As cryptocurrency is dominating almost every conversation about the world economy, the number of investors in the crypto field are proliferating at an extensive rate.
The reasons being very obvious – Where on the one hand the crypto money has extended a hope to the international business community by offering immediate and hassle-free transactions of money on a budget, but on the other, the whole world seems to be apprehensive due to its use in illegal activities.
Till now when we heard about the word ‘Exchange’ the places where our mind transformed us were Stock Exchange like NASDAQ, NIFTY, SENSEX, DOW JONES, etc or Money Exchange like FOREX, Western Union Money Transfer and many more.
But where to go in case if one wants to buy or sell cryptocurrency of your choice like Bitcoin, Ethereum, Litecoin, etc. For this the Crypto Exchange have become a new sensation. Some of the Crypto Exchanges have reached a valuation of nearly 14 billion USD.
What One Should Look For Before Selecting A Trading Platform
So, one needs to take the services of a crypto exchange if he or she wants to convert one type of crypto coin to other, or convert it into fiat currency and vice-versa. But with a great deal of options available and a lot many mushrooming every day, to choose the best one becomes a tedious task.
So, let’s first check what all features a person needs to look for while selecting a platform to trade crypto coins:
High Level Security
The first and foremost quality that any exchange must offer its users is the security. The history of crypto exchanges has already given us a lot to be more vigilant in regard to this feature. Do not forget to check the customers feedback and cybersecurity measures for the concerned exchange. Recently, it was reported that hackers stole nearly 600 million USD from a Blockchain network. Some of other big names in Crypto Exchanges have been hacked in the past as well.
User Friendly
The exchange should have a user-friendly interface. It should rather have some kind of tutorials for freshers so that everyone can operate it easily. As per the conventional mind, people generally think that crypto world is the hub for technocrats only. But it is not so, it is investors hub. So, if the exchange offers a user-oriented software, it can be easily operated by investors with basic computer skills.
Low Transaction Fee
Now this is the most noteworthy area as the transaction fee is different for different exchanges. Though it also depends on the quantum of trade but if this parameter is not taken care of, it may cost you a fortune. If you are a frequent trader, then exorbitant transaction fee will make its presence visible on your gains. Also ensure that the cutbacks are not served at the cost of services.
Variety of Cryptocurrency
The exchange that you are choosing should facilitate the transaction of different types of cryptocurrencies by presenting an assortment of crypto coins ruling the markets. If you feel that the choices provided are not enough, then look for other alternatives.
For example, the Coinbase Exchange may be one of the best options if you desire to trade in Bitcoin or Ethereum, but if your choice of trade is Dogecoin, then you would have to look for another platform.
Payment Options
The exchange under consideration should be open to various types of fiat currencies and payment gateways like debit card, credit card, etc. The users should have the liberty to buy using the fiat currency of their preference.
Nature of Exchange: Centralized or Decentralized
The Crypto Exchange can be chosen according to one’s own requirements. They could be anyone of the following types:
Centralized Exchanges (CEX)
These crypto exchanges are the ones where investors are required to submit their KYC details making it more or less like a brokerage firm which act as an intermediary between the buyer and the seller. They have generally high liquidity owing to high volume of trade. These exchanges also provide some insurance to its investors in case of system breakdown.
This kind of exchange can also be an easy prey to the malicious activities. Binance, Coinbase and Gemini are some of the trending Centralized Exchanges today. As per a report Binance, Crypto.com and Coinbase were hacked in the past by hackers and are subject of enquiries by regulators of Italy, U.K., Japan and Germany.
In India also, recently a number of Crypto exchanges faced a penalty from the Tax authorities for evasion of taxes.
Decentralized Exchanges (DEX)
Decentralized exchanges are in sync with the essence of cryptocurrency which themselves are decentralized. It is more or less like a crypto market which helps investors to indulge in peer to peer trade.
In this type of exchange, the investors remain anonymous and therefore are on the lower side in terms of volume. But the brighter side to this type is that it cannot be attacked by hackers easily. Examples of Decentralized Exchange are Uniswap, Pancake Swap, Tokenlon.
Hybrid Exchanges
Hybrid exchanges are the latest in the series and offer the investors the privileges of both – the centralized and the decentralized exchange. It is a blend of long-established and contemporary world. The expenses incurred in transactions are comparatively high with little scope for scalability. Nash and Legolas are the popular hybrid exchanges.
Provision of Wallet
Wallets are like your digital lockers where you can keep your digital currency. It can be operated with a combination of public and private key only. It helps to secure your digital assets from possible hacks. The wallets offered by Exchanges are often ‘Web- hosted wallets’. So before selecting your platform for trading in crypto coins, look up for the provision of wallet facility.
Security Amount
Most of the times, the investors are required to deposit a security amount with the exchange to keep a window for the losses. Though a bigger security amount may pinch in the beginning yet in the longer run, it could be an assurance as crypto economy is highly volatile in nature. Due to high level of speculation involved in the crypto trade, an investor can incur considerable amount of profit or loss in a short span of time.
Customer Care Support
If the exchange you want to trade with is backed with customer care service center, then it can be really helpful to understand the new additions in the field. Moreover, they are always informative and supportive to the amateur traders of cryptocurrency.
Authentic
Apart from all the above-mentioned points, a crypto exchange should be a legit one as fraudulent activity in this field are shooting up rapidly. Investors are often duped by duplicate agencies which name themselves like the recognized names. So, checking the credentials of the exchange, the name, spellings are a must.
Whatever Exchange you choose may not come with the best of everything, but make your choice according to your needs and the cryptocurrency you want to trade in. Security and functionality of the exchange should always remain on top of an investor’s list.
