Key Factors to Consider When Selecting a Crypto Exchange
Ready to explore the world of cryptocurrency trading? But where do you even start? If you want to make sure you are taking the proper steps, you must consider the most important factors when choosing an exchange. At BestBitcoinexchange.io, you can get firsthand information on cryptocurrency exchanges best suited for your needs.
Essential factors to consider before joining one include.
- The Fees
- The Verification Requirements
- The Security
- The Verification Times
- The Exchange Volume
- Available cryptocurrencies
The Fees
When choosing a cryptocurrency exchange, one of the first things you should look at is the fees. Find out how much fees you will have to pay for all types of transactions on that particular exchange. If you are a beginner trader with a very low trading volume, it might be worth going for a relatively lower fee exchange. However, as your trading experience grows and your trading volume increases, you might end up wanting an additional edge by going for a more expensive transaction fee with better cryptocurrencies exchanges. Nathan Reiff of Investopedia stated that in some cases, cryptocurrency traders could incur maker and trader fees if the limit order is already present in the order book.
The Verification Requirements
Just like banks and other financial institutions, some exchanges require your identity to be verified before you can start trading. This is done to combat criminal activities such as money laundering and terrorism financing. Other cryptocurrency exchanges will allow you to trade anonymously and only require authentication for the withdrawal of funds. If you want a more secure trading platform, you should pick an exchange that offers high user account protection.
The Security
Just as you would expect from a cryptocurrency exchange, the security of exchange is vital. This also holds for a payment method. So just as you would check the security of your wallet before sending your cryptocurrency, it is also good to check the security of your exchange before making your first trade. It is also essential to consider how secure the information on this exchange will be after an attack. Some exchanges which have been hacked have been known to hold the majority of their keys on a third-party server. This is a risk you should not take if you want to ensure maximum security of your digital assets.
Freelancer stated that they now protect their users from any unauthorized withdrawal transactions. They have now implemented two-factor authentication (2FA) for all withdrawal requests and set up a security phone number.
The Verification Times
Not only should security be a top priority, but so should the speed of the verification process. Some exchanges do not even bother with verification and still provide an amazing trading experience. They conduct KYC (Know Your Client) and AML (Anti-Money Laundering Processes) before giving you access to your account. The time it takes to complete the verification process is vital for consideration. Some exchanges have KYC processes that are very lengthy and may even take weeks. If you are in a hurry to start trading cryptocurrencies, you should consider using one of these exchanges.
The Exchange Volume
Although you may be a crypto enthusiast, it doesn’t mean that you have all the time in the world to do your research. Knowing which cryptocurrency exchanges have high trade volumes will make your life easier if this is the case. There are many reasons why you should consider using a high exchange volume exchange. For one, they are often more trusted by users and also have more resources to help secure your digital assets. In addition, by using a high volume exchange, you will also benefit from freebies and bonuses, which are often available to traders who use high volume exchanges.
Luke Conway of Investopedia stated that while many cryptos have little to no following or trading volume, some enjoy immense popularity among dedicated communities of backers and investors.
Available cryptocurrencies
Before making your decision, it is highly recommended that you do a lot of research and read through the wiki pages of the most popular cryptocurrency exchanges available in the market. Here are some exchanges that offer a wide array of cryptocurrencies:
LocalBitcoins
LocalBitcoins allows users to buy or sell bitcoins in their locality, resulting in lower fees and faster transaction times with better security.
Coinbase
Coinbase allows users to purchase bitcoin using a bank account or debit card. They also have excellent customer service and can manage transactions without any issues.
Poloniex
Poloniex is one of the most well-established cryptocurrency exchanges out there. It has made headlines in the past by being hacked twice but continues to thrive with its high trading volume and excellent customer service into the future.
Final words
When you finally decide to choose a cryptocurrency exchange, you need to weigh up all the factors mentioned above. This includes security and verification times, fees, and how much financial backing they have to help protect your digital assets. This is an essential step before you invest in a cryptocurrency exchange. Although there are many variables to consider, you can safely reduce the list by eliminating exchanges that don’t have any of these characteristics.
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