How to choose the right Cryptocurrency exchange ? What factors should one consider while choosing an exchange ?

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By Degen Lipsa

The availability of cryptocurrency exchanges to users has skyrocketed as a result of the increase of cryptocurrencies. It can be a daunting task to choose the best exchange with so many choices available. The correct cryptocurrency exchange you choose, though, will be essential to your success as a trader or investor.

What is a Cryptocurrency exchange ?

A cryptocurrency exchange, also known as a digital currency exchange (DCE), is a company that enables customers to swap cryptocurrencies or other digital currencies for traditional fiat currency or other assets. Credit card payments, wire transfers, and other forms of payment may be accepted by exchanges in return for digital currencies or cryptocurrencies. A cryptocurrency exchange can function as a matching platform that only charges fees or as a market maker that usually uses the bid-ask spreads as a transaction commission.

What are the Factors to consider while choosing an exchange ?

Below, we’ll examine the factors to take into consideration when selecting a cryptocurrency exchange and walk you through the process of selecting the best exchange for your requirements.

1. Supported coins :

Different exchanges support different cryptocurrencies. It is essential to choose an exchange that supports the coins you want to trade or invest in. Some exchanges offer a wide range of cryptocurrencies, while others specialize in a few. Learn about the cryptocurrency pairs your exchange offers.

2. Security :

Security should be the utmost priority while choosing a cryptocurrency exchange. Since cryptocurrency is not regulated, it is crucial to select a reputable exchange that provides top-notch security features. The exchange should offer two-factor authentication, SSL encryption, cold storage for funds, and regular security audits.

It is essential to investigate and do your own research about the exchange’s history to find out if it has suffered any hacks or security breaches in the past. Look for exchanges that have never been hacked or have taken swift action to rectify any security breaches. Find the physical address associated with the exchange. Do not use exchange if the address is not available. There are many reasons for that. Transparency is often a sign of legitimacy. 

Also, The more challenging a specific exchange makes it to register for an account, the better. If creating an account is excessively simple, the trade might not be very reliable.

3. Reputation :

The reputation of an exchange is an crucial factor to consider while choosing a cryptocurrency exchange. Look for exchanges with a positive reputation and a track record of satisfied customers. Check online reviews and social media to see what others are saying about the exchange and choose accordingly.

4. Fees :

Now that you’ve found an exchange with excellent reputation, unquestionable security and also supports the coins you want to invest on, it is crucial to think about their fees. Fees are frequently assessed by exchanges for trades, payments, and withdrawals. To locate an exchange that fits your budget, it is critical to compare the costs imposed by various exchanges.

Most crypto exchanges will include some type of fee for your transactions; these can be based on the size of the transaction, or they may be dependent upon your level of activity, or, in some cases, they may be unrelated to either of those factors.

Study the fees and take into account how they would affect your buying based on your investing style: Do you intend to be very busy and conduct business daily? If so, you might want to think about using an exchange with a reduced transaction fee. If you’re thinking about using ether for transactions, you should be conscious of the “gas” fees you’ll have to pay for different kinds of transactions.

5. Liquidity :

Liquidity is the measure of how easily you can buy or sell cryptocurrencies on an exchange. Higher liquidity means that there is a larger pool of buyers and sellers, making it easier to execute trades quickly and at a fair price. It is crucial to choose an exchange with high liquidity to avoid slippage, where the price of the asset changes during the time it takes to execute a trade.

Long thing short, Apart from the above stated factors ,You also have to Do Your Own Research ( DYOR) before choosing an appropriate exchange . Some of the best exchanges are Binance , CoinsBit , Kraken , CoinDcx etc.

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