If you’re seeking to get into cryptocurrency, crypto exchanges are a place to invest and trade. A fantastic place to begin is by opening an account with a cryptocurrency exchange.
Like online brokerage platforms, crypto exchanges give you the means to buy and sell digital money and tokens. This includes your Bitcoin, Ethereum, and BNB, to name a few.
There are some things you have to consider before selecting a cryptocurrency exchange. Variables like supported assets, fees, payment options, and security is vital to selection.
In this article, we will be looking at:
What is a crypto exchange?
What to look out for when choosing a cryptocurrency exchange
The three main types of crypto exchanges and
top exchanges to look out for.
What is a crypto exchange?
Cryptocurrency exchanges are online marketplaces where users can exchange their digital assets for fiat money like U.S. dollars.
There are also other fiat currencies, as well as other cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and BSC (BNB).
Because most traditional investment firms do not include cryptocurrencies in their portfolios, exchanges are a critical component of the crypto ecosystem.
Without exchanges, you’d have to find another person willing to trade cryptocurrency and come to an agreement on an exchange rate.
Youll have to send the coins to each other’s cryptocurrency wallets, which is a somewhat complicated process.
What to look out for when choosing a cryptocurrency exchange
The main factors to consider when selecting a crypto exchange are functionality and security measures.
Your preferred exchange should have the majority, if not all, of the features you expect using.
Be it fiat-to-currency trade pairings, liquidity aggregation, or specific altcoins and stablecoins.
It should also provide extra lines of defence against hackers, such as two-factor authentication and Bitcoin locks.
Another factor to consider is the ease of use. This factor is especially important for newer traders who may struggle to use platforms with a less intuitive user interface. But, advanced traders can enjoy improved usability as well.
It is also critical to know if the exchange is available in your country of residence, as not all exchanges are available in all countries.
Binance, for example, is not available in the United States, but Coinbase is, so keep an eye out for that.
The three main types of crypto exchanges
- Centralized exchange (CEx)
- Decentralized exchange (DEx)
- Hybrid exchange
Centralized exchange
The most common and traditional type of cryptocurrency exchange is the centralized exchanges. These privately held companies provide investors with a trading platform for cryptocurrencies.
This type of exchange is known for its user-friendly interface, higher trade volumes and liquidity. This exchange is also known for a larger number of trading pairs.
One of the many benefits of CEXs is that the barrier to entry is low, and most people begin their crypto journey on CEXs. They are also custodial.
That is, the exchange retains your private keys to the wallet. If you forget your password, you can always request that the exchange be reset.
This method can also be a disadvantage because having them keep your private keys means you don’t own the wallet.
Yes, you may have an account with them, but if something goes wrong, they’ll use your cryptocurrency without your permission because you don’t have your private keys.
Decentralized exchange
A decentralized exchange, or DEX, is an alternative to a traditional, centralized exchange.
This platform does not rely on a company or service to control a customer’s assets. Instead, the trades or transactions are managed by an automated process with no central authority.
These transactions are considered peer-to-peer, eliminating the need for a third party.
Decentralized exchanges are built with blockchain technology to ensure a secure transfer of cryptocurrencies without a central figure.
The platform serves as a service that connects trade orders to suit customers looking to exchange tokens. Most decentralized exchanges use Ethereum’s blockchain to provide services via smart contracts.
Hybrid exchange
Hybrid exchanges are part of a new generation of crypto trading platforms whose goal is to provide the best of both worlds.
This exchange offers the greater functionality and liquidity of centralized exchanges and the security advantages of decentralized exchanges.
With this combo, this exchange aim to overcome the limitations of older exchanges.
We know that with this combination, such exchanges are the real future of the cryptocurrency trading experience.
Although hybrid exchanges offer fast transaction speeds without jeopardizing their users’ privacy, they are still a new development in the crypto world.
Time will tell if they will succeed or fail due to high costs, limited scalability, and limited assets.
Factors to consider in choosing a crypto exchange
The elevation of some of the crypto exchanges was based on low fees, user experience, and security. Other factors we considered include supported assets, payment options, customer service, and reputation.
