Beginner’s Guide: How to pick the right Cryptocurrency Exchange

A cryptocurrency exchange is your entry into the cryptoverse. Through it, you get to conclude all the buying and selling transactions in digital currencies that you’d wish to. Their centrality to digital asset trading underscores the significance of their careful selection.

Three key questions should guide you when shopping for an exchange. First, what kinds of deals do the market offer? Second, which features make an excellent cryptocurrency exchange? And finally, which beginner-friendly exchanges should every novice consider adopting?

Today is your lucky day if you’re starting your exchange hunt and relating to these questions. This article will take you through the points to consider when choosing a crypto exchange. Furthermore, it will point you toward beginner-friendly exchanges that will help ease your entry into crypto trading.

Types of Cryptocurrency Exchanges 

There are many different types of exchanges. These include;

Trading Platforms Exchanges

Trading exchanges are the most common type of exchange. These are platforms that connect buyers and sellers for transactions. They charge fees for facilitating this interaction.

• Centralized exchanges (CEX)

Centralized exchanges employ a third party to guarantee trust for transactions taking place on them. Since they’re custodial, they fully control all the trades. Another key feature is that they emphasize compliance with KYC and AML requirements. Also, Every user adheres to the exchange’s procedures and mechanisms in executing trades. Besides crypto-to-crypto exchanges, they undertake fiat-to-crypto transactions or vice versa. Binance and Coinbase are examples of prominent centralized exchanges.

• Decentralized Exchanges (DEX) 

Unlike CEXs, a DEX dispenses off with the use of intermediaries. In their place, they use smart contracts to conclude exchanges. Moreover, as they are non-custodial, they afford their users total control of their funds.

Moreover, their permissionless nature discards conformity to strict KYC and AML regulations. Finally, again unlike CEXs, they predominantly offer crypto-to-crypto trades. Among the popular DEXs are Uniswap, SushiSwap, and dYdX.  

Direct Trading Exchanges

These exchanges are founded on a direct P2P model and facilitate crypto exchanges between individuals from different countries. The platforms don’t fix market prices. Instead, each trader sets their exchange rate. 

Atomic Swap Exchanges

Atomic swap exchanges, atomic cross-chain trading exchanges,  are smart contract-based platforms that enable traders to undertake different atomic swaps of cryptos. Like DEXs, they exclude intermediaries from trades.

Broker Exchanges

These are crypto exchanges where brokers set prices. They operate similarly to foreign exchange dealers.

Factors To Consider When Picking A Crypto Exchange

As the opening indicates, selecting a suitable exchange is the first step towards a fulfilling crypto trading adventure. Today any crypto trader has a wide selection of trading platforms. All of these have their strengths and flaws. Accordingly, their suitability varies with the individual. Getting the best out of exchanges calls for care in their selection. As you embark on the process, here are some key questions to guide you.

What’s the Exchange’s Reputation?

The exchange’s character should be a pivotal factor when selecting an exchange. To determine the exchange’s reputation, look at user reviews and reputable industry sites. 

Additionally, there are crypto centers fora you could get info. For instance, you could use Reddit, Quora, or even Google to search for information on the platform.

What Security Guarantees Does the Exchange Offer?

Security ranks high on every crypto trader’s wish list. You want assurances that you’ll trade safely on the platform. The rising cases of crypto theft and fraud have heightened this need.

To bolster their security, exchanges have adopted upgraded security features. For example, they employ cold storage, 2FA, end-to-end encryption, and email verification.

Customer Support

All customers desire fair treatment. Professional customer support makes you feel valued. It is responsive, knowledgeable, and empathetic. Such customer support assures you of timely and amicable resolution of any issues. The exchange you choose should guarantee you top-notch customer service.

Does it Geo-Restrict Services?

Some exchanges have geo-restricted access to functions and services. As a crypto trader, it is essential to establish if the exchange you’re drawn to offers complete access to services and products within your locale. 

Is the Platform Legit?

The cryptocurrency space is still in its infancy. Despite growing acceptance, many countries still hold restrictive views about them. Consequently, many crypto exchanges and trading functions lack legitimacy in many jurisdictions. 

