Trading and investing in cryptocurrencies can be a complex endeavor that involves a variety of factors and requires a deep understanding of the industry and the technology behind it. The market’s volatility, the high risks associated with crypto trading, the steep learning curve, as well as the rapid evolution of this innovative asset class pose numerous challenges for traders. Therefore, crypto enthusiasts can use all the help they can get to make trading and investing easier, and that’s where cryptocurrency exchange platforms come into play. With just a few clicks, crypto exchanges will let you know that the Bitcoin price is at a current level of $21,827, while the Ethereum price has reached $ 1,510, and provide you with a host of useful services for trading purposes.
When cryptocurrencies first emerged on the financial scene, the only way to get hold of them was through mining or by connecting with other crypto users on online forums and purchasing or exchanging coins directly. Although these methods were relatively efficient, they did require a lot of time and technical skills. Then crypto exchanges entered the chat, providing an unprecedented level of convenience and becoming a one-stop shop for all trading requirements.
These days, crypto exchanges act like a marketplace where buyers and sellers can trade crypto assets for fiat money or other digital assets with minimum effort. These platforms also allow users to view crypto prices in real-time, so they can make better investing decisions. On top of that, they also offer storage options, and some of them provide lending services.
So, if you’re interested in trading or investing in crypto, exchange platforms can make your life infinitely easier. However, since there are over 500 crypto exchanges to choose from and the crypto industry is still new and risky, you can’t just go with any exchange platform you stumble across. Focusing on the following aspects will help you separate the wheat from the chaff and find a good crypto exchange that you can trust.
Digital currencies are touted as being extremely safe since they use cryptography to secure transactions, making it impossible to counterfeit or double-spend coins. But while the technology underpinning digital assets is inherently secure, the same cannot be said about trading and storing cryptos. Exchange platforms are far from being immune to fraud, scams, and cyberattacks, as has been proven by the many exchanges that have been wiped out over the years due to scams and hacking attacks.
This stresses out the necessity to verify the legitimacy of exchange platforms before opening an account. The first step is to check the physical address of the exchange. If there is none, you should steer clear and continue your search because the lack of transparency is never a good sign. Besides, if you don’t know the physical location of the exchange, you won’t be able to learn about the rules it complies with, and how these regulations could affect you.
Reputation is also a good indicator when searching for legitimate exchange services. An exchange platform that is highly popular among investors, has amassed positive reviews from users and hasn’t recorded any incidents in the past is more likely to provide safe and efficient services.
Number Of Coins You Can Trade
With over 20,000 digital currencies in existence, it’s impossible for an exchange platform to include them all. While you can find big-name cryptos like Bitcoin and Ethereum on all crypto exchanges, newer coins or less popular assets might not be on the menu. So, you need to make sure that the service you’re choosing provides the coins you’re interested in.
And it’s not just the number of available coins you should inquire about. As crypto exchanges evolved, so did their service range. Nowadays, their offering includes NFTs, futures contracts, leveraged tokens, and other types of assets. It’s therefore advisable to familiarize yourself with the product range from the get-go.
Liquidity is another important factor to keep in mind when vetting crypto exchanges. The term refers to the ability to convert an asset into cash or the other way around without having a huge impact on its price. In other words, a platform with high liquidity will be able to process transactions with ease and turn your money into coins or your coins into money quickly and at a fair price.
For a platform to ensure good levels of liquidity, it has to have a large number of users that ensure a high volume of orders, or users that possess large amounts of assets. If there are not enough assets traded on a daily basis, the exchange will not be able to match the orders between buyers and sellers and that can cause it to crash.
Trading fees also play an important part in the equation. You need to be aware of the fees these platforms incur for processing transactions, and find out exactly what you’re paying if you don’t want to be hit with hidden costs.
Ease Of Use
While versed investors might have no problem navigating exchange platforms, newer players can find it rather difficult and confusing. As a beginner, it’s important to choose an exchange that offers a simple, easy-to-use interface that won’t overcomplicate your trading experience.
Certain platforms offer basic and advanced versions to cater to all types of customers. Others are specifically designed to target beginner investors. Additionally, exchanges should also provide good customer support in case you need assistance at some point.
Last but not least, you need to learn about the security protocols set in place by the exchange. The increased interest in digital currencies has led to an increase in financial scams and fraud, with crypto-related crimes spiking over the past few years. So, it makes perfect sense to choose an exchange that focuses first and foremost on security.
Apart from reading about the security practices that the platform employs, you can also get a sense of their security levels by looking at the steps you need to take to create an account with them. If the process seems too easy, chances are the site is not as safe as it should be.
Crypto exchanges are a dime a dozen these days, but not all of them are created equal. So, make sure you take the time to do your research and chose a trustworthy exchange platform that will help you start your trading journey off right.