Cryptocurrency is no more a fancy word. Most people want to get into the world of digital currencies and buy Bitcoin or Ethereum, but where? Banks don’t sell them, and neither do the investing firms. If you have decided to buy and sell cryptocurrencies, you need a crypto exchange.
A crypto exchange, also known as a digital currency exchange, is an online marketplace where one can trade in cryptocurrencies using fiat currencies. With the right exchange, you can exchange crypto on the spot with strong security features and nominal fees.
Nevertheless, finding the best crypto exchange is not easy. You need to consider some important aspects to choose the right one, and they are:
- Security
With crypto growing fast to become one of the most desirable and popular digital assets, it has become a prime target for hackers. Do you know there are thousands of cryptocurrencies? And there are more added now and then. Cybercriminals have stolen millions of dollars and crypto exchanges reimburse the traders through insurance. It is by no means certain that you don’t want to begin within that position. Therefore, it is important to create an account and invest money in a reputable exchange.
Most exchanges have insurance to protect your digital currencies from hacking. However, look for how the crypto exchange you choose is protected. Some exchanges utilize hot and cold wallets to enhance the level of security.
When cold wallets are not connected to the Internet and hold most of the cryptocurrencies, hot wallets facilitate transactions as they are connected to the web and permit you to store, receive and send tokens. Look for the exchange that uses two-factor or multi-factor authentication and notification emails for the withdrawal of cryptocurrencies.
- Accessibility
Several countries are still trying to figure out how to treat cryptocurrencies from a legal standpoint. You may find a crypto exchange website accessible, but it may not be available in your country. It is possible that the geographical location, regulations, and restrictions may prevent you from trading in digital currencies. Hence, before fixing an exchange, check if it is legal and accessible from your country. Many states and federal governments are still up in the air about legislation.
It is advisable to choose an exchange after checking its geographical limitations, restrictions, and other accessibility aspects like the currencies accepted.
- Volume and Liquidity
A crypto exchange you pick should have a large trade volume, which ensures that it can fill your order at any time. Liquidity is an important aspect of a crypto exchange as you can buy and sell crypto whenever you want to.
For instance, if you want to buy or sell popular currencies like Bitcoin and Ethereum, it is better to sign up for a reputed centralized exchange, which is extremely quick and liquid. You have a better chance to buy or sell crypto at the price you want. Most popular exchanges generally have larger trade volumes, and they help you fill your orders within a few seconds.
What’s more, if there is not much volume or is a low-trading market, you will end up buying at a higher price or selling at a lower price than you want to, which is called slippage.
- Cryptocurrencies Available
With innumerable cryptocurrencies available, not everything is offered by an exchange. As for popular coins such as Bitcoin, Ethereum, and Bitcoin Cash, you can find them with most exchanges. For new altcoins, you need to shop around as there are not many exchanges dealing with them. To minimize risk, stick to the popular digital currencies.
- Educational Resources
If you are an absolute beginner, choosing a crypto exchange should give you an opportunity to gain more knowledge about digital currencies and other assets, and blockchain technology. A reputed exchange offers you courses, videos, blogs, and quizzes to learn about cryptocurrencies and markets. They also reward you for completing activities like quizzes.
- Transaction Fees
Though transaction fees are one of the essential aspects to consider, let not a high fee stop you from choosing an exchange. The fee may be higher for the insurance and added protection a reputed exchange offers you. Transaction fees are usually a percentage of what you buy or sell and they may be a fixed one. Nevertheless, it is better to learn what the fees are and how they are charged before signing up for a crypto exchange.
The aspects explained are the most common ones considered while choosing the best crypto exchange. However, it is essential that you carry out thorough research before putting your money into crypto, which is more volatile than other assets.
