A cryptocurrency exchange is the only thing that is even more important than cryptocurrency wallets. Why? Because before you can utilise digital assets, store them in your private wallet(s), transfer them or exchange them for other value assets, you first need to purchase them.
In this brief article, we introduce you to the concept of cryptocurrency exchanges, which differences there are on the market, what to expect, look out for and beware of. We highlight where and how to trade, invest, buy, sell and exchange them. Stay updated and learn more about these important websites and portals.
What are cryptocurrency exchanges?
Crypto exchanges are essential marketplaces for a cryptocurrency user, trader or investor. These marketplaces are platforms that allow you to exchange fiat money for a cryptocurrency asset (coin or token) or swap one cryptocurrency for another.
Some exchanges restrict their users only to convert digital assets into other digital assets. However, the best ones also allow conversion with many fiat currencies worldwide. Later in this article, we highlight a few of these marketplaces which will further guide you on your journey to becoming a savvy crypto investor and crypto trader.
What you can do on these cryptocurrency platforms:
Buy and sell
First and foremost, you can buy and sell cryptos with fiat money. Depending on the exchange, you may be able to buy directly with a credit or debit card or via bank transfer. Check out our cryptocurrency exchange reviews and comparisons to see which ones offer the best service and deposit/withdrawal options. At this point, it is the most frustrating thing when you can’t exchange fiat to crypto and vice versa. Once digital assets are part of our everyday economy, we will surely be able to use many cryptocurrencies for payments and in our daily life.
You can typically exchange one crypto coin or token for another. For example, if you believe Ethereum (ETH) possibly going up, you can exchange your Bitcoins for ETH. Depending on the cryptocurrency exchange, you will have the opportunity to swap (exchange) one digital asset for another. This is a critical factor because you will first need to check that the relevant exchange offers that currency depending on the cryptocurrency you wish to invest in.
You may also store coins and tokens on crypto exchanges, but we do not recommend this as exchanges can be hacked, and you have no control over your assets (and private keys) there.
There are many other applications for these platforms, such as trading through the trading terminals, long-term investing (or staking) and using the sites to view trading charts. Leaving your coins on these exchanges can be dangerous, though.
Some advanced crypto exchanges also allow trading at their trading terminal. Not all exchanges offer this feature but if they do, you will find similar tools and applications to Forex trading platforms. Day trading is a serious profession where a person can make a lot of money but also lose everything. Learning about technical analysis, chart patterns, signals, RSIs, etc., can be very handy. However, if you only wish to buy and hold (HODL) cryptos, we recommend that you look for exchanges with simpler buy and sell features.
How to evaluate online crypto exchanges
Now is the time to dive deeper and learn about the most important criteria when choosing the best crypto exchanges.
Geographical location restrictions
The first thing you should verify is whether the exchanges are available for your country of residence. Most of the popular cryptocurrency exchanges allow sign-ups from many countries worldwide. However, certain restrictions often apply.
Depending on those restrictions, exchanges limit their services regarding which assets they offer for buying, selling and trading.
This word might be new to beginners in crypto and trading as a whole. Liquidity means how quickly you convert one asset, coin or token into another after placing an order.
As a buyer or seller, you want your transaction to be completed as fast as possible. The longer a transaction takes to be filled, the higher the volatility and risk of missing out on the desired price.
Security and anonymity
Hacks are unfortunately not uncommon for online exchanges as people want to get access to funds and crypto-assets held in online wallets. Therefore, it is of utmost importance that you choose an exchange that offers a high level of security and privacy.
Anonymity and privacy are similarly crucial. Crypto exchanges that support this do not require you to enter any sensitive personal information when you sign up and allow anonymous operations with crypto.
It is crucial to investigate how well the customer support team works and how they can be reached. A 24/7 help desk online live chat is desirable, especially if the marketplace offers its services globally.
You most definitely want to be able to reach a helpdesk at any given time.
The 3 biggest crypto exchanges
Now that you’ve learned about the most important aspects when choosing a cryptocurrency exchange, it is time for us to present our top 3 picks. Take a look at our list of the best exchanges, compare and decide if you want to choose one of them.
Binance comes first as all the factors are almost perfect. Their website is translated into many languages, and it offers a wide variety of cryptocurrency assets to buy, sell, trade and even invest in. The user interface is also quite modern, and there are a lot of advanced features for the more dedicated investor.
However, the platform is hard to get used to for newcomers and has some more complicated features.
Coinbase comes in second place but is a more beginner-friendly platform than Binance. Coinbase is a New York Stock Exchange-listed company, and its platform has a simple interface that allows a new user to learn everything intuitively and almost instantly. Instant access to crypto charts and news is also provided.
The disadvantage of the platform is its limited access to rare coins. You cannot buy crypto there except for the few major coins like Bitcoin or Ethereum. Moreover, despite Coinbase being a legit company with high-security standards, this exchange had a hack in the past and left a bad impression by communicating their issues poorly.
Kraken is an overall great platform made for trading and investing. It may not be the best for beginners, but once you get used to crypto, Kraken is a great choice. The website claims not to have been hacked once and offers access to many digital assets. Kraken was also the first crypto exchange that received a crypto banking license in the US.
You’ve learned all the basic information about cryptocurrency exchanges. You now understand what they are and how you can invest in digital assets. Moreover, you know the criteria for choosing only solid exchanges and have seen our top picks of global exchanges.
So, what are you waiting for? Take a closer look at these websites and begin your crypto journey today!