Crypto industry. How to decide which exchange to choose for cryptocurrency trading?
Nowadays the number of presented cryptocurrency platforms is still increasing, despite the fact that some of them become bankrupt. The digital asset market has more than 300 trading platforms and exchanges where coins can be bought, sold and exchanged. There are no guaranteed rules to suit any user, so professional traders and investors choose the proper platforms for them in respect of certain parameters.
A crypto exchange is a specialized platform offering various tools for online digital assets trading, storage and exchange. You can use both digital and fiat money within the platform, depending on the transaction format. It is also possible to earn money by trading and taking profit from the exchange rate differences. Popular websites such as Coinmarketcap and Coingecko provide you with the crypto exchanges rating. We also want to present you a list of criteria to choose the best platform.
1. Decide on the main goal.
Before starting to choose a cryptocurrency exchange, the professionals recommend that one should answer the following question: “What is your purpose of searching a platform?” For the purpose of trading, it is better to choose an exchange that allows margin trading, where you can profit from digital asset rates correction as well as buy and store cryptocurrency.
First of all, you need to know the difference between centralized and decentralized exchanges. A centralized platform is managed by an organization or a certain individual, whose purpose is profit-making. The scheme is designed in such a way that those, managing the system, trace all transactions, have responsibility to retain the user data, and control the exchange continuity.
A decentralized exchange is based on blockchain technology that does not require the data storage on its own servers. All data is written and stored on a blockchain. This platform is aimed at matching requests for purchase and sale of digital assets, combining them into transactions. The transaction participants trade on the exchange between them without intermediaries.
Returning to the goal of margin trading, you can use forex brokers services. Essentially, it is the third party, connecting the trading platform and the client. A forex broker is a type of financial platform that allows its client to enter the cryptocurrency market for trading.
Forex brokers enable trading on CFD contracts. Such a contract allows a seller to make a profit from a transaction with negative closing price of a financial asset and enables a buyer to profit when the closing price is positive. CFD is a contract for difference. Working with a forex broker has such benefits as: deposit in fiat money and protection from hacking. The disadvantages include high spreads.
2. An exchange’s image and reputation
The easiest way to get a full information on an exchange is to read it on the website, which contains the user registration terms, withdrawal conditions and many other necessary tools. Experienced specialists suggest seeing traders and investors reviews about the platform. You can find them on such popular and independent forums as BitcoinTalk and Reddit.
It is important to understand that reliable information can be mixed. Therefore, it’s no good to make conclusions from ratings or a quantity of positive comments. It’s worth addressing the content of comments. Sometimes a negative review can be written after unsuccessful trade and loss of money on a deal that is directly related to the exchange rate but not to the exchange itself. It is also recommended to check whether there is evidence of fraud or hackers ‘attacks on the crypto exchange.
On the forums you can learn about the speed of the platform’s response to an error or problem and understand how controversial points are resolved. There are a lot of examples when minor issues are being solved in weeks on some exchanges. At the same time there are crypto platforms that deal with issues of any difficulty within the hourly time frame.
3. Learn about commissions, terms and conditions of funds deposit/withdrawal and fiat currencies support
If you are just a beginner in working with cryptocurrencies, you should give preference to large platforms. First, check whether there is an option on the exchange to replenish your account with fiat money. Pay special attention to the interface: it should be intuitive and accessible so that even novice PC users could work with it. This will allow to simplify transactions, account opening and other operations. If the exchange accepts fiat currency, you can avoid additional transactions through cryptocurrency exchanges.
Each platform has its own terms and conditions. Before the account replenishment, it is necessary for you to carefully read about commissions for depositing and withdrawing funds. Some exchanges charge a commission of 10%, which can significantly affect the final profitability.
4. Find out how many currency pairs are available for trading.
It is considered that the number of crypto trading pairs determines the range of opportunities the exchange has for earnings and investment. This applies to coins with high trading activity, but in fact some digital assets eventually lose that quality, in professional terms it is called a “scam”. That’s why it is important to choose platforms with a high daily trading volume.
The volume of trade is determined by the number of transactions over a certain period. This demonstrates both the activity and attractive terms of a trading platform, and the interest in the coins among market participants. If a digital asset is traded in small volumes, it shows its low profit potentials and perspectives.
5. Carefully study the platform security requirements
Evaluation of the platform security for future work begins with the study of registration terms and conditions. One of the most important steps is the KYC (Know Your Client) procedure, that allows the platform to identify the user, excluding bots or fraudsters from entering the site. KYC validation can vary on different exchanges, depending on internal network settings. For example, many foreign identifiers request additional statements from the bank indicating the residential address or receipts of payment. Even though all this is indicated on the pages of the passport. By the way, passport data is a prerequisite for providing data. Do not ignore two-factor authentication on the platform, because this option can help you to avoid the leakage of funds.
You should understand that despite the best efforts of platforms to protect users, there is no 100% guarantee. The reason is that hacker attacks happen all the time, their number is only increasing. These risks should be assessed when working with cryptocurrency.
According to the specialists, nowadays there are several large platforms, that show sustainable trade level, have high ratings and positive reviews and reliability that is evidenced by a long period of their existence: these are Binance, Bittrex, Kraken. The following leaders include Bitmex, Kucoin, Huobi.
The choice of an exchange to deal with cryptocurrency should be made seriously. It can be compared to the choice of a car or real estate. Several factors should be evaluated in a long-term perspective. It is important to find a convenient platform, where you don’t have to spend your time studying the website, its options and complex sequencing. All operations must ideally be fulfilled in a few clicks. You also need to see the security system advantages that help you to save assets and protect against the loss of funds from a crypto wallet. Pay special attention to an appropriate work speed and a sufficient number of users on the platform in order not to waste time waiting for transactions. It is possible to try different variants when making small ordinary transactions before the final choice of the platform. All these actions are important to further equity increase.
6. Secure cryptocurrency storage and transfers worldwide
Crypto exchange is an excellent tool for trading cryptocurrency. But what is the best place to save your earnings? Can you have trust in crypto exchange? Unfortunately, there are a lot of stories, when popular crypto exchanges have been hacked and large sums have been stolen from the clients’ wallets. So, the safest place to store crypto currency is ABApay wallet (https://abapay.eu). This service provides favorable cryptocurrency exchange and safe money transfers around the world. ABApay offers a personal manager and the ability to manage your finances from anywhere in the world. Take care of your money and choose reliable and trusted partners. ABApay absolutely applies to those.