Cryptocurrency is a speculative asset. Still, you have to find a good cryptocurrency exchange that can take good care of and maximize opportunities for your money.
Below are the things you should consider in looking for a cryptocurrency exchange.
Selection of cryptocurrencies
Most, if not all, cryptocurrency exchanges carry Bitcoin and Ethereum. So if you are looking to trade only these two coins, finding an exchange should not be a tedious task for you. More popular and more established cryptocurrencies are not hard to find.
However, if you are looking for the riskier and relatively newer altcoins, you will have to check if it’s on the exchange’s list. Eventually, you will have to diversify your crypto portfolio and a good crypto exchange must have room for that.
One good piece of advice is to check price-tracking websites for crypto assets such as coinmarketcap.com. They don’t sell coins but have a list of assets you might be interested in and what exchange sells them.
Security
As cryptocurrencies grow and more investors become interested in making money from these coins, exchanges become more vulnerable to attacks.
Read news articles or about the cryptocurrency exchange you are interested in. One red flag is if the exchange has been hacked before and was not able to handle it well. Check if the exchange has an insurance policy that protects users.
If it doesn’t cover insurance, review the security practices in place. It should be a good sign that setting up an account requires patience. If generating an account is too easy, there might not be enough safeguards to protect your digital assets.
Some of the security features you should look for include the availability of a cold wallet (an offline storage wallet), encryption, and two-factor authentication (2FA). Having a 2FA means an unfriendly party can’t access your account with just a username and password.
Fees
Low fees don’t necessarily mean good exchange. In most cases, an exchange offers services for a high fee because they charge you for security, insurance, and convenience.
Some exchanges have a fixed price on transactions. Others depend on the following:
percentage of your trade
price volatility
whether you are selling or buying
type of currencies you trade
deposit or withdrawal
Whatever the cryptocurrency exchange, make sure you understand how they charge fees and whether they fit your trading behavior or not.
Ease of use
Beginners should look for exchanges that have a user-friendly interface. An exchange with an option for basic and advanced trading views should be good for you.
Funding your account and buying cryptocurrency should also be hassle-free. Check if it allows you to connect your bank account, debit card, credit card, or other options that suit you.
Interest or rewards
You’re in this to earn. If there are other features embedded in the site or application that give you a chance to earn interests or rewards, maybe you should consider this exchange.
Below are examples of how platforms offer interests and rewards:
rewarding users for reading educational materials
a percentage is given back to users for using the indicated credit card
investing on a scheduled basis
sure yield for holding user’s money on the platform
earning a percentage for maintaining a minimum balance
Liquidity
An exchange that has a high trading volume is one assurance of liquidity. That means you can buy, sell, or trade your crypto anytime you want at the best price. If there isn’t enough volume of orders, price movement can become too volatile. Users end up paying or losing more than expected.
Closing thoughts:
One exchange can’t possibly meet everything on this list. You will have to look for an exchange that best suits your needs and trading goals. If you are looking for the best cryptocurrency exchange, try searching reviews and reading discussions on the topic. A friend who has been trading for a while might help you pick one that works for you.
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