The happening crypto market has witnessed quite a bumpy ride over the years. So much so that it has blown the sentiments of many potential investors. But cryptocurrency is here to stay and can uncover a significant shift in the economy is enough to see it with open eyes. Suppose you are the one who’s still anew in this market and here to make a memorable, fruitful journey with many long-term cryptocurrency investments. In that case, you first need to consider the best cryptocurrency exchanges.
Cryptocurrency Exchanges Explained
Cryptocurrency exchanges are digital platforms facilitating the exchange of cryptocurrencies with other digital and fiat currencies. It acts as a bridge between buyer and seller that makes money through commissions and fees so levied. Note you can’t buy cryptocurrency from any bank or a government body. Once you have bought a cryptocurrency (bitcoin, ethereum, or Dogecoin), you need to make an account on a cryptocurrency platform to exchange your US dollars or any currency with these digital assets.
A digital exchange platform like Coinbase has existed as long as the early days of Bitcoin. It was the time when crypto was an unfamiliar word, and technically, people were oblivious to the basic functioning of the crypto market.
Exchanges serve the purpose of reflecting the current market price of the cryptocurrency, which can be converted back into US dollars or any currency of choice to leave the cash safely within your account.
There’s no one crypto exchange that’s best for every user, says Tyrone Ross
He is a financial advisor and CEO of Onramp Invest, a crypto investment platform for financial advisors. He says it is best to evaluate your interest in investing and select the exchange platform meeting or align your goals.
What Factors To Consider In A Cryptocurrency Exchange?
There are several ways and places to trade in cryptocurrency but finding the cryptocurrency exchanges as a beginner needs a few points to consider:
1. Accessibility
Accessibility plays a crucial role in buying or selling cryptocurrencies. Some countries or locations may prevent buying or selling cryptocurrencies because of several state or national regulations. There are many regulatory uncertainties in the USA on purchasing digital assets, and even some states have their limitations. For instance, trading in New York requires a BitLicense before operating in the state, and only licensed companies may offer their only approved coins. Cryptocurrency exchanges in the USA are different, and not all states have regulations as strict as New York, but they are taking their steps.
The geographic imitations of exchange can easily be explored on the website or within the terms of service page, like accessibility factors, national currencies accepted, and much more.
2. Security
Cryptocurrency is not operated by a government institution nor backed by any official legal body, like the money in your bank account safely taken care of by the traditional banking model. Therefore, checking on these security guidelines is imperative. Some exchanges offer insurance policies beneficial for any mishappening like hacks or fraud to protect cryptocurrency. Whether you are mainly to hold your cryptocurrency within the exchange or looking to transfer it back to the crypto wallet, having impeccable security by the exchange platform is the topmost concern. Exchanges, by nature, have to keep the crypto assets active for facilitating trade. Keeping the significant chunk of it in cold storage is advisable, where hackers can’t crack.
For example, Coinbase comes with an insurance policy of $255 million for any hacks in the Coinbase reserves. Here, the account holder would be protected.
3. Fees
Fees are another essential factor to stick to but don’t let a prominent tree structure turn you off. When exchanges levy hefty fees, they are doing most work for you. Higher fees can be a brilliant tradeoff for the seamless security offered and a huge tag of insurance that big cryptocurrency exchanges provide.
The fees are fixed for most of the exchanges and most often a percentage of your trade. Fees are usually incurred per transaction depending on selling or buying. Some exchanges like CashApp charge based on the volatility of cryptocurrency.
4. Liquidity
The chosen cryptocurrency should have enough trading volume, ensuring your holdings are liquid. It means you have an edge to selling them whenever needed. The most successful exchanges are the ones with an enormous trade volume. Crypto prices fluctuate quickly; therefore, having an exchange platform with an extensive trade volume allows you to pay comparatively less fee.
CoinMarketCap continually tracks the trade volume of hundreds of exchanges in operation and currently lists Binance, Coinbase, and Huobi as the top exchanges by volume worldwide.
