Whether you want to trade or invest in cryptocurrency, it’s important to choose a crypto exchange. Hundreds of exchanges are available, including Binance, Coinbase, Crypto.com, Kraken, and Huobi. Despite having numerous options, you can’t trust many of them for keeping your crypto assets.
Therefore, you need to select the right exchange for your investment or trading. In this post, we will highlight a few things to consider when choosing a crypto exchange.
Reputation
When it comes to picking an exchange, the importance of reputation can’t be overemphasized. You want to select a platform that is known for securing the assets of its clients. So, before choosing a platform, you should read about its recent history.
Was the exchange involved in exit scams, vicious activities, etc. recently? Was it hacked? Find answers to these important questions before you choose an exchange.
Additionally, read the terms and conditions of a crypto exchange before setting up an account.
Security and safety
Due to the nefarious activities of some people, it’s easy to lose your crypto assets. In view of this, every good exchange implements a series of security and safety measures to protect the assets of users. You need to ascertain the security of a platform before using its service.
Some of the security features you should consider include:
- A web address with HTTPS
- Two-factor authentication
- Multi-layered verification for withdrawals
- Know your customer (KYC) policy
- Custodial wallet
- Biometric face recognition
User-friendliness
Using a crypto exchange doesn’t have to be difficult. You shouldn’t have to spend days learning how to navigate it. Given this, look for a cryptocurrency exchange that’s easy to use. The platform shouldn’t be confusing for anyone to use.
The user interface must be friendly. The platform should be compatible with both desktop and mobile devices. Furthermore, it should feature notification settings that allow you to know what’s happening to your trades.
The number of tradeable coins
Today, more than 10,000 digital coins are on different exchanges. Unfortunately, you can’t find all cryptocurrencies on a single platform. Even the likes of Kraken, Binance, and Coinbase with hundreds of coins don’t have everything. Hence, you may not find what you need on your preferred platform.
What does this mean for a crypto trader or investor when choosing an exchange? Select a platform that has the specific coins you need. Another option is to utilize multiple cryptocurrency exchanges. Just make sure all chosen platforms are properly regulated and secure.
Availability of fiat exchange
Cryptocurrencies can’t be used for all transactions you may want to do. Many online and offline platforms don’t accept digital currencies. This means that you’ll need fiat currencies at a particular stage.
Go for a crypto exchange that enables easy and quick fiat exchange. Whether you want to exchange your digital asset for USD, CAD, GBP, EUR, etc., you shouldn’t have any challenges with completing the transaction.
In this regard, you’ve to think about the following factors when choosing a crypto exchange:
- The fiat options available
- The particular banks you can transfer money to
- The one-time/daily transaction limit
- The speed of completing a transaction
Insurance fund
Of course, every exchange puts different strategies in place to prevent fraud and loss of users’ funds. However, undesired events can happen; thus, losing customers’ funds. What plan does your exchange have to compensate affected users? Learn about this before using any exchange.
Some exchanges have insurance funds for compensating users. Others are protected by the Federal Deposit Insurance Corporation (FDIC). Regardless of the option, be certain you’re covered.
Transaction fees
Every crypto exchange charges you for each transaction. In other words, you’ve to pay a certain amount for depositing, withdrawing, or trading a digital currency. However, the charges vary from one platform to another.
While some platforms charge as low as 0.5%, others have transaction fees of up to 5%. Besides, the type of trade or payment method involved also determines the specific transaction fee.
Even though transaction fees shouldn’t the main factor to consider, they should be affordable. The charges shouldn’t take a large chunk of your crypto assets.
As shown above, choosing a crypto exchange is not hard as long as you know what to do to select the right option.
