 

A cryptocurrency exchange is a website or an app – or often both – that allows people to trade cryptocurrencies and digital assets like NFTs. If you have already invested in cryptocurrencies, you have quite likely already joined one or more exchanges. 

Crypto exchanges are not absolutely necessary to get involved with cryptocurrencies since you can also buy and hold cryptos using some brokerages. For example, eToro and Robinhood both allow you to buy cryptos, but you cannot send them to other crypto wallets. 

Traditional crypto exchanges allow free movement of your assets, but you might need to pay a fee to make transfers. Nevertheless, crypto exchanges are probably the better way to go if you are a more active trader. 

How Do Cryptocurrency Exchanges Work? 

Crypto exchanges can seem a bit daunting at first, but once you get used to the look and feel of your chosen exchange, you’ll soon notice they are actually not that complicated. There are three steps you need to take: 

  1. Create an account. 
  2. Deposit money with a credit card or other payment method. 
  3. Buy the cryptocurrencies that interest you. 

This is a bit of simplification, but basically, that is how the exchanges work. You can convert cryptocurrencies to other cryptos or back to fiat currencies, and you can transfer your cryptos to other wallets, for example, if you buy something using bitcoins or other cryptocurrencies. The exchanges charge commissions for transactions, which is how they profit. 

How Many Crypto Exchanges Are There? 

It is impossible to say how many crypto exchanges exist worldwide since new ones constantly pop up. The bigger ones often serve many geographical areas, in some cases nearly the entire planet, but many smaller ones are available too. 

Some crypto exchanges focus on serving a single country or a few, which you can often tell by the languages used. For example, if a site only works in Swedish or Portuguese, you can safely assume the exchange focuses on Swedish or Portuguese and Brazilian customers. 

It has been estimated that there are probably around 400 active crypto exchanges at the moment, but the numbers are constantly changing. One thing is certain, though: you will have no trouble finding an exchange, no matter which currencies you are after. 

Which Crypto Exchange To Use 

Many crypto enthusiasts use several exchanges to benefit from differences in pricing. Why are crypto exchange prices different? There are several reasons, but one is profit. Exchanges try to benefit from price fluctuations and add a small margin to the values of cryptocurrencies. 

The values of cryptocurrencies move based on supply and demand, so the differences in trading volumes between different exchanges might also explain small differences between prices. The fees that the exchanges charge can also differ between different providers, but generally speaking, the bigger the exchange, the smaller the fees – big players can afford smaller fees thanks to higher volume. 

One of the most common questions in people’s minds starting their journey in the world of crypto is: How many crypto exchanges should I have? There is no absolutely correct answer to these questions, but generally speaking, it’s a good idea to start with one or two. 

Not all exchanges offer the same currencies, which is the biggest difference between them. Start by joining one or two that offer the cryptocurrencies you are interested in and expand when you need to add more versatility to your portfolio. 

Listing the 5 best crypto exchanges is impossible because we all might have a different view on what is best. But listing the top 5 by trade volume is much easier, so here’s the current big five: 

  1. Binance
  2. Coinbase 
  3. FTX 
  4. Kraken
  5. KuCoin

Binance leads the pack with a very big margin and has about six times the number of weekly visits compared to its competitors. The competition behind Binance is much stronger, and the positions keep changing constantly. 

Using Leverage On Crypto Exchanges 

If you are already familiar with investing in cryptos, you might wonder what crypto exchanges offer leverage. There are quite a few that do but let’s first see what leverage investing is. 

When you use leverage, it means you borrow assets and use them as leverage to make a bigger investment than you could use only your own money. You do need to use some of your assets as collateral. 

Let’s take an example to clarify how leverage works. Let’s say you want to invest $10,000 in dogecoin, but you simply can’t afford to put that kind of money in cryptos right now. Instead, you invest $1,000 with a 10x leverage. 

If the dogecoin’s value rises by 50%, you will make a profit of $5,000. Even with the exchange fees deducted, you will make a much bigger profit than you would have with your initial deposit of $1,000. 

There is a catch, however: what happens if the prices go down? In that case, you would need to invest more to compensate for the gap or risk all your invested funds being liquidated. That is why leverages should be used very carefully. 

Many crypto exchanges offer the possibility to use leverage, for example, Binance and Kraken give you this opportunity. You might also find demo accounts where you can try leveraging without any risk, though you won’t be netting any real profits either. 

The demo accounts are a great way to see how the exchanges work in practice and realize the potential and the risks associated with using leverage. 

Crypto Sports Betting Exchanges 

Crypto sports betting exchanges are still pretty rare, but it seems like this could well be changing. When you understand the basics of both exchanges and sportsbooks, you can easily compare them to see which offers better odds.

Betting Exchange Vs. Sportsbook

The difference between a betting exchange and a more traditional sportsbook is, to put it simply, that in betting exchanges, you bet against other players, whereas in sportsbooks, you bet using the odds set by the operators. 

When you place a bet on a betting exchange, you join a group of people who disagree on the outcome of a match or event. How much you can win or bet on a single bet depends on the market size. 

The players themselves build up the prize pool, so the more money players bet, the more they can win. The odds are then based on supply and demand – if more people bet on a certain outcome, the odds are lower. Betting exchanges charge only a small commission, but who wins the match doesn’t concern the exchanges.

In sportsbooks, the operators set the odds so that they make a profit no matter the outcome. The odds change based on players’ bets, but the logic is different than in betting exchanges since the operators only change the odds to ensure they profit. 

Sportsbooks can also limit the amount you can bet, limiting your potential winnings as well. Exchanges have no incentive to do so since they will take a commission out of every bet placed. The more people bet and the bigger the potential winnings grow, the better. 

Bigger prize pools tend to lure in the high rollers, and when they make bigger bets, the exchanges benefit by charging bigger commissions. As you can probably now see, crypto betting exchanges can be beneficial to all parties.  

Even though the logic behind sportsbooks and sports exchanges is different, one thing remains the same for the players: you still need to make the correct prediction. This is why spotting when it’s a good idea to bet on the underdog can make all the difference, no matter what type of platform you use to bet. 

More Cryptocurrency Betting Exchanges To Come 

Some punters have preferred betting exchanges for years, and their popularity seems to grow worldwide. At the same time, cryptocurrencies are becoming more popular as investments and payment methods, and currencies used on gambling sites. 

Putting the factors together, it would seem logical to see a lot more crypto betting exchanges soon. There will likely be more currencies to use and more markets to bet on, resulting in more lucrative odds for the players. 

Understanding how the exchanges and sportsbook define their odds and knowing how to calculate where to find leverage makes all the difference in the long run, so learn the basics well, and you’ll get way more value for your bets.

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Samu Lampiranta
Samu Lampiranta
Sports & Casino Expert

Samu-Ville Lampiranta knows the ins and outs of online gambling having worked in the industry since 2013 in various roles from customer support agent to content writer and manager. He knows how to look at casinos and sports betting sites from both sides of the fence, and uses his experience to give his articles a unique view from the inside.