The cryptocurrency sphere is expanding incredibly fast today. More and more people have started using this type of money because of its numerous advantages: safety, fast transactions to other countries, and lack of fees and restrictions, to name a few. One of its greatest perks is anonymity. It aims to prevent fraud risks and eliminates the need to disclose personal data. Nowadays, there are hundreds of various cryptocurrencies on the market, and their number is constantly growing.
If you have certain knowledge and experience, you can make investments in crypto and earn a significant amount of money. But how to choose the best crypto exchange? In our article, we'll find out! We’ll have a detailed look at crypto exchanges, their key characteristics, and benefits.
Crypto Exchange 101
A crypto exchange resembles a traditional stock one, but all the currencies are digital — Bitcoin, Ethereum, Dogecoin, and more. You can access it conveniently through a mobile or desktop app. There, it's possible to buy or sell different cryptocurrencies. This short definition can give the simplest picture of how a crypto exchange operates.
Moreover, such exchanges typically offer a wide assortment of investment and trading tools. Oftentimes, there are transaction fees that depend on the volume or the type of trade. The size of such fees varies from one exchange to another, as well as the exchange's security level.
However, nowadays, many top crypto exchanges are extraordinarily secure, allowing for safe storage and transactions. You’ll just need to choose the right platform. Also, crypto trading gives the possibility to optimize business processes better.
Crypto Exchange Types
Cryptocurrency exchange platforms are complicated structures, and selecting the best one may not be a quick process. They have lots of important nuances and rules that every crypto trader should know. One of these rules is the categorization of crypto exchanges.
There are three different types of such platforms — centralized, decentralized, and hybrid. Let's look at each one of those types.
Centralized Exchanges
As you can see from its name, a centralized (CEX) exchange has an authority organization that regulates it, watches users' accounts, and is in charge of all transactions. This authority plays the role of an overseer and an intermediary between people who buy currency and sell it. It possesses keys to all clients’ wallets and also functions as a tech support service. So, in case of any error, glitch, or another issue — you’ll get guaranteed help.
On such exchanges, there’s a much lower risk of various frauds, and the verification system makes them even safer. These places are perfect for people who are completely new to the cryptocurrency world and are only making their first steps there.
Let's name the main advantages of such exchanges:
- High liquidity;
- Possibility of funds recovery;
- Higher transaction speed;
- Simpler interface;
- Qualified support service;
- Additional tools that make using the exchange even more comfortable.
Now, let's move on to the flip side:
- Sometimes, it can be vulnerable to cyberattacks;
- There were cases of trading volume manipulation.
Decentralized Crypto Exchanges
The basis of decentralized (DEX) crypto exchanges is a distributed ledger infrastructure with no authority at all. The users are in complete control of their virtual assets and keys. KYC registration procedures are not necessary, and transactions are more private. Control and supervision are absent. So, its anonymity level is nearly perfect. Also, lack of authority means much lower commissions (or none at all). And what about safety? You may think that on a decentralized exchange, all your data and money won’t be protected at all. It also has a security system based on smart contracts. They encrypt users’ asset data and make it almost impossible to hack.
On a decentralized platform, some aspects of user cooperation resemble those of a credit system — for example, you can give a cryptocurrency loan to someone else, and then the other user will return your money to you with some interest.
Their main advantages are the following:
- Better privacy and anonymity;
- Users have complete custody of their own funds;
- Lower cyberattack risks;
- Low or no commissions;
- It is possible to make transactions that are impossible in online banks.
As for drawbacks, they are:
- Poor liquidity;
- More complicated functionality;
- In many cases, there’s no high-quality tech support;
- Sometimes, there can be problems with currency conversion.
Hybrid Crypto Exchange Platforms
These crypto exchanges have appeared quite recently. Basically, they're a combination of the first two types — as convenient as centralized exchanges and as safe and private as decentralized ones.
Their biggest advantages are:
- Perks of both exchange types;
- Great privacy.
However, they also have some downsides:
- This concept is still relatively recent;
- The volume to date is rather low.
