As more people grow informed about cryptocurrencies, investors are looking for the easiest way to invest in this new asset class.
Cryptocurrency exchanges provide that gateway, allowing users to buy and sell bitcoin and other virtual monies for their local currency.
There are currently over 200 cryptocurrency exchanges around the world. Each one has its pros and cons, and they are not all created equally.
What is Cryptocurrency?
Cryptocurrency is a means of a transaction using cryptography to create a unit of the desired currency. Cryptography is also used when buying and selling.
The decentralized nature of each cryptocurrency uses a blockchain, which functions as a distributed ledger.
The first cryptocurrency that made most people aware of this entire field was Bitcoin, which was launched in 2009 by an unknown person or collective under the alias Satoshi Nakamoto.
As of January 2021, there were over 21 million bitcoins in circulation, with a total market capitalization of $600 billion.
Bitcoin is the largest of any cryptocurrency; however, there are over 18 million bitcoins.
The defining feature of a cryptocurrency is that it is not issued by any central bank, making it immune to government interference or manipulation. This makes it very desirable to those looking to become less reliant on the government.
Top Crypto Exchanges
You can check out this Bitstamp review for a more in-depth analysis, but essentially Bitstamp is a bitcoin exchange located in Luxembourg.
It provides individuals and institutions with a platform to buy and sell bitcoins. It allows users to deposit funds using a bank transfer, SEPA transfer, international bank wire, or credit card.
The exchange rate is not locked in at the transaction time, and the company also has a European bank account for faster wires.
You can also buy bitcoins by using a prepaid debit card purchased locally in your country. There is also a fee for the service.
Coinbase and Coinbase Pro
Coinbase Pro is a cryptocurrency exchange that enables you to trade digital assets. It's a platform that makes it easy to buy and sell digital currency and is available in the United States, Canada, Europe, UK, Singapore, and Australia.
Coinbase Pro users can trade more than 30 cryptocurrency pairs and place orders using a limit, market, and stop orders.
To get started trading on Coinbase Pro, you'll need to verify your identity and complete the account setup process.
If you've used a cryptocurrency exchange, you know that they can be confusing to use and often require users to learn how to use unfamiliar interfaces.
Cash App Exchange is perhaps the best for those just starting and eliminates most of those problems.
The app allows users to trade cryptocurrencies from within the Cash App interface.
Users can click on the option to buy or sell a cryptocurrency to convert their balances to one of the supported cryptocurrencies, like Bitcoin or Ethereum.
The process is simple, secure, and accessible for all users, regardless of whether you're a crypto expert or just getting your feet wet.
Binance has grown massively since starting in 2017 and is now one of the largest and most famous bitcoin exchanges in the world.
Speaking of DEX's, Bisq is probably the best example. Bisq is an open-source desktop software that enables its users to buy and sell bitcoins using national currencies or alternative cryptocurrencies.
It is decentralized, peer to peer, and completely open-source, which is excellent for those who are more experienced with cryptocurrency and value complete control.
What Is The Best Crypto Exchange?
This is not so simple and depends on how advanced a trader you are and what you need from an exchange.
For example, a total beginner may feel more comfortable with a well-known exchange such as Coinbase. On the other hand, an experienced trader may avoid that particular exchange due to costs and lack of control.
The cryptocurrency market is expanding at an accelerated pace, especially since the massive run on Bitcoin at the start of 2021. As the market becomes more accessible to the average investor, more people are joining in.
As a result of this, many new crypto exchanges pop up to help people buy and sell their cryptocurrencies.
This is great for the average investor, but with many exchanges to choose from, how do you know which one is right?
If you trade cryptocurrency, you need to have a place to exchange it for other fiat currencies like USD and to buy altcoins.
Trading cryptocurrency can be lucrative if you understand how to, but it can also be expensive if you don't use the most economic exchange.
What Is A Cryptocurrency Wallet?
If you're interested in trading cryptocurrency, you've probably heard of the big exchanges like GDAX, BTC-E, and Bitstamp.
These are great for buying and selling cryptocurrencies, but what if you want to move your coins to a wallet?
A cryptocurrency "wallet" is a digital wallet used to deposit, transfer, and accept digital currency such as Bitcoin securely.
Unlike bank accounts, cryptocurrency wallets are not insured by any countries financial fraud departments, i.e., if you lose your password and key, you're on your own.
A cryptocurrency wallet is essentially software that saves the keys needed to open it and interacts with numerous blockchains.
You could transfer your coins directly from one exchange to your wallet, but there are two problems with this: first, you have to pay a transfer fee, and second, you have to trust the exchange with your private keys.
You may have heard of the solution to this problem: decentralized exchanges (DEXs). DEXs are exchanges that don't hold customer funds, instead of allowing users to trade peer-to-peer.
Are Cryptocurrency Exchanges Safe?
Many new traders get confused about the safety of cryptocurrency exchanges. There is always a concern about a cryptocurrency exchange being hacked.
Many new traders will wonder what is the best exchange as there is always a concern about a cryptocurrency exchange being hacked.
History will show you that there have always been risks involved with exchanges. With the current economic climate and increased investor awareness, more people are taking their chance at making large profits in the currency markets.
Centralized Vs. Decentralized Exchange
A centralized exchange is a type of cryptocurrency exchange market that facilitates fiat currency, bitcoin, and other virtual currencies.
While centralized exchanges are considered more efficient than decentralized exchanges, they also hold the risk of hacking funds.
A decentralized exchange is also a type of cryptocurrency exchange market that enables the trading of bitcoins and other virtual currencies. By its nature, the decentralized exchange is a type of exchange that doesn't rely on a third party to hold the customer's funds.
This means that the trader's money is not at risk of being lost, frozen, or seized by a third party, like a bank or government.
There are so many different exchanges out in the wild these days that it is difficult to list the best. This is because what is the "best" is subjective and varies from person to person.
Nonetheless, we have listed five different options, from centralized exchanges for beginners to decentralized ones for those who have a bit more experience trading cryptocurrency.