It is possible to make a lot of mistakes trading cryptocurrency, especially if your basic knowledge is not up-to-date. While you may make huge profits, you could also end up bankrupt before even studying the market. You need to be aware of several things, including how to select a cryptocurrency exchange. The wrong crypto exchange can lead to a lot of distractions and wasted effort. Here are some tips to help you choose the best cryptocurrency exchange.
Geographical Restrictions & Location
The most important factors in a user’s experience with cryptocurrency exchanges and their usage are their geographical location and any restrictions. Most cryptocurrency exchanges only cater to a small number of people. It is worth considering if you are unable to legally trade on an exchange. Before you sign up for crypto exchange, ensure it is legal and accessible from your country. There is a possibility that your country has tightened restrictions on crypto and blockchain access.
Exchange should have ultimate Security
Security and privacy are essential for financial services. Many cryptocurrency exchange platforms require KYC procedures. This means that the user must verify their identity before they can make any transactions. You can also buy cryptocurrencies anonymously on certain platforms. However, you should first consider the reliability, security, and regulatory status of the exchange provider. Before purchasing any exchange provider, we recommend that investors learn more about the regulator (which could be the Financial Conduct Authority (FCA in the UK) or the Financial Crimes Enforcement Network (FinCEN in the US). Based on our research, Binance, Kraken, and Coinbase are the most secure platforms.
Google Authenticator (2FA authentication)
You should look for exchanges that have the following features:
• Two-factor authentication (2FA), such as Google Authenticator and SMS,
• Sign-ups anonymously (this is most often applicable to decentralized exchanges)
• Complex captchas
Combining all three of these will ensure that you can rest assured knowing you have taken all necessary precautions to stop malicious actors from accessing your funds.
Exchange should have High Volume and Liquidity
Volume is another important indicator to assess the reliability of your exchange platform. For a smoother purchase, we recommend that you choose a provider that has processed more than $1B in the past 24 hours. These providers are generally experts in handling money. They are also well-regulated because of the amount of money they deal with every day. The platforms handling the largest volume of transactions in the crypto market are Binance, Huobi Global, and Coinbase.
Verification (KYC) Process
When signing up for a crypto exchange provider, verification is an important step to take into consideration. You may need to provide documents that prove your identity for providers to verify it. Some providers may take up to seven days to complete these verification steps. For some providers, your passport’s page 1 and a photo of you may suffice and the verification process can be completed in a matter of minutes. Before signing up, we recommend that you learn more about the verification process for the exchange provider. Our research revealed that Coinbase, Binance, and Kraken have the most straightforward verification processes.
Fiats and Coins available
While Bitcoin is the most popular cryptocurrency, it is not the only one. Altcoins can be considered alternatives to Bitcoin. Many people trade with altcoins such as Etherium and Ripple, Litecoins, Stellar, Stellar Tether, Cardano, and Polkadot. You should therefore first decide which cryptocurrencies are most important to you at the moment. Also, consider which other altcoins you might be interested in in the future. Not all platforms have all altcoins. Many exchange platforms offer over 100 altcoins, including KuCoin, Binance, and Bitfinex. Some have more than 200. When choosing a crypto exchange platform, make sure you consider the availability of fiat currencies. While most exchange platforms accept deposits in USD, EUR, and GBP, you will need to consider other deposit options if you wish to pay the platform using your local currency. Binance and Huobi Global allow payments in +40 currencies.
Commissions Structure
Every exchange platform has its deposit and withdrawal options. Each platform has its agreement with payment providers. The commission rates for each platform are different. They differ depending on the payment method used within the platform. Below is a list of withdrawal and deposit options. We found that Binance, Kraken, and Gemini have the lowest commission rates. Before you choose your platform, consider the trading commissions. Binance and Bitfinex offer 0.1% and 0.2% respectively.
