Things to Consider Before Selecting a Crypto Exchange [2023 Updated]

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Written By Tabrez Ahemad

As a novice to cryptocurrency, selecting the best cryptocurrency trading platform is daunting. 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 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 that you need to look out for.  Let us check the criteria for selecting the best crypto exchange.

Several cryptocurrencies

Each exchange offers a different list of cryptocurrencies. For example, some new platforms may feature only ten, while a renowned discussion may provide hundreds. As an amateur, your instinct would be to go for a safer and more 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. The chances of you encountering fraudulent exchanges must be addressed. It is advisable to go for the one which has its reputation intact. If you 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 government intervention, some might find it appalling. As hacking crypto exchanges is a potential threat, compromising the users’ data and financial security is a serious problem. Therefore, security features are also one the critical features to evaluate. Further, features like two-way authentication, encryption, and offline storage to protect against theft and hacking are called cold storage. Unfortunately, only some exchanges 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 trading fees and potential commission fees on a reliable trading platform. Some businesses 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 deals are ever-increasing their geographical sphere of influence. You must be aware of regulations in the country where you reside.

You may sign up for a cryptocurrency trading platform that eventually becomes 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, keeping updated with the latest buzz regarding your exchange is in your best interest.

Selection based on Volume

The number of people utilizing a trading platform at any given moment and the quantity of each item 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 of various businesses, noting the Volume of each asset in the order book and the difference in the price levels.

Trading options

You may need your bank account to buy cryptos from your exchange account. Some exchanges also allow using a debit or credit card to purchase cryptos. In addition, some businesses 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 in the same business is quite convenient. It is good to have an external cold wallet if you hold 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, the Federal Deposit Insurance Corporation does not insure your assets, as they are in typical bank accounts (FDIC). Your money will only be returned if the crypto platform succeeds.

Mobile Application

Although cryptocurrency is the way toward the future, only some platforms are 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.

Availability of Customer Service

The customer service offered by most crypto exchanges could be better. It is sometimes frustrating 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 stumble across an exchange with excellent service ratings, this significant 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 tricky if you are new to this crypto world. There are thousands to choose from, offering many features that can overwhelm you. However, the above tips can help you choose an exchange that best suits your needs. 

While these are essential concepts, the ideal approach is to start by understanding 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.

Read also: Is PI Cryptocurrency Legit? Know Here

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