Wherever you are in your cryptocurrency journey — from beginner to expert level, it is almost certain that you will need a Crypto exchange service. Picking the right crypto exchange could play an important role in deciding your fate. This is especially true for newbies just learning the ropes.
What are Crypto exchanges anyway? Crypto exchanges put simply, help match buyers with sellers and vice-versa to transact crypto assets. Crypto exchanges are the stock exchanges of the crypto world. Whether traders, investors, hodlers, or regular users, many use Crypto exchanges to participate in transactions.
The consequences of picking the wrong exchange are numerous ranging from being unable to exchange your tokens to the most extreme scenario of losing all your assets.
In the next few paragraphs, we will guide you on the most important factors and features to look out for when picking the best Crypto exchange to ensure you never lose your funds. To be clear, exchanges, even the great ones have several differing features (like fee structure, payment method, etc.) but in this guide, we will only isolate the most important features that could do the biggest damage to your crypto earnings.
Please note that this guide is best used as a guide to help you ask the right questions and verify the genuineness of any exchange you choose now or in the future.
6 Factors that make all the difference when choosing the right crypto exchange for you
1. Security: It’s a no-brainer that every exchange should take its security seriously. Aside from basic security such as KYC (Know your customer), 2FA (2-factor Authentication), etc., Exchanges today integrate a wide range of sophisticated security measures and continue to update these features. Unfortunately, hackers are getting better at their game too and even top exchanges have been susceptible to attacks in the past that have resulted in losses running into tens of millions of dollars. Any exchange can fall victim to an attack but how it rises from it speaks volumes on how it values its user’s security. For while exchanges with ironclad insurance funds bounce back easily exchanges like Bitgrail and Altsbit have been forced to stop operation. Our advice- Before picking a crypto exchange always check with the customer support or on available documents of the company to see what security the exchange offers its users.
2. Geographical Restriction: Crypto exchanges have operational guidelines it must heed depending on the countries it operates. Always check to confirm that your chosen exchange is not restricted in your country. Some bypass these restrictions using a VPN but unless you live in North Korea, we do not recommend doing this except in extreme situations. For example, if you need to buy or sell an unpopular token that is not yet available on any of your geographically supported exchanges.
3. User Interface: Choosing a crypto exchange with an intuitive, user-friendly, and responsive design should be prioritized. As a beginner, always go for exchanges with a great look and feel. This will help shorten your learning curve. You will also ask fewer questions while finding your way around the platform. Depending on your need for exchanges, a proficient grasp of the basic features might suffice. But do not be afraid to learn new features too. It’s most likely just a YouTube video away.
4. History and Reputation: Some exchanges are known for all kinds of underhanded tricks. For example, some exchanges have developed a bad reputation for inflating trading volumes, pump and dump, and facilitating other scam investment platforms and Ponzi schemes. Stay away from these platforms. Finding out about an exchange’s checkered past is as easy as searching on the internet (Google, YouTube) to check out user reviews. You’ll be hard-pressed to find an exchange platform with a pristine record as some users are impossible to please. Many shortcomings can be forgiven but if a platform’s integrity is consistently questioned, it might be a source of serious concern.
5. Volume: Exchanges presents buyers and sellers a platform to trade crypto assets. A measurement of the trading activities on an exchange over a period is called the trading volume. A low trading volume will indicate a shortage of buyers/sellers on the platform, and this can negatively impact price. It’s generally best to trade on high-volume exchanges. But many unscrupulous fly-by-night exchanges inflate trading volumes so as mentioned on point 4 above, always do your research well before jumping in. The following platforms contain information about the trading volume in different exchanges and a token/coin’s market capitalization: Coingecko, Coinmarketcap, Onchainfx, Coinlib, etc.
6. Tokens Supported: Most crypto exchanges support popular coins like Bitcoins, Ethereum, and Litecoins but many new tokens might not be listed. If you have bought a token that is not listed yet on many exchanges, it is best to contact the customer support of the issuing company to find out the specific exchanges the tokens are listed. Many token issuing platforms typically have this information on their website and social media pages.
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