It’s essential to ascertain an exchange’s legal standing in your country before signing up. This way, you’ll avoid running afoul of the law.

Transparency Level

How open is the exchange? Who’re its owners? What’s its location? What’s the team’s makeup? A transparent exchange inspires confidence that they are authentic. Additionally, they publish their cold storage addresses and the means of checking their reserves.  

Liquidity Level

The platform’s liquidity is another critical consideration you should make. Exchanges vary in their liquidity levels. Higher liquidity implies confidence in the platform. Besides, it streamlines cryptocurrency exchanges.   

Additionally, it’s crucial to establish whether the exchange offers “locked-in” pricing. This feature guarantees you the price at the time of your transaction, regardless of the settlement time. Finally, understand that liquidity can vary depending on trading pairs. While it may be high for BTC/EUR, it could go below for BTC/GBP. 

Affordability

Traders should look at how the transaction costs compare across exchanges. Usually, these are less than 1% of the transacted value. But, again, they could decrease with increased trading volumes.  

You should also check the withdrawal fees. On this score, some exchanges are dear. Furthermore, it’s vital to ascertain a platform’s deposit fees. Though debit and credit cards offer convenient means of purchasing cryptos, they charge up to 5% of the transactions or higher.

User Experience

Before settling on an exchange, interrogate the user’s experiences. For example, how satisfied would you be if you chose one platform over another? 

Look at such aspects as the levels of anonymity they’d guarantee you. Ask yourself how easy it is for you to navigate the interface. Is it available on multiple devices? Additionally, check for user feedback on the platform, particularly its pros and cons.  

10 Dependable and Beginner-friendly Crypto Exchanges at Your Disposal

By now, you must have a good grasp of a crypto exchange. You’re well versed in what to look for in one too. Let’s now shift our focus to some dependable and beginner-friendly platforms. Shall we?

• Binance

Binance boasts of being the largest crypto exchange by volume. 

Impressive ICO Listings

Its popularity stems from its impressive ICO listings. Also, it has an amiable CEO and levies low trading fees.

Easy Trading

Binance’s strength is in its comprehensive crypto offering. Moreover, it has an intuitive user interface that quickly switches between advanced and basic views.

KYC Requirements

Users needn’t verify their accounts before starting a cryptocurrency exchange. However, the platform caps withdrawals at 2 BTC daily. So you’ll have to pass their  KYC test to qualify for higher amounts. The test requires you to send them a picture of your ID and a selfie. 

• OKEx

OKEx is a multi-crypto exchange designed for professional traders. It’s one of the largest and most trusted exchanges available.

Fiat Trading

Apart from crypto-to-crypto trading, the platform supports fiat trading. It also hosts digital asset-based futures with diverse leverage choices. Users enjoy a wide variety of trading pairs. They can trade directly between crypto and fiat currency. OKEx is also developing a crypto-derivatives market by offering futures.

Multilevel Verification

The OKEx platform offers different verification levels. Each has its set of requirements and benefits.

Level One Verification: At this level, the user can access most parts of the OKEx site. It comes with a transaction limit of $2,000. After that, all you need is a username, an ID, and a confirmation of their nationality. 

Level Two Verification: Level two verification grants you access to all trading functions. Furthermore, you have a limit of $200,000. You’ll have to identify yourself and provide your photograph.

Level Three Verification: Your transaction limit grows to $500,000. Additionally, you require video verification of your identity. Check out our full review here.

• Coinbase

The largest digital asset platform globally serves more than 4 million active users. It’s present in over 33 countries. These figures explain why it’s one of the most trusted exchange platforms.

Hustle free Transactions

Traders can use multiple means to trade their BTC. For example, they may use their bank accounts, credit cards, and PayPal, among other payment methods. 

Traders will find Coinbase to be a beginner-friendly platform. On set up, the only other requirement is linking an existing bank account. After that, you’re good to go.

Multi-Currency Support

Coinbase supports many cryptos, including BTC, BCH, ETH, LTC, ETC, ZRX, and USDC. Unfortunately, it doesn’t support all countries. As such, you’ll need to check your country’s eligibility before signing up with them. Check out our full review here.

