Since the inception of cryptocurrencies, trading activities have been made easier. The likes of Bitcoin, Binance coin, Dogecoin, Ethereum, and other prominent cryptocurrencies are gained and traded through blockchain networks with the aid of crypto exchanges.
A cryptocurrency exchange is simply a medium where you can buy and sell cryptocurrencies. The cryptocurrency markets are open and deconcentrated. They are not issued or backed by a central authority such as a government. Instead, they run across a network of computers.
However, cryptocurrencies can be bought and sold via exchanges and stored in wallets. These exchanges can send cryptocurrency to a user’s cryptocurrency wallet. Some other exchanges have the feature to convert certain crypto into another crypto. Another great feature is the ability to convert crypto assets into fiat currencies which can be used to withdraw funds from ATMs worldwide.
Key Factors to Consider Before Selecting a Crypto Exchange
Currently, several exchanges exist. Some of them are available on Google Playstore, Apple store, or even web apps. One must consider the following factors before deciding to put in dollars for trading purposes.
- Security: Crypto assets are highly targeted by fraudsters and hackers thus an exchange must be highly valued. Some crypto exchanges have insurance policies to protect the digital currencies users hold within the exchange from hacking or fraud.
- Fees: Each platform has its method of deducting its fee. Some exchanges charge in certain percentages while others have a fixed amount that must be paid on deposits and withdrawals.
- Reputation: In selecting an exchange, reviews play a major part. They tell the story about users’ experiences. Good reviews mean the exchange is good. Bad reviews can be a good sign not to engage in carrying out transactions on such platforms.
- Liquidity and volume: High liquidity and high volume should be looked out for by any trader when choosing an exchange. High liquidity means it can be sold at a fair market price easily and with no significant impact on pricing. High volumes mean that the crypto is being traded frequently. On the other hand, low volumes are traded infrequently and any trading is likely to result in large price fluctuations, up or down.
- Options available for payment and withdrawal: There are different ways through which deposits can be made. It can be done directly from credit cards or through third-party platforms such as PayPal, Skrill, Neteller, Paybis, etc.
The Current Best Cryptocurrency Exchanges
One would need a cryptocurrency exchange to buy and sell these digital currencies to enjoy the benefits of the crypto world. No one cryptocurrency exchange is best for every user; it is all dependent on one’s ability to adapt to the features on such a platform.
CoinMarketCap, a trusted and top-rated price-tracking site for all cryptocurrencies monitors and rates exchanges in order of their functionality, use, acceptance, and values. To ensure the credibility and accuracy of this article, the top 5 would be examined.
Binance initially launched in China, founded in the year 2017, and continues to expand its services globally. Its success is mainly due to its constant innovations, reduced transaction costs, and reliability. The exchange offers easy-to-use features for newbies as well as complex trading tools for professional traders. It has a low cost for spot and general trading, a wide range of cryptocurrencies available for trading, and a high cybersecurity ranking and user review. Binance charges a fee of 0.015% to 0.10% purchase and trading fees, 3.5% or $10 whichever is higher for debit card purchases, or $15 per U.S. wire transfer.
There are over 500 global traders on Binance. It is currently the largest cryptocurrency exchange in the world today in terms of the trading volume of cryptocurrencies. Its quarterly trading volume is equivalent to $180 billion. Despite being the world’s most popular cryptocurrency exchange, it has its flaws.
Coinbase was launched in 2012 by an organization based in the United States. Coinbase was the top crypto exchange by trading volume in March 2021, but Binance has since taken the lead. It is covered by a $255 million insurance policy. Account-holders would be covered if Coinbase’s reserves were stolen. It also has a trading volume of approximately $5 billion.
It provides a user-friendly platform that includes basic transactions, a digital wallet, and PayPal withdrawals. It also charges 0.50 percent each trade, 3.99 percent for credit card purchases, 1.49 percent for Coinbase wallet or bank account purchases, and $10 for deposit and $25 for withdrawal via wire transfers.
FTX is a cryptocurrency exchange platform established in the Bahamas that allows digital traders to exchange cryptocurrencies. FTX is headquartered in The Bahamas and was founded in Antigua and Barbuda.
The exchange has over one million members and a daily trading volume of $10 billion as of July 2021. Over 257 coins are available on FTX.
Lower transaction fees are one of FTX’s primary advantages. Fees for both makers and takers begin at 0.10 percent and 0.40 percent, respectively. Those that are filled right away are charged taker fees, whereas orders that aren’t filled right away are charged maker fees.
Kraken is one of the oldest U.S. crypto exchanges, founded in the Paleolithic era of crypto (2011), Kraken offers a solid range of coins with low fees. It has sophisticated trading features, like margin, which may appeal to advanced users and has a high cybersecurity rating; however, it may be too complex for true beginner users.
Today, this crypto exchange has carved out a reputation for being one of the platforms with the best security, advanced trading tools, and a good mix of coins to choose from.
Kraken fee is 0% to 0.26% per trade, 3.75% + €0.25 for credit card purchases, and 0.5% plus 0.9% or 1.5% for ACH purchase. Kraken supports 93 cryptocurrencies; it allows a maximum deposit and withdrawal of $100,000 daily.
In September 2017, the Seychelles-based KuCoin Exchange was established for crypto trading. KuCoin is a cryptocurrency exchange that allows customers to execute secure and efficient digital asset trades. KuCoin intends to serve its more than five million registered customers in over 100 countries with long-term, growing value over time.
On September 25, 2020, KuCoin’s exchange was hacked, and hackers stole $275-$285 million worth of users’ digital assets. In response, KuCoin worked with blockchain data firms, other crypto exchanges, and law enforcement agencies, and was able to retrieve the majority of the funds and refund the rest of its users using its insurance fund. It accepts almost 200 different cryptocurrencies.
KuCoin offers exceptionally low costs of 0.1 percent, with a 20% reduction if one pays with KCS. KuCoin has some of the lowest trading fees on the market.
It’s not just about buying cryptocurrencies but also finding the best cryptocurrency exchange that suits your interest and adaptability. That being said, the cryptocurrency exchange that offers more deposit options, lower fees when buying crypto, the ability to withdraw fiat, and the security of your investment should be taken into serious consideration.