5. Coins Offered
Every exchange platform does not offer all the crypto assets under the sun. Popular assets like Bitcoin and ethereum are readily available on most exchange platforms. But the less popular ones like altcoins with a relatively more minor market cap may let you scour through a lot. Note that the new coins are often riskier than the famous, already established cryptocurrencies.
What Are The Best Cryptocurrency Exchange Platforms?
The cryptocurrency exchange platforms are based on the factors mentioned above, such as accessibility, liquidity, and security. Therefore, after combing through the leading exchange offerings, the best crypto exchanges list is:
1. Coinbase
In terms of popularity and exploring reams of data, Coinbase is the leading crypto exchange platform as you can invest directly in USD. You can shop through Bitcoin, ethereum, and 30+ other popular cryptocurrencies and earn interest on USD. Easy to use with competitive rates, Coinbase was founded in 2012, four years after Bitcoin. It works hard to reduce any rising security concerns for the investors. It is based in the USA and, as we speak, has never been hacked.
2. Voyager
Another popular platform for investing in cryptocurrency is Voyager. It was one of the first publicly traded cryptocurrency exchanges driven by an app with a commission-free trading structure. Voyager leverages most cryptocurrencies with a fail-proof engagement and offers competitive interest rates on assets. It is ideal in sampling crypto trading and acts as an app-based cryptocurrency broker. Over 50 digital assets are available on Voyager with popular assets like Dogecoin, Shiba Inu, and others.
3. BlockFi
BlockFi offers a boon in the crypto world, offering to earn up to 8% annually on your cryptocurrencies. It leverages the investor to borrow against the coins, and you can take loans on your assets instead of selling them. It prevents selling in the down market and acts as a crypto custodian. The cryptocurrencies offered are limited, but earning interest on your deposits is an exciting endeavor.
4. Uphold
Offering a simple solution to trade multiple assets or cross-asset trading – uphold has earned the name in the cryptocurrency exchange world. It is a global platform allowing users to convert between cryptocurrencies, fiat currencies, and other commodities and stocks. The advantage is you can sell many assets directly, unlike other coins or tokens traded in specific pairs. It functions on the basic principle of — open an account and trade multiple assets without taking a trip back to cash.
5. Kraken
This original cryptocurrency exchange platform is whipped with an excellent selection of coins and tokens to trade in. It is the most reliable exchange platform and may lack user-friendliness, unlike others at the top. But it is one of the few platforms offering to invest in Dogecoins and even riskier cryptos apart from being highly secure. It is based in the USA and has never been hacked. Kraken checks all the boxes for an investor to consider a cryptocurrency exchange platform. With over 90 cryptocurrencies available on Kraken, it is one of the largest and oldest exchanges.
6. eToro
eToro has been found in the UK with worldwide trading options. It offers a wide variety of cryptocurrencies for buying and selling with an edge to have a practice trading account for beginners. As a social trading platform, it allows copying the trading behaviors of top traders present on the forum. It lends an unparalleled step to diversify investments and widen the knowledge by learning proven strategies from expert traders.
7. Binance
Binance is available across the globe and supports over 50+ coins in the USA. It is one of the crypto exchange platforms with the lowest fees and is best suited for experienced traders. It is the largest crypto trading platform to trade volume and weekly site visits. With fast transaction times, users can leverage the best crypto prices in the market. It was founded in 2017 and is based in Malta.
Conclusion
Knowledge is power, making double sense while trading for digital assets. Suppose you’re getting started with cryptocurrency, eye to find an easy-to-use platform with ample educational resources to decipher this noisy, complex crypto world. You may be comfortable paying a higher fee while still learning the ropes, but high prices may toss with your likely returns. Always look for the fees.
Choosing an ideal cryptocurrency exchange platform may let you consider additional factors, but learning about it is extensively significant before putting in the money. Crypto is a wild market that changes haphazardly, and even the most stable cryptocurrencies take a flip overnight.