• KuCoin

KuCoin is a Singapore-based multi-cryptocurrency exchange platform. Theirs is a crypto-to-crypto service dealing with a wide selection of cryptocurrencies. 

Feature Rich

The platform is feature-rich. It prides itself on offering its customers a safe and straightforward user interface. One can access it via desktop or mobile through the KuCoin App that supports Android and ios. Further, it charges lower fees.

Profit-Sharing

The platform incentivizes holders of its native currency, KuCoin Shares (KCS), by discounting their trading fees. Additionally, the exchange adopts a profit-sharing mechanism. As a result, it distributes 50% of the daily trading fees to KCS holders.

• Bittrex

Bittrex is an established and highly regarded crypto trading platform headquartered in Seattle. Prominent in its features are its robust security and reliability. Moreover, it has a comprehensive coin offering; it holds about 300 cryptos and counting.

Next-Gen Trading

Bittrex fashions itself as the next-gen crypto trading platform. Its other salient features include fast deposits and withdrawals, reliable customer support, and fiat trading. That said, its user interface isn’t beginner-friendly.

• CoinMama

CoinMama is a  brokerage exchange allowing you to acquire cryptos using debit or credit cards. 

Faster Crypto Acquisition

One of CoinMama’s selling points is its beginner-friendly setup. In addition, it prides itself on being one of the fastest and easiest ways to buy Bitcoin or Ethereum, Litecoin, Cardano, QTUM, Ethereum Classic, and Bitcoin Cash Ripple XRP directly from your credit card.

Lower Fees

Coin mama charges low transaction fees. As compensation for this, it nevertheless places daily caps higher than Coinbase. For example, the daily cap is up to $5,000 coins, while the monthly figure is $20,000. In addition, account setup requires you to provide personal information.

• LocalBitcoins

LocalBitcoins is a P2P crypto exchange popular in most major cities worldwide. Its underlying thinking is that people can find others in their locality for in-person exchanges. 

Multiple Payments Avenues

Users can purchase cryptos through PayPal, Square, direct-to-bank transfers, besides other payment-processing methods. However, sellers applying their exchange rates incur a 1% fee per transaction.

Privacy Focussed Platform

The platform targets the privacy-conscious trader. You can purchase BTC in person without linking your ID to the exchange. To mitigate scams, all transactions have to go through an escrow process. After verification, the exchange concludes with them.

• CEX.io

Launched in 2013, CEX.io is one of the oldest and most popular cryptocurrency exchanges. Earlier, it served as a BTC exchange and cloud mining service. It, however, shut its mining services in 2015 to concentrate on the cryptocurrency exchange.

A Beginner-Friendly Platform

CEX.io’s easy-to-use interface makes it a popular choice for beginners. In addition, it operates a customizable multilevel account system that is every institutional trader’s favorite.

Multi Payments Support

Due to its affiliation with FINCEN, it carries out KYC and AML checks. In addition, it supports credit card purchases and wire transfers. European residents can use SEPA transfers.

• Kraken

Founded in 2011, Kraken has built a reputation for secure cryptocurrency trading. It finds favor in both individual traders and institutions. Again, it has international appeal and is the current leader in BTC-Euro trading volumes.

Support  for Major Fiat Currencies

Kraken allows deposits and withdrawals in CAD, EUR, JPY, and USD. Again, it employs Bank Transfers to conduct fiat currency payments. Users resident within the EU can use the SEPA payment system. 

• Bitpanda

Bitpanda is one of Europe’s popular exchanges. It specializes in crypto-fiat transactions. The exchange facilitates exchanges in Bitcoin, BCash, Dash, Ethereum, Litecoin, IOTA, Komodo, and Ripple Ethereum Classic to  US Dollars, Euros, British Pounds, and Swiss Francs.

Diverse Payment Methods

The exchange accepts many payment methods: bank transfers, credit cards, debit cards, Skrill, and Neteller. It levies a 3.98% fee on credit and debit card trades. However, its simple user interface eases trading for beginners.

No Fees for Account to Account Transactions

Bitpanda has waived the transaction fees for sending crypto between accounts on the exchange. This move makes transferring low amounts of crypto convenient.

Key Takeaways