If you decide that you want to buy come crypto, you will not be able to do so by contacting a bank or an investing firm. Instead, you will have to get crypto from a crypto broker or exchange. While crypto brokers are middlemen between you and a crypto exchange, what exactly is the latter?
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So what is a crypto exchange?
In essence, it is very similar to brokerage. Still, to avoid wasting time explaining the difference between the two, you can check out our crypto broker vs. exchange text for more information. A crypto exchange platform is a marketplace where users can buy, sell, or trade cryptocurrency with each other.
Each transaction does have a small fee, which is what makes it similar to a brokerage, except that the fees are significantly smaller. There is also an additional fee if you want to trade cryptocurrency with another user with different cryptocurrencies. It works like it would if you change USD for Euro in a bank.
What should you look for in a crypto exchange?
Finding out the best crypto exchange depends on what you plan to use it. Different platforms are better if you are planning to buy and sell, different ones if you are planning to trade, and then there are also options such as crypto staking or margin trading. While we will list some of the best platforms later, here’s a quick overview of things you should look at in a crypto exchange.
1. Security
One of the essential things when any currency is involved, is security, as you do not want your account to be hacked and your crypto was stolen. It is important to know that a central institution of any kind does not back up cryptocurrency. That means that it is not the same as having money in the bank or investing the traditional way.
To protect your crypto, certain exchanges have insurance policies that protect their users from hacking or fraud up to a certain amount. Coinbase is a good example, as their insurance policy is worth $250,000,000. So if your account is hacked for anything under that amount, your money would eventually be returned.
2. Fees
Since not all crypto exchange platforms have the same fee, the fees can play a big part in your decision-making, depending on what kind of transactions you will make. Make sure to check out what sort of fees apply to the cryptocurrency you are interested in, especially if you are planning to invest in crypto to play crypto games, as some crypto exchanges can have a high fee on those.
3. Accessibility
Even if we live in the 21st century, and everything is digitalized and modernized, specific locations still have a lot of limitations, especially when it comes to crypto exchanges. This can be either due to the crypto exchange itself or, more commonly, due to regulations in your country. China, for example, has banned all access to crypto for its citizens.
4. Liquidity
Having a platform where you can easily buy or sell whenever you want is very important, especially if you plan to do it with a lot of volume. Platforms that trade in a lot of volume are popular for a reason, and that is because the more traffic there is, the higher the chance you will sell your crypto at the best price. This is more important in crypto than in fiat currencies because crypto prices can quickly locomote.
5. Coins offered
Not all platforms have all coins available to purchase or trade on their platform. The popular coins can be accessed with ease in most cases, while newer ones are not available everywhere. This can play an essential role as getting in on new mooning crypto can be a huge and worthy investment.
On the other hand, it can also be the most significant risk you can take, so some more prominent platforms avoid it since it is not a good experience for their users.
What are the best crypto exchange platforms?
While we have listed the things you might want to look out for when looking for a platform, we will list some of the most popular ones that you might want to check out before others. Each of these platforms has its ups and downs, so if you see something you dislike on one, you might not find it on another one, but there will be another downside instead.
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1. Coinbase and Coinbase Pro
While Coinbase on its own is more of a crypto broker, when you get the Coinbase Pro, it will give you a crypto exchange experience. Coinbase Pro is one of the most popular ways to get crypto, whether you are an experienced crypto trader or a complete beginner. It has a nice variety of cryptocurrencies, and it is effortless to use due to its simplified interface. Liquidity on this platform is incredibly high due to its considerable traffic, which is why we like this platform.
2. Cash App
If you are a beginner, then Cash App is the best peer-to-peer platform out there. Thanks to its interface, you can easily withdraw Bitcoin, and you can even invest in stocks. You might have guessed due to the platform’s name already, but this crypto exchange also has a mobile app. That can be pretty convenient if you want to trade crypto on the go.
3. Binance
We know this is technically a broker platform, but it can be easily seen from a crypto exchange perspective because fees are meager. You will only be charged 0.1% per transaction, which is lower than most exchange platforms out there. Other than that, there are all kinds of coins that you can acquire on this platform, and you can sell them with ease too. Feel free to check out our Binance review if you wish to learn more about this fantastic platform.
Do the research!
One piece of advice we would like to give you before you use a crypto exchange is to acquire the proper education on crypto if you do not already have one. Making a mistake can be easy if you do not know certain things about crypto, and those mistakes can cost you a hefty sum.
