How to Choose the Best Cryptocurrency Exchange?
Cryptocurrency has taken the world by storm as more and more people explore the world of trading in digital currencies every day. Even though the cryptocurrency was launched more than a decade ago, the number of people who get curious to learn more about it keeps increasing day by day.
As a result, investors and the number of transactions also keep increasing. Many people start investing or trading in cryptocurrency in different parts of the world to reap benefits from the rise in the price of various digital currencies.
But one of the major problems or obstacles they face in the beginning is choosing the right cryptocurrency exchange. For those who don’t know, a cryptocurrency exchange is a platform or a marketplace that works similarly to a stock exchange. You need a platform on which different cryptocurrencies are available so that you can select one or more from them to invest in.
This platform is known as a cryptocurrency exchange. On digital currencies exchanges, you will get all the tools that are necessary for you to buy and sell cryptocurrencies. These exchanges are available in the form of a mobile application or a website. You just need a device (like a computer or smartphone) and a stable internet connection to start your cryptocurrency trading journey.
Once you select the digital currency exchange, you need to create an account on it. For this, you need to provide some basic information, such as name, contact number, bank account number, and so on. The features available may vary from one crypto exchange to another.
In this blog post, we have shared some helpful tips, using which you can choose the best digital currency exchange possible. However, if you are still reluctant or don’t have the confidence to start trading in cryptocurrencies, you can opt to create an account on a CFD (i.e., Contract for Differences) trading platform. Users on this platform predict the movement of the price of digital assets. One of the best CFD trading platforms available currently is Bitcoin Prime.
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Points to Keep in Mind for Selecting Cryptocurrency Exchange
You need to keep certain points in mind while selecting the exchange for investing or trading in cryptocurrency. But before that, you must understand that digital currency exchanges can be divided into two categories – 1) Centralized Exchanges and 2) Decentralized Exchanges.
Availability of the Exchange
Not every cryptocurrency exchange is available everywhere in the world. Many exchanges may not be available in your country, depending on the origin of the founders and other reasons. As finalizing tax regulations and legal obligations is difficult, some exchanges might not be accessible to users outside a particular region.
There is no use understanding the features of an exchange if it’s not available to you. So, before you try to conduct research about any crypto exchange, make sure that it’s accessible in the region you live in. In order to check the accessibility, you should not take the website as a parameter because the website of the exchange might be accessed from any corner of the world.
Range of Digital Currencies
Some cryptocurrency exchanges might offer a limited number of digital currencies for users to invest in or trade. On the other hand, some exchanges might have hundreds of cryptocurrencies listed. If you are interested in investing in only a few digital currencies that you have already selected, you can select the exchange on which the currencies of your choice are available.
But if you are someone who likes to take the risk and wants a huge number of cryptocurrencies to explore, then you should go for the exchange that offers a vast range of digital currencies to users for trading in. If a cryptocurrency exchange is available in your region and meets your criteria regarding the number of digital currencies listed, then you can proceed to other checks.
Security Level of the Exchange
You must choose a highly secure digital currency exchange if you don’t want to lose your money and peace of mind. Cryptocurrency exchanges are always surrounded by the risk of fraud and online scams. Even the most reliable digital currency exchanges can collapse. Exchanges can also be hacked or compromised due to malicious activities being performed on the Internet.
In order to minimize or eliminate the risks associated with cryptocurrency exchanges, you should show due diligence while choosing an exchange. You need to acquire relevant information regarding all those exchanges you have shortlisted until now. The official website, online portals, review websites, forums, financial newspapers, videos, social media channels, and many other sources can help you in this regard.
With the help of these sources, you can gather information about the founders of the exchange. You can also learn about the top executives, tech team, customer service department, physical addresses, contact numbers, registration details, security features, and more. If the exchange is a customer care number, email address, or chatbot, use it to assess the customer service provided by the company that owns the exchange.
Another way to evaluate the security level of any cryptocurrency exchange is to check the account creation process. If the exchange allows you to create an account quite easily (although making the tasks easy for users is important), you should stay cautious.
To keep your investment in digital currencies safe, you can do what most people do – create an account on multiple exchanges. You can also transfer your digital currencies from the wallet of the exchange to a cold wallet. A cold wallet is a storage option for cryptocurrencies. The best part about a cold wallet is that it is not connected to the Internet.
Trading and Withdrawal Fees
Cryptocurrency exchanges earn by charging their users various kinds of fees, for example, trading fees, withdrawal fees, etc. Every time a user makes a transaction, they have to pay trading fees. This fee is in the form of a percentage that may be based on the value of the transaction or any other numerical figure.
Similarly, if you want to withdraw your digital currencies or the money earned by selling your digital currencies from the wallet of the exchange, they can charge withdrawal fees. This fee is also in the form of a percentage based on your cryptocurrency holdings or profit.
You can also make other checks, such as trading volume and educational resources, along with the points mentioned above.
You should choose the cryptocurrency exchange wisely as it will act as a storage for your investment in digital currencies.