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xCoins Review - is it scam or safe?

xCoins Review - Is xcoins.io scam or safe cryptocurrency exchange?

RATING: 1.5 / 0 REVIEWS xCoins
xCoins is not regulated. We cannot guarantee your money is safe.

RECOMMENDED BITCOIN BROKERS


Trading Accounts & Conditions

Account type Leverage Fees
Standard 1:1 Vary by lender


xCoins isn't what one would call a cryptocurrency exchange. Instead they offer a relatively unique service – Bitcoin lending. Their business model is similar to that of a peer-to-peer lending service, but we have a couple of issues with the service.

 

So how it works?

 

 

Contrary to what you may expect, the fiat currency (USD in this case) is used as a collateral and Bitcoin is the asset, which is borrowed. Both counterparties must have an account at xCoins, where they are provided with a wallet. Once a borrower (i.e. buyer of Bitcoin) wants to acquire his coins, he has to send USD to the lender (also called “investor”). A fee is set in place and paid at this point in time, together with the entire payment. Later, the borrower can pay back his crypto in order to get his funds back, but he may also choose not to repay the loan.

 

It’s worth pointing out that when the return payment is made, one would have to provide enough Bitcoin to match the dollar sum he has left as collateral (i.e. if he doesn’t do anything with the coins, he is exposed to market risk). 

 

xCoins Advantages

 

Multiple fiat payment options – making a fiat payment to a lender on the xCoin platform can happen via multiple methods, which are integrated with PayPal. As far as we understand the “seller” must have a fully verified account with the payment company, but a “buyer” can simply use a Credit Card or Bank Transfer to them. 

 

>>Other exchanges, where you can use a Credit Card<<

 

Coins are transferred instantly – unlike other similar services, xCoins offers instant transactions. This sounds wonderful, but can actually lead to a problem, which we have covered below. 

 

Based in the US – xCoins provides the address of its operation, which is allegedly in Santa Monica, California. As much as this sounds as a reassuring factor, this is as much information as they provide, which leads us to the negatives.

 

xCoins Disadvantages

 

No company background – the most concerning fact about xCoins is the feeling of low transparency. We simply don’t know anything about the people running the operation. If they are truly based in the US, the company would probably have to be registered under a specific law (or several given the nature of their service), which isn’t mentioned.

 

Entire model has a flaw – while this is mentioned by the company, the fact one can reverse a PayPal payment, after he has received his Bitcoin can’t be dealt with easily. The “Terms and Conditions” forbid users from doing so, but there isn’t information of a reliable compensatory mechanism in place, while a “50% of the profit margin guarantee” is advertised.

 

PayPal may not like them – possibly even a bigger issue than the lack of some information is the presence of another. As PayPal is part of every transaction on xCoins, one would imagine the two companies having solid cooperation. In reality, much like other “traditional” financial services, the company doesn’t want to be associated with cryptocurrencies. This is what xCoins has to say on the matter, in their official forum (click to zoom-in):




 

 

Fees not disclosed (may be high) – we aren’t certain if each lender at this platform determines his own fees and what the company’s cut is. If nothing else, this makes the entire environment feel even less transparent. Judging by their investor-attracting material, the markup can go as high as 10%:




 

What potential investors at xCoins are presented

 

Repayment isn’t automated – according to the FAQ, both counterparties’  wallets are held on the exchange, but once a transaction is made, the borrower can send his Bitcoin wherever he wants. After he’s done using them, the repayment process isn’t as simple as the borrowing one. He would have to contact the seller himself and arrange the terms.

 

Only reference charts – xCoins provides some form of charting, which isn’t impressive. This is by no means our biggest concern wit the project, but we are used to seeing price dynamics presented in a much more detailed way. Here is a preview:

 

 

Not an exchange – it should be quite clear by now, this isn’t a trading platform, built with the active investor in mind. On a side note, the few exchanges, which actually do provide margin trading, use a somewhat similar way of granting you the extra coins needed.

 

>>Trade Bitcoin with leverage<< 

 

That being said, some forex brokers have started offering crypto CFDs. These allow you to trade with margin and even take short positions. We have to clarify, this type of investing is very different from going to an actual cryptocurrency exchange, as you are essentially only speculating with the price of a given coin, via a derivative product. Check all the details here.

 

Conclusion

 

xCoins is a peer-to-peer cryptocurrency lending mechanism. While their idea seems cool in theory, we found a lot of troubling things when it comes to the execution. The issues with PayPal are probably the most crucial, but at the end of the day we aren’t certain if there is demand for such a system in the first place. 

 

In other words, we think most users are simply using this as a gateway into crypto and not as a “bank” (or “online pawnshop”). If this is the case, the entire process is overly complicated if xCoins is used only as an entry level exchange.

 

The company’s presentation explains the service, but doesn’t inspire much trust. This is a common theme in the world of cryptocurrencies, which can easily be compared to the Wild West. On the other hand some of the forex brokers, which offer Bitcoin trading are highly regulated and reliable companies.

 

>>Regulated Bitcoin forex brokers<<

 

Here is a summary of this review xCoins:

 

Pros Cons
Multiple fiat payment options No company background
Coins are transferred instantly Entire model has a flaw
Based in the US PayPal may not like them
  Fees not disclosed (may be high)
  Repayment isn’t automated
  Only reference charts
  Not an exchange

 

 

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Traders` reviews for xCoins

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