How to Choose A Cryptocurrency Exchange

Cryptocurrency has become the hot topic in this modern era – where everyone is thinking about which cryptocurrency to trade, we also need to understand which cryptocurrency exchange should be used. There are multiple factors that must be considered while finalizing a cryptocurrency exchange, including user experience, security, transaction fees, and liquidity. 

The cryptocurrency exchange can be used to buy, trade, and sell digital currencies, and one wouldn’t be able to purchase or sell digital assets without one. For this reason, there are hundreds if not thousands of cryptocurrency exchanges available in the market which is why you must be careful about the selection. So, let’s dive deeper into the details!

Factors To Consider While Choosing The Cryptocurrency Exchange 

Before you jump into some random Bitcoin trading software or an exchange platform, you need to consider multiple factors. Honestly, it can take time to find the best one, but once you do, it can ease cryptocurrency trading and investment by multiple folds. To begin with, one must differentiate between crypto-to-fiat and crypto-to-crypto exchanges. 

To illustrate, fiat-to-crypto exchanges allow the users to sell and buy different cryptocurrencies with real money, including yen, pounds, euros, and dollars. On the other hand, the crypto-to-crypto exchange allows the users to trade between crypto. In the section below, we are sharing the factors that must be considered, including;

Security 

The first and foremost consideration is security because it can directly influence the storage of your cryptocurrency. This is because if a cryptocurrency exchange is insecure, the assets will be at risk of theft because who wants to lose the money? For this purpose, you have to focus on the following points;

• Technology

You need to ensure that the web address starts with HTTPS and make sure it has two-factor authentication available for the login system. In addition, the bitcoin assets must be stored in cold storage wallets and the availability of an auditing program is a must since it helps monitor the activities of the cryptocurrency with the help of alerts. In addition to this, you must ensure that you have to whitelist the IP address to have the highest standards of security.

• Legalities

You must choose the cryptocurrency exchange from the country that you belong to since it eases compliance with the regulations. It’s obvious that you have the option to use other exchange platforms and remember that some exchanges are only supported in limited countries. Moreover, some exchanges allow insurance of funds, so you can get the reimbursement if the cryptocurrency is stolen in any case.

• Transparency

Always look for the cryptocurrency exchange that has revealed the address, owners, and team members. In addition, they must have a published cold storage address and have an audit information 

Liquidity 

When the trading volumes go higher, the liquidity of the exchange will be enhanced as well. To illustrate, liquidity promises faster transactions and more conveniently. In addition, there won’t be any chances of price volatility. In addition, you must look for the locked-in pricing because it promises the price you paid at the time of the transaction even if there is no settling. 

Keep in mind that liquidity is different for every trading pair, which means it can be lower for GBP/BTC but will be higher for EUR/BTC. All in all, it’s suggested to have the exchange with the highest possible trading volume. 

Fees 

Before you give some cryptocurrency exchange a go-ahead, considering the fees is important. To begin with, you must compare the fees associated with the exchange charges. For the most part, they are lower than 1% for one transaction and will reduce with an increase in the trading volume. 

Secondly, you must select the withdrawal fee because some exchanges have higher withdrawal charges for certain currencies. Last but not least, you must research the deposit fees. For instance, multiple exchanges offer a convenient and efficient way of purchasing cryptocurrency with a debit card or credit card but they often charge at least 5% fees or even higher. 

User Experience

If you are someone who likes being anonymous, it’s obvious that you cannot choose any crypto exchange that needs you to reveal your personal identity. In addition to this, make sure that the user interface is convenient and easy to use because cryptocurrency is complicated enough already. 

To summarize, if you are tapping into cryptocurrency, it is important to weigh various factors before you invest your hard-earned money. Keep in mind that every exchange operates differently, so be vigilant about it!