As a novice to cryptocurrency, selecting the best cryptocurrency trading platform is a daunting task. Many factors are to be considered before applying for their services.
Many amateurs apply for a cryptocurrency trading platform based solely on the name as it appeals to them. Some may choose it because their family members or friends are using or suggesting it. Instead of settling for one blindly, it is advisable to conduct research. Many cryptocurrency exchanges offer distinct features, some that you aren’t currently looking out for.
Let us check the criteria for selecting the best cryptocurrency exchange.
A number of cryptocurrencies
Each exchange offers a distinct list of cryptocurrencies. For example, some new platforms may feature only ten, while a renowned exchange may offer over hundreds. As an amateur, your instinct would be to go for a safer and popularly known crypto platform. Even selecting an exchange offering hundreds of crypto can be challenging, since there are plenty of factors to consider. However, if you are experienced and know how the crypto market works, you can research and select an exchange that offers various cryptocurrencies.
The reputation of the exchange
There are thousands of exchanges in the market, but not all are genuine. Chances of you encountering fraudulent exchanges cannot be ignored. It is advisable to go for the one which has its reputation intact. If you happen to choose a crypto exchange, it is best to do a background check and see if it has been associated with any scams in the past.
The exchange’s security settings
Since the entire crypto market is unregulated, without any government intervention, some might find it appalling. As the hacking of crypto exchanges is a potential threat, compromising the users’ data and financial security is a serious problem. Therefore, security features are also one the important features to evaluate. Further, features like two-way authentication, encryption, and offline storage to protect against theft and hacking are called cold storage. Unfortunately, many exchanges do not work around these features.
Commission or fees charged
Fees in the industry are likely to standardize and decline as competition grows and risk decreases. As of now, there is a varied fee structure adopted by each exchange. The users are charged with trading fees and potential commission fees on a reliable trading platform. Some exchanges also charge deposit fees and withdrawal fees.
Availability of Cryptocurrency Trading Platform
State, as well as country regulations, affect the exchanges. If you are applying for a trading platform, it is best to check if the state or country allows that platform. The exchanges are ever-increasing their geographical sphere of influence. You must be aware of regulations in the country where you reside. There are chances that you’ll sign up for a cryptocurrency trading platform that eventually turns out to be illegal. These trading platforms should reach out to their users and update them with the latest state or country regulation.
However, these swift changes cannot be expected from poor customer service. Therefore, it is in your best interest to keep yourself updated with the latest buzz regarding your exchange.
Selection based on Volume
The number of people utilizing a trading platform at any given moment and the quantity of each item being traded determines how much each platform costs. It is crucial since it influences how easily users can enter and exit positions.
Due to exchanges posting bogus volumes, checking volume might be challenging. One technique is to examine the order books on various exchanges, noting the volume of each asset in the order book and the difference in the price levels.
You may need your bank account to buy cryptos from your exchange account. Some exchanges also allow the use of a debit or a credit card to buy cryptos. In addition, some exchanges allow crypto to crypto trade, while some won’t allow it.
Availability of a Wallet
Exchanges offer wallets to keep your crypto holdings safe; however, many don’t. Having a wallet facility on the same exchange is quite convenient. It is good to have an external cold wallet if you are holding a large amount of crypto for extra security.
Interest or rewards for holding cryptos
Some crypto exchanges, like traditional bank accounts, offer incentives on your holdings to keep your money on their platform. Some offer 10% on certain coins while maintaining a minimum balance. However, your assets are not insured by the Federal Deposit Insurance Corporation, as they are in typical bank accounts (FDIC). There’s no guarantee that your money will be returned if the crypto platform fails.
Although cryptocurrency is the way toward the future, not every platform is on par with the current technology. However, without navigating a clumsy mobile website, a comprehensive and user-friendly investment mobile app might allow you to maintain your cryptocurrency account and execute trades on the go.
Availability of Customer Service
The customer service offered by most crypto exchanges is not up to the mark. It is quite frustrating at times if anything goes wrong with your account, and you need someone on the other end to resolve the issues as quickly as possible. If you happen to stumble across an exchange with excellent service ratings, this major benefit could enhance your experience.
Debit card feature
Some platforms provide a debit card that may be used to make purchases directly from your crypto account without exchanging for fiat money first (like U.S. dollars).
Rewards of using credit card
Some exchanges allow you to earn crypto using their issued credit card every time you purchase.
Choosing a cryptocurrency trading platform is quite tricky if you are new to this crypto world. There are thousands to choose from, offering tons of features that can overwhelm you. However, the tips mentioned above can help you choose an exchange that best suits your needs.
While these are important concepts to go through and keep in mind, the ideal approach is to start by understanding what are your requirements, expectations, trading style, and goals. Attain a common ground and you might land on the best cryptocurrency trading platform that suits your preferences.