Cryptocurrency trading is complicated. Using a bitcoin exchange might make things a lot easier for you. However, with so many options, including some that have only been in operation for a few years, selecting the best crypto exchange takes prudence.
Investing in bitcoin is risky due to its unpredictability and speculative character, regardless of how and where it is purchased. We believe that when choosing a cryptocurrency exchange, the security of your investment should be a top priority, and each of our recommended exchanges clearly defines the security mechanisms in place to protect consumers. According to Business2Community, older bitcoin exchanges are usually a better alternative than newer ones, and this is always the safest method to play the cryptocurrency investing game.
How to Choose a Cryptocurrency Exchange
There are various factors to consider while looking for a bitcoin exchange. Before making a decision, consider the following points:
- Availability: Because not every state or country allows access to every cryptocurrency exchange, be sure the one you choose is accessible where you live.
- Security: Different exchanges provide different levels of security and insurance coverage.
- Fees: Find out how much it will cost you to buy and sell cryptocurrencies on your preferred exchange.
- Coins available: Some exchanges only have a certain amount of coins accessible.
- Storage: Many exchanges provide a crypto wallet in which you may store your coins.
Which are the Best Crypto Exchanges we recommend:
- eToro – Overall Best Crypto Exchange in the United States and Worldwide
- DeFi Swap is a leading decentralized cryptocurrency exchange with practical trading features.
- Binance – Lowest Fee Crypto Exchange for Commissions Binance – Easy Crypto Investments through Debit Card
- Coinbase is the best US cryptocurrency exchange for newcomers.
- Webull – One of the Best Crypto Exchanges in the United States for Small Investments
- Huobi is the best cryptocurrency exchange for savings accounts.
8 Tips for choosing the best Cryptocurrency exchange in 2022
As a result, you can’t just accept every deal you come across on the internet. Here are seven crucial factors to think about when choosing a bitcoin exchange:
1. Check diversity of cryptocurrencies you can trade
As bitcoin has grown in popularity, there are currently up to 10,000 different currencies to choose from. Because no exchange offers all digital assets, double-check that yours does. Consider if you want a simpler or more complicated menu, or whether you want to focus on bitcoin, ether, and the handful of top DeFi tokens that enable smart contracts.
Large, well-known exchanges like Coinbase and Kraken are great places to start since they provide a wide choice of currencies and tokens to accommodate most investors, from beginners to experienced traders. Kraken accepts around 160 cryptocurrencies, including so-called meme coins like Dogecoin and Shiba Inu coin, whereas Coinbase supports over 450.
For the crypto aficionado, there are exchanges that allow you to trade hundreds of odd currencies, some of which are based overseas. A word of caution: These aren’t always compliant with US regulations or give the same level of investor protection as, say, a US stock trading site.
2. Make sure there’s enough cash on hand- liquidity
It’s crucial to choose an exchange with liquidity (the capacity to quickly convert cash into coins or vice versa) and low markup. This is particularly true in the world of digital assets, where prices fluctuate rapidly. When the price of a coin you want to purchase is surging, you’ll want to know that your buy order is being filled quickly and for a price that’s close to the one on your screen.
Examining an exchange’s transaction volume is the quickest way to figure this out: the higher the volume, the better. The 24-hour trading volume for hundreds of exchanges is provided by CoinMarketCap, a cryptocurrency data website. The greatest trading volumes have recently been seen on Coinbase and eToro.
Furthermore, you should search for a well-established exchange with at least a five-year track record, as well as one that takes effort to ensure it genuinely has the assets it claims to hold on your behalf, such as eToro.
3. Compare the fees and expenses
There is no such thing as a free lunch with cryptocurrency exchanges, unlike your brokerage account at Schwab or Fidelity, where you may currently trade stocks, bonds, and ETFs for free. Cryptocurrency exchanges frequently charge a fee for each deposit, trade, or withdrawal. Depending on your payment method and the kind of transaction, fees range from 0% to 5% per transaction. Fees are usually calculated based on your total trading volume during a 30-day trading period, with the percentage you pay lowering as the number of trades increases. If you exchanged $1,000 in tokens 15 times on Bitstamp in a month, your charges would be $75. The cost of a single $20,000 deal, on the other hand, would be only $50.
4. Make sure there’s enough security
It’s no secret that cryptocurrency exchanges are vulnerable to hackers, therefore it’s a good idea to avoid investing in cryptocurrency exchanges with a long history of hacking or theft.
Most crypto exchanges have basic security measures in place, such as two-factor authentication, which is frequently performed through the use of apps like Google Authenticator or Authy to build a line of defense against phishing attempts and other forms of crypto theft. You should, however, keep an eye out for any further stages. Biometric login, for example, is available in Crypto.com’s Exchange mobile app, which uses your smartphone’s facial and fingerprint recognition to verify your identity.
When creating a new account, prominent exchanges such as Kraken and Gemini require you to present U.S. government-issued paperwork like as a passport or driver’s license to boost security and dissuade imposters. They also have further layers of codes to validate whether you’re buying or selling, modify your financing levels, or make large account changes that need a master password, such as freezing your account.
5. Think about the laws and Regulations
For example, the New York Stock Exchange is heavily regulated. On the other side, cryptocurrency exchanges are the Wild West. One argument is that, whereas the NYSE has been established for centuries, Bitcoin has only been around for a little more than a decade. Another concern is that Washington is still discussing how to effectively manage the crypto sphere, with agencies like the Securities and Exchange Commission and the Commodity Futures Trading Commission vying for dominance.
To protect consumers, certain states in the United States have enacted regulations. Exchanges like Gemini, Coinbase, and Bitstamp, for example, have a Bitlicense from the New York State Department of Financial Services, indicating that they have solid internal controls.
6. Evaluate the insurance policy
The primary priority of any cryptocurrency exchange should always be digital security, which stops hackers from stealing customer assets. The good ones, on the other hand, will have adequate insurance coverage in case something goes wrong.
Many exchanges now provide corporate crime insurance, which covers things like theft, robbery, property damage, and cyber fraud. For example, Gemini claims to hold $290 million in digital-asset insurance in case of specific losses. However, insurance policies range significantly amongst exchanges, so double-check what they cover. This information may be found in the user agreement you receive when you sign up, as well as in the FAQ sections of exchange websites on a regular basis.
Another important consideration is whether or not the exchange offers FDIC security for your assets. Your bitcoin trading account will very certainly include more than just coins. You’ll need to keep some deposits in US dollars while you move money in and out of crypto exchanges. This money should be stored in a custodial account with an FDIC-insured bank, which will protect your savings up to $250,000 in the unusual event that the bank fails. This degree of protection is provided by the majority of significant exchanges, but not all.
7. User experience is very important
As a bitcoin trader or investor, this is a necessary requirement for your success. It is simpler to trade cryptocurrencies on an exchange with a user-friendly interface and a favorable user experience. User experience, on the other hand, is subjective, and different people prefer various interfaces. Also, be sure that a crypto exchange offers customer service and other client-related services. The easier the platform is to use, the better.
8. Consider the method of purchase
The process of purchasing bitcoins varies depending on the site. Some websites allow bank transfers, others credit and debit cards, while yet others only accept bitcoin. Examine the many payment options available on the website and choose the one that is most convenient for you. To begin, if you don’t have any cryptocurrencies, it’s vital that you choose a platform that accepts fiat money since this will allow you to enter the market with less anxiety.
How to Choose the Best Crypto Exchange? Bottom Line
Cryptocurrency exchanges are crucial to your success as a trader or investment. As a result, knowing how to choose a cryptocurrency exchange is crucial. The platforms described above are among the best available to traders all around the world.
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