A Customer’'s Review of Kraken

Kraken, by Payward, is a new bitcoin/altcoin trading market based in Sweden, which has been trending on Angel List for the past few months.

krakenKraken allows members to fund their accounts and trade using Euro, USD, Won, Bitcoin, Ripple, Litecoin, Namecoin and Ven.

Kraken’’s trading books allow USD trades for five crypto-currencies, as well as a pairing of Bitcoin with Litecoin, and trading Bitcoins against the other two fiat currencies (Euros and Won).

Opening My Account

When you open a Kraken account you cannot trade until you have been “’verified’”. There are several tiers of verification, the lowest of which allows trading in cryptocurrencies but not fiat currency.

After providing copies of passports and utility bills showing my residential address I was able to get level three verification which allows me to fund my accounts, trade and withdraw.

The verification process took about six weeks, partly because I live in a developing country that does not have postal addresses for residences, and Kraken’’s KYC model did not know how to handle that. But they eventually adapted their policy to fit the country I was in, and allowed me to start trading.


Kraken has a nice trading platform, comparable to other Bitcoin exchanges. The user interface is attractive and easy to use. Market data and charts are available to give you a quick way to size up the market conditions, number of open orders, etc.

After the six week verification process was finally finished, I was able to deposit a few Bitcoins and within a few hours I was able to place trades on the books.

The trading fee is quite reasonable. It starts out at about 28 basis points (0.28%) and decreases with the number and volume of trades you do.

Currently the only types of trade you can place are market orders and limit orders. It appears they plan to add stop-loss orders and allow leveraged trading in the future.

A market order will be filled at the best available price from the existing limit orders.

A limit order allows you to set the maximum or minimum price you will accept, depending on whether you are buying or selling.

At first I experimented by placing some limit orders at the top and bottom of the market trading range and left them there for a couple of days. However, the trading volume and volatility on Kraken are pretty low, so even though Bitcoin broke $1000 again on other markets during the time my limit orders were open, my sell order did not get filled.

The depth and liquidity of Kraken’s market is quite shallow compared to that of btc-e.com. This is partly because Kraken is new, and partly because their customer identification process is substantially more strict than that of their Bulgarian competitor. This makes it quite difficult to get into Kraken and start trading.

Eventually I cancelled my open orders and then placed an order to sell the Bitcoins at market price. This order was fulfilled immediately.


Kraken has a reasonable security setup for low value transactions. On the Security tab, there are a number of settings you can specify, including setting up SMS two-factor authentication, and a master password that is requested less frequently.

For serious traders dealing in large volumes you would want something along the lines of an RSA security token, you should definitely use the two-factor authentication.

Your choices are another password, YubiKey or Google Authenticator. YubiKey is a hardware

token that generates a one-time password each time you log in. YubiKey is the strongest security. You can order one for $25 from http://www.yubico.com.

I set up Google Authenticator on my phone using the free app on Google Play, and linked that with my Kraken account.

Given the rash of Bitcoin hacking over the past several years I would insist on using two-factor authentication – preferably with a hardware token.

On the Settings tab, you can specify a number of additional details, such as a PGP for receiving email communications from Kraken, your time zone, primary email account, etc.

There is a nice feature that allows you to lock your settings for a certain number of days to prevent an attacker from changing your details quickly. When I was satisfied with all the settings, I turned this feature on to lock my details.

However, I later found out when I tried to process a withdrawal, that your bank account details are locked as well, but they are not included on the Settings page. By locking my account I prevented myself from being able to process a withdrawal because I had not added a bank account yet. I had to wait several days for the unlock to expire so I could add my bank account.

This feature is not intuitive, and I give Kraken a negative mark for this. All the settings affected by the lock should be there on the settings page above the lock button.

Customer Service

In the past I have worked for several years in the digital currency industry as an exchange provider. Outgoing bank wires bear the highest risk for the exchange operator, because people who hack, steal or defraud others of digital currency tend to run to the nearest exchanger and try to get the money out with an ATM card or a bank wire – both of which are effectively irreversible.

However, even given that risk, gold bullion dealers and digital currency exchangers have typically been able to process outgoing wires in 24-48 hours, even with a small staff and processing $30 – $100 million per year in orders.

The way exchangers mitigate that risk is by requiring thorough identity documentation and verification. Kraken has required so much documentation of me that there is no justification for also delaying customer withdrawals after the customer has been so thoroughly identified.

Kraken states in their FAQ that they may take 5-10 business days to process outgoing bank wires because “this process is not automated”. Having worked in this business, I do not find that to be an acceptable excuse for slow service.

I initiated an outbound wire request one full week ago and as of this morning, the order still says “pending” in the queue, and can still be cancelled – which means it has not been touched by the order processing department. It looks like they intend to take the full 10 business days, which means I have to wait two weeks for money. This reminds me of PayPal which deliberately delays withdrawal of customer funds for five business days.

The fact that my wire order has not been touched in over one week indicates that Kraken staff are not even doing outbound wires one day a week, which would certainly be reasonable. I’m not sure I can take an exchange operator seriously if they don’t even go to the bank once a week.

The promoters of the Bitcoin ecosystem have repeatedly claimed that Bitcoin is better and faster than traditional banks, money transmitters and PayPal. But from what I have seen, this is not really true. Kraken, at least, is even slower than PayPal when it comes to moving real money.

Kraken’s most obvious market and customer base would be retail cryptocurrency exchange providers who need to restock their inventory by buying, selling, or hedging their exchange risk. However, if it consistently takes 10 business days to get your money out of Kraken, exchange providers will not be able to use the service for hedging or restocking. They require fast liquidity. Delayed transactions expose them to too much volatility risk.


Kraken is a visually well polished Bitcoin trading site that is easy enough to use once you get verified. Their security seems to be solid and well thought-through. Kraken’s ability to link a YubiKey or Google Authenticator is crucial for serious trading. However, their customer service for new accounts and for withdrawals is excruciatingly slow.

If you are a serious trader or retail exchange provider, you will probably want to stick with the markets with deeper liquidity and more experienced customer service until Kraken has demonstrated that they have gotten their act together on bank wires.


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