If you think choosing a cryptocurrency exchange is easy, you might want to think again. Since crypto sector is rising extensively, so are its facilitators and though they can be super helpful, selecting the best one for you might become rigid.
With so many options to choose from, people end up wondering which platform to invest money with? Features like security, easy and diverse payment options and more add up to make an exchange stand out.
If you are starting out in the cryptocurrency investing field, here’s a short checklist for you to see how you can evaluate a crypto exchange before choosing them.
Putting money in a credible crypto exchange is immensely important. This is probably what you should be looking out for as it guarantees that you have handed you money to a truthful organization. It is essential to do thorough research and reach an assurance before selecting an authentic and secure Crypto exchange.
An exchange should have reliable liquidity, be sanctioned and verified and having a strong backup of handling fraudulent schemes so as to keep the money safe.
Anything connected to the internet raises a concern for Security.
The not-so-long ago hacking of Coincheck fills in as a genuine alert for traders and investors who are looking to put their money to investigate the security picture of a crypto exchange.
It is highly necessary that you go through research on user experiences and reports suggesting how the exchange performs on the security parameter.
3. Tradable Currencies and Tokens
Trading of Bitcoin and Ethereum is easily available on most of the exchanges today, but are these the only two to trade? There are a number of tokens and cryptocurrencies with a greater prospect that you should watch out for.
There is a critical variety in supported digital currencies across various exchanges; like Binance, an exchange with an active support to an extensive list of altcoins. Whereas platforms like Coinbase support just four significant cryptocurrenices. So, find an exchange that has a larger variety to offer.
4. Fee and Purchase Options
Method of purchase is a significant point in the success of a cryptocurrency exchange. You would surely want an exchange that accepts variety of payment options such as – PayPal, Bank transfer, digital wallets, Credit or debit cards, etc.
These options can reach a larger number of people giving them the freedom to pay as they wish.
Also to note the structure of fee or the charges that you will be paying while trading.
Different exchanges have a different fee structure with a definite set of charges payable on trade. You must check them out while you are looking for cryptocurrency exchange to see how much fee you need to pay.
Sometime there are some extra charges you have compelled to pay while trading. Of course, not every exchange runs a 0% trading commission offer like BtcEX do, so do a study of fee structures of different exchanges to get a clear picture.
5. Type of Exchange
After you have accounted for all the above points, you should now be looking at what type of Exchange it is.
Majorly, there are 3 types of exchanges that function –
- Trading Platforms – A marketplace which facilitates users in easily buying and selling cryptocurrencies at a fee are termed as Trading platforms. These are the most common type of crypto exchanges you find. Examples include Binance, Wazirx and Coinbase.
- P2P Exchanges – P2Ps connect buyers and sellers of cryptocurrency directly, thus facilitating the whole process of trading of cryptocurrency. These types of exchanges alleviate the easiness of the network while ensuring a secure and trustworthy framework of exchange. P2P transcations normally eliminate issues and problems that traditional trading couldn’t. Examples of P2P are – Cointal, Giottus, etc.
- Brokers – Just like share trading, there are brokers in crypto trading as well. They operate by setting up prices and allowing buyers to then buy cryptocurrencies through their platform. Examples of Broker exchanges are – AvaTrade.
It is fairly important to do a well-defined research on your behalf prior to choosing a crypto exchange to invest with. The above mentioned points will explain all the important aspects of an exchange that are important for you and can affect you in any way as a trader.
Author BioVikram is a Social Media Marketer and an active Cryptocurrency Follower. He frequently writes about cryptocurrency and crypto trading. It is one of his favourite topics to cover. Along with that, he runs a social media marketing team where he brings in sales and leads for different clients.
His hobbies include Meditation, football and cooking.