Low fees
Fees can be a great way to consider an exchange, as they can be a headache for users, especially those trading with great frequency.
So before selection, you have to research crypto exchanges that are cost-efficient/favourable.
An example of a cost-efficient exchange includes Coinbase, Kraken, and Binance.
User Experience
One great way to maintain users on any platform is the user experience. There is a saying that no product is an island, and products are integrated sets of experiences.
Regardless of whether one is a novice or an expert, an exchange that is easy to use and navigate is always a bonus.
Examples of best user experience-enabled exchanges include Coinbase and Crypto.com.
Security
Unfortunately, crypto exchanges are a prime target for hackers looking to get their hands on cryptocurrency.
Users should feel their crypto is secure on their trade platform. So, security breach prevention measures and safe account management methods are essential.
Examples of the most secure crypto exchanges are Uniswap, dydx, and Gemini, to name a few.
Supported assets
Before deciding on an exchange, look at the list of supported assets if you want to buy cryptocurrencies other than Bitcoin.
Some only accept a few cryptocurrencies, while others accept hundreds.
Payment options
Crypto exchanges provide a few options for funding your account or purchasing cryptocurrencies .
Most exchanges accept wire transfers, while other platforms accept credit cards, debit cards, and other forms of digital payment.
Customer service
If you are new to cryptocurrency or investing, you may have questions or need help getting started.
In that case, an exchange with excellent customer service is the best option.
Reputation
It’s a good idea to research the importance of a crypto exchange before signing up for an account.
Read customer reviews, look into the history of the exchange, and any recent news stories that may provide some useful insight.
To crown it all, we will be looking at the top exchanges.
Top Crypto Exchanges
Binance
Binance is the world’s largest cryptocurrency exchange by trading volume.
Its domestic counterpart, Binance.US, provides many of the same benefits as its parent company.
One of its most appealing features is a competitive largest 0.1 per cent maker/taker fee. This fee begins low and decreases as your trading volume increases.
Binance.Us has been named the best cryptocurrency exchange for low fees. This exchange has one of the most generous fee structures among all trading platforms.
Binance.US also provides discounts for buying and selling other coins using the company’s proprietary cryptocurrency (BNB).
Many of the exchange’s cryptocurrencies are available for sale with USD, saving you money on conversion fees.
Pros
- Affordable trade and conversion fees
- Advanced trading charts and data graphs
- High-speed trade execution
Cons
- Limited coin variety compared to its international version
- Not supported in all U.S. states.
Coinbase
Coinbase is one of the largest and most well-known exchanges in the United States. This exchange has a simple onboarding process that eases users into trading.
The platform does an excellent job of lowering the barrier to entry for investing in cryptocurrency.
At the same time, its user interface makes navigating the forum and managing cryptocurrency a breeze.
Coinbase also offers a wide range of learning materials that are both comprehensive and accessible.
They encourage users to take advantage of these resources through the Coinbase Earn program.
This program teaches users how to trade and rewards them with free cryptocurrency.
Pros
- Intuitive, user-friendly interface and an easy sale process
- A broad assortment of educational materials
- Wide selection of cryptocurrencies
Cons
- Poor customer service
- Coinbase is a custodial account. What this means, in essence, is that you don’t control the private keys.
Crypto.com
Crypto.com uses various techniques to keep its users’ cryptos safe. This technique includes:
- increasing many layers of protection against crypto fraud
- cyberattacks on its trading platform.
It also offers offline cold storage for all cryptocurrencies, a regulated custodian bank account for traditional currency, and regular software peer-review.
Crypto.com employs multi-factor authentication, including password, biometric, email, phone, and authenticator verification.
Furthermore, its platform has completed several penetration tests, simulated cyberattacks performed to evaluate system security, and has demonstrated proof of funds over time.
Crypto.com isn’t only about security. The exchange has the most currency options of any company on our list, with over 250 coins.
Pros
- A large pool of crypto assets
- Outstanding cybersecurity infrastructure
Cons
- high fees
- Poor customer support
These top three crypto exchanges will point you in the right direction.
You can look up any of them, if you’re considering investing/trading cryptocurrency.