Jesse Powell, CEO of Payward, designed Kraken to be a currency exchange platform that operates much like online forex exchanges. And after a long beta test phase, Kraken is open to the public.
Users can use the platform to trade Bitcoins, Litecoins and hard currencies such as euros and dollars. Common forex features such as stop orders and margin trading are available. Other math-based currencies such as ripples, namecoins and ven were opened to traders just after the launch.
Security was a big concern throughout Kraken’s development, and the platform addresses this in a variety of ways. First, new deposits go to encrypted cold wallets isolated from any online systems, and this is where the majority of coins are stored. Two-factor authentication that requires an additional passcode is available for a number of user functions, as well.
And Kraken says it maintains full reserves, so there can never be a run on the system.
Regulatory clearance is still an ongoing process, and Powell’s team has learned step by step where Kraken can’t operate. For the US market, the company’s goal is to become the first Bitcoin exchange there that is fully compliant.
To that end, much attention has been paid to legal requirements. In recent months, the state of New York has subpoenaed 22 companies, and California has sent a cease-and-desist letter to the Bitcoin Foundation.
Powell has said that the state and federal governments’ actions are a strong incentive to take companies offshore, and this makes the job for Kraken’s legal team that much harder.
The company is communicating with regulators and banks, though, and insists it isn’t trying to slide under anyone’s radar. But there is always a risk when cooperating banks, who might one day decide that Bitcoin is not worth the risk. To date, Kraken has raised $3 million as it grows the platform.
Users who are new to trading currencies of any kind can still use Kraken as a learning platform. Order forms for new users are available, as are step by step explanations that allow beginners to learn and trade at their own paces.
That makes Kraken a good opportunity for some traders to try to ride bullish sentiments toward Bitcoins or other currencies, and deposits and withdrawals are quick.