Selecting the Best Crypto Coin Exchange
A crypto exchange is a much more complicated thing than it may seem at first. So, you'll need to be super careful when picking it. Making an uninformed choice can cause you a lot of problems. Since there's less regulation at these exchanges in comparison to ordinary ones, you'll have to pay attention to way more factors — for instance, insurance coverage, authentication variants, access to the support service, and so on.
| Top Rated Crypto Exchanges | ||
| Name | Fees | Coin Availability |
| Binance | 0.1% | 100-200 |
| Coinbase | 0.4% for makers, 0.6% for takers | over 200 |
| Kraken | 1.5%, 0.9% for stablecoins | over 200 |
| Bittrex | 0.25% | 100-150 |
| Crypto.com | 0.075% for makers, 0.075% for takers | over 250 |
| Gemini | 0.50% or less | over 70 |
Safety
Crypto exchange security is one of its most vital characteristics. Nobody wants to trade on unsafe platforms prone to cyberattacks and glitches. Safety measures like two-factor authentication and cold (unavailable to hackers, such as offline or hardware) currency storage are a must. Also, really safe crypto exchanges utilize methods of encryption that make cyberattacks impossible without decryption keys.
Experts suggest that the safest exchange platform is Crypto.com, followed by FTX and Gemini.
Coin Assortment
The assortment of coins varies depending on the cryptocurrency exchange. Top-level coins such as Bitcoin are available on most, if not all, platforms. They’re much more stable and can be a continuous source of income. In some countries, people even use them to buy goods. However, trading them probably won’t bring you huge amounts of money.
That’s why some people prefer less-known ones — for instance, new or with a narrow specialization. Examples of them include Solano, Cardano, and many others. They’re riskier to trade but can bring larger and quicker revenues. If that’s your choice, try to find an exchange with a wider selection. Look up not only the list of coin options themselves but also how often the exchange adds new ones.
Trading Volume and Liquidity
Trading volume is the complete amount of deals made in a certain period of time. Market liquidity (and traders' ability to sell and buy assets without any problems) directly depends on it. The higher it is, the more profitable the prices are and the more reliable the platform can be — which also increases its popularity.
Large exchange platforms with high liquidity and trading volume also have other benefits, such as:
- Quicker fulfillment of orders, which decreases the price fluctuation risk
- Smaller risk of “slippage” (a worse price for an order execution), which is great for traders who often operate with big assets
- Lower spread (the gap between selling and buying prices)
It’s important to mention that different coins also have their own liquidity, which is important to know, too. On some platforms, the overall liquidity is good, but the activity of some cryptocurrencies has its limits.
Payment Option Variety
Most crypto exchanges charge fees from their clients. But their amount and type can be different. On some platforms, there's a flat fee per deal. Others' approach is percentage-oriented. Also, there can be fees for various user activities, such as conversions, deposits, withdrawals, and even not using your account for some time. You can encounter some fees really unexpectedly. To prevent those unpleasant surprises, look for a platform with a transparent fee format. It will allow you to plan your additional expenses beforehand.
There are several main types of fees on crypto exchanges:
- Taker fee — paid when placing a market order;
- Maker fee — paid when placing a limit order;
- Deposit fee — paid when making a deposit;
- Withdrawal fee — paid when withdrawing money.
In addition to them, there can be various rebates and discounts, which are also important to know about.
Transaction Methods
Most crypto top exchanges offer a huge variety of payment methods. Their assortment is also a crucial factor that you'll need to consider when selecting an exchange. Not all platforms allow making deposits and withdrawals in fiat currency. So, if this option is necessary for you, choose an exchange with the possibility of fiat transactions. On the other hand, transactions in cryptocurrency often cost less.
Another key moment that you'll need to consider is the transaction speed. Some methods of payment are almost instant, while others are much slower. Usually, e-wallets are rather quick and convenient, especially when it comes to depositing. In comparison to bank transfers, their fees are quite low, and the transaction speed is high.
Support of local currencies is also extremely important. The wider their assortment is, the more accessible the platform is for traders from different countries. If it supports the currency of your country, you’ll be able to manage your assets much easier, without the necessity of conversions.
Crypto Exchange Credibility
If you want to find a reliable crypto exchange with a good reputation, you'll need to look through its reviews. Thoroughly read how other people describe its safety, performance, transaction speed, coin assortment, and other things. In addition to that, ensure the platform has good customer support service. This means that it cares about its clients. Moreover, crypto exchanges with the best reputation typically meet all the standards and regulations of this sphere, so they're much safer to use.
Best Crypto Exchanges Takeaway
Nowadays, the number of cryptocurrency exchanges in the world is over 200. These platforms are the simplest and most convenient method of trading crypto money. If you're new to this sphere, selecting the right exchange can seem difficult. To minimize the risk of mistakes, consider all the aforementioned things — and you'll manage to find the most optimal variant!