It is undeniable that cryptocurrency has grown to be a huge drive of investment in recent times. With thousands of already existing cryptos and numerous ones popping up every other day, the size of this industry can be intimidating. As the craze for it grows and spreads, investors will have to make many decisions – where to invest, how to keep your digital assets secure, and how to trade cryptocurrencies. The last question is alas, a significant one.
In this article, we will brief you on the factors you should consider before choosing a cryptocurrency exchange, even if you are experienced in this field. After all, it is a form of trade too, and it has its nuances.
Credibility and Reliability
A lot of people tend to get skeptical of cryptocurrencies and any other business related to these digital currencies. This is because of the occasional fraudulent activities that take place in the industry. So, it is highly essential that you do the necessary research before you invest or trade in any platform. Make sure that you look into the exchange’s security protocol.
Most platforms take a lot of necessary safety precautions that help them to keep your personal and financial details secure and protect your investments from any kind of theft. Some important features you should look for while choosing an exchange platform are encryption, two-factor authentication, and cold storage.
Research Extensively
The more you research about both the business and the platform, the better. Learn a lot about how these exchanges work, how volatile they are, and the techniques of investing in the right crypto. Talk with specialists and get advice before you jump into this business. Go for an exchange with the utmost safety. It is advised that you maintain a higher percentage of your digital assets in offline storage, like a cold wallet.
It is also highly crucial to do your exploration about the platform in which you are going to trade. Transparency is the key when it involves businesses, so make sure to acquire whatever contact details you can get about the exchange platform.
Selection of Crypto
Depending on the platform you are choosing, there will be a variety of cryptocurrencies with which you can trade. This means that it is for the better if you go for an exchange with a large selection of cryptos so that you can research the lesser-known ones and invest in them wisely. Instead of always trading with popular currencies, learn more about other currencies with more potential and invest in them.
A better strategy is to balance your funds by investing a fixed amount on “stable coins” – the ones which are backed up by currencies like USD. This will let you explore other cryptos while having stable funding. You can go url and learn further about opting for the right cryptocurrency.
Procedure of Purchase
Let’s say that you are joining a cryptocurrency exchange platform without any cryptocurrency. Then, it’s essential that you make sure that the platform accepts fiat currency. There are some exchanges that use only cryptocurrencies for purchases, so beware of this fact. This way, you can purchase cryptos inside the platform.
Some exchanges demand bank transfers, while others go for alternatives like PayPal, credit cards, and debit cards. Another detail to notice is the time the platform takes for processing a payment. Some platforms are quick with their process while others take days and weeks.
Types of Exchanges
There are three main types of exchanges that enable cryptocurrency exchange. They are – trading platforms, P2P, and brokers.
Trading platforms are the most common type of exchange. One good example is Binance. These are marketplaces where users buy and sell purchase orders for cryptos. There is an additional fee for each transaction the user makes. In this type, the user can only interact with the platform.
P2P (Peer-to-Peer) are exchanges that connect investors and sellers directly. They rely on both of the parties to agree on any transactions. Dealing on a P2P basis might help you to eliminate any difficulties that might arise in traditional platforms. This type of exchange assists in reducing network congestion and building a secure system for the exchange of cryptocurrencies.
Cryptocurrency brokers function just like foreign exchange brokers. They set a particular price and the investors can buy the cryptocurrencies from the exchange platform.
Transaction Fee
All exchange platforms cost you a certain transaction fee. The fee structure varies from one platform to another, and this is a crucial factor to consider while choosing a cryptocurrency exchange platform. When an exchange’s own token is used for a transaction, the platform might offer you discounts for the fees. Some exchanges cost you a fee only for a transaction while some others charge for purchasing cryptos too.
User Interface
For any investor, let them be new or experienced, the user interface of the platform being easy to navigate is an important aspect. When the functionalities are uncomplicated to navigate through, you gain confidence in using the platform. A good user experience can be the selling point for many people.
Statistically, the exchanges with the best user experiences will see the greatest growth in transaction volume. This is because an exchange’s value is largely tied to the number of users that use the exchange; so, the better the user interaction, the more the exchange will profit and grow.
Stay Connected
Even though digital currencies are on the rise, not all platforms are up to date with their technology. Make sure that in whichever platform you invest, they have an app via which you can keep an eye on your holdings. A simple and effectively built mobile app will help you to maintain your transactions and trade without having to visit the platform’s website every time you need to look up something.
Conclusion
When you are choosing an exchange platform, consider all these factors and weigh them out. There are hundreds of platforms out there, eager to attract users. Every exchange is different on its own, so do your best research and invest in an exchange that will be the safest and the most rewarding for you in the long run.