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How To Choose A Cryptocurrency Exchange

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How To Choose A Cryptocurrency Exchange

More important than knowledge of how to navigate the vast and sometimes overwhelming world of the crypto market, is how to choose the right place to perform transactions.

If buying, selling, or holding cryptocurrencies is your aim, then finding a great platform to do so is a great place to start. Cryptocurrency exchanges are similar to brokerages in the foreign exchange or the stock markets. 

These exchanges provide you with tools such as charts and indicators, as well as an environment to successfully transact with cryptocurrencies such as Bitcoin and Ethereum.

Types Of Crypto Exchanges

There are two categories of crypto exchanges available to choose from

Centralized Exchanges (CEX): These exchanges are owned and managed by one organization. The main advantage of these exchanges is that it is easier for users to convert their fiat or government-issued currency into cryptocurrencies.

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The disadvantage, however, is that these exchanges are the most vulnerable to hackers.

Decentralized Exchanges (DEX): Decentralized exchanges have a more decentralized approach to storing cryptocurrencies on their platform. Anyone on a DEX platform can certify transactions, improving transparency and efficiency.

The disadvantage, on the other hand, is that these platforms are less user friendly.

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What Should You Be On The Lookout For, Before Choosing?

The volatile nature of cryptocurrencies presents a serious risk to investors, experienced or otherwise. This means that making the right choice is ever so important.

As a general rule of thumb, it is safer to go for crypto exchanges that have been around for a longer time than others. 

Nevertheless, here are a few things to keep in mind before making a choice.

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  • Security

As mentioned earlier, it is important to go for crypto exchanges with a longer period of operation than others. And even then, the risk involved is never zero.

Cryptocurrencies, unlike other financial assets, are not so regulated as other FDIC-insured investments. 

According to wikipedia.com;

‘The Federal Deposit Insurance Corporation is one of two agencies that supply deposit insurance to depositors in American depository institutions, the other being the National Credit Union Administration, which regulates and provides insurance to credit unions’

Put simply, FDIC insurance ensures that assets are properly protected against theft and/or failure of the institutions in which they are kept.

In the event of a hack with a less secure crypto exchange, there is no guarantee that your assets will get returned to you.

  • Accessibility

Not all states, countries or regions allow access to cryptocurrencies or their exchanges. Cryptocurrencies and crypto exchanges are currently banned in over 50 countries including Nepal, China, Bangladesh, Algeria and Egypt among others.

It is important to be familiar with your country’s laws for or against cryptocurrencies before choosing an exchange.

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  • Fees

Most cryptocurrency exchanges charge a fee when you buy or sell assets, deposit or withdraw funds, or borrow. These fees can be 0.5% – 2% of the amount involved, or be a flat rate that depends on the size of your transaction.

It is important to go for secure, accessible cryptocurrency exchange with the most affordable fees.

  • Coins Offered

The most prominent goal of cryptocurrency investors is to make some profit. Some exchanges offer only a limited number of coins. This can contribute negatively to how much money you can make as a customer of these exchanges.

It is crucial to choose an exchange that offers at least fifty coins to buyers, sellers and traders. 

There are some great exchanges, however, that offer just over twenty coins.

As far as the number of coins offered by an exchange goes, there is no golden standard. If an exchange has the coins you need, then the number of other assets it offers does not exactly matter.

  • Storage

Many crypto exchanges come with a storage wallet you can carry around with you on your mobile device, contributing greatly to how easily you access your investments. Many of these exchanges also allow you to transfer these assets to other wallets, depending on what you need.

In Conclusion

Over the years, public interest in cryptocurrencies has grown by a large margin. And by no means, is it too late to get in and experience the action firsthand. Not to worry, there are over six hundred crypto exchanges to choose from.

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Adekunle Joshua is a cryptocurrency writer. He has a deep understanding of the technology and how it can be used to improve the world. James is a strong advocate for using cryptocurrency to make the world a better place. He wants to help people understand the technology and use it to improve their lives.

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