If you want to trade, buy or sell cryptocurrencies, you start by creating an account with a cryptocurrency trading platform. Crypto exchanges work almost the same as online brokers, giving you the tools to trade digital currencies and tokens such as Bitcoin, ALgo, Ethereum, and Dogecoin. However, not all crypto exchanges will provide you with everything you need. You need to consider factors such as fees, payment methods, assets supported, centralization, projects, transaction speed, and security.
What is a crypto exchange?
A crypto exchange is a digital currency market where people can trade cryptocurrencies. It works similarly to digital fiat trading platforms, but deals strictly with cryptocurrencies. Here are examples of popular crypto platforms:
Cryptocurrency trading platforms require users to have an account where they create different types of orders to trade and speculate in the crypto market. Some exchanges support advanced trading features such as futures trading and margin accounts. Others have tools or features like crypto loans or crypto staking that allow users to earn interest on crypto holdings. The best exchanges offer educational resources to users with updates on the market, regulations, etc.
Types of Crypto Exchange Platforms
Crypto exchanges are generally categorized into centralized and decentralized exchanges. Centralized crypto exchanges (CEX) are run by a single organization. They improve the start of cryptocurrency trading by allowing users to easily convert fiat currencies directly into crypto. Many crypto trading platforms are centralized and support many exchanges because they are convenient and reliable. However, they are less secure and prone to hackers stealing vital assets.
Beyond the type of exchange platform, here are other factors you can consider when choosing the best cryptocurrency exchange:
Crypto Exchange Fees
You need to consider trading and withdrawal fees. Don’t choose a platform that has too high fees on both.
Not all exchanges are available everywhere. Check and verify that the exchange you want is available in your country. Some decentralized crypto exchanges like Algorand are not available in the United States, while you can buy XLM in Canada, the United States, and many other countries.
The growing popularity of crypto attracts the attention of hackers, leading to millions in losses. Although exchanges will refund coins lost to theft, you don’t want to be in that position. You have two options: select a platform that you know is highly secure (decentralized platform) or spread your crypto across multiple centralized and decentralized exchanges. Alternatively, move your crypto holdings to a secure “cold” wallet often.
Cryptocurrencies that only exchange a few coins are safer than those with more coins. Carefully research cryptocurrencies with coins available for exchange and select the right ones for you.
The available coins are not enough if no transaction takes place. Verify that the exchange has sufficient trading volume to ensure liquidity, allowing you to trade your coins easily. Don’t settle for exchanges with low trading volumes or those with too high trading volumes.
If you’re new to cryptocurrency, consider an easy-to-use platform that provides plenty of educational resources to guide you. You will benefit from the educational resources as you learn how to navigate your way through crypto trading.
With too many crypto exchanges in the crypto industry, choosing the best exchange platform can be difficult. Check fees, security, availability, transaction volumes and educational resources. If you are a newcomer, start with a centralized platform before moving to a decentralized platform.