You can’t get started with crypto trading without choosing a cryptocurrency exchange. A crypto exchange is an online marketplace where you can buy, sell or trade cryptocurrencies.
Think of it as a stock exchange, except that there are no brokers who will transact on your behalf. Instead, you could trade directly on the exchange or platform of your choice.
There are two types of cryptocurrency exchange that you can choose from — fiat exchange and altcoin exchange. Fiat exchanges allow you to buy cryptocurrencies with fiat money such as dollars, euros, pounds, and the like using cash, a credit card, or a bank account.
Meanwhile, altcoin exchanges don’t let you transact through credit cards or banks and instead, require that you make a cryptocurrency deposit first, which you can later use to trade for other coins. Thus, some crypto users go through a fiat exchange first and deposit the cryptocurrency they purchased in an altcoin or pure cryptocurrency exchange.
Choosing a crypto exchange platform can be confusing and overwhelming. However, looking at the most important factors such as the ones described below could help simplify things for you.
1. Availability in your country/location
Before signing up, find out if the exchange has office address that you can verify. It’s best to pick an exchange that’s available in the same country where you live. The reason for this is mostly for security and convenience.
If your exchange is operating domestically, the local courts could intervene for you if you became a victim of hacking and you need to file a case against the hackers.
Plus, it’s easier to transact on a cryptocurrency exchange in your own country compared with those based in other countries since there are fewer restrictions or barriers as far as functionality is concerned. Fortunately, most exchanges will tell you during signup if you may or may not use their service.
2. Supported tokens/ coin pairs available
Bitcoin and Ethereum are two of the most popular cryptocurrencies in existence. A good exchange will not only offer these two types of crypto, a but will also provide an option for you to purchase or trade using other types of coins.
This is to prevent monopoly in the cryptocurrency space, and at the same time, it balances the risk that cryptocurrency contributors have to deal with.
Exchanges that support a long list of cryptocurrencies can offer other alternatives if a particular cryptocurrency suddenly faces regulation or other issues.
3. Liquidity
Liquidity refers to when there’s an adequate number of buyers and sellers of a particular cryptocurrency that makes it eligible for trading. You’ll want your exchange to have high liquidity to make it easy for you to buy or sell cryptocurrencies within the platform, which leads to competitive pricing and hassle-free transactions.
4. Security
Due to the decentralized nature of cryptocurrencies, it’s important for exchanges to put strict security measures in place to ensure that your coins are safe from unscrupulous individuals and unquestionable transactions.
Choose an exchange that has a way to move coins offline so that hackers can’t easily access your crypto assets. Its system of verifying transactions and users’ identity should include two-factor authentication and email verification.
Speak of identity verification, the exchange should have a way of knowing who its members are as a way to minimize fraud.
5. Customer support quality
Your preferred exchange should demonstrate good customer service whether you’re trying to get an answer to a question or going past the verification process. Customer service staff should know the ins and outs of cryptocurrency and the way that the platform functions to give proper advice to its users.
Plus, since time is of the essence when it comes to trading, you should get instant support so that you don’t lose out on any opportunity to grow your crypto wallet.
6. Reputation
Cryptocurrencies have become a hot commodity, and bad actors are quick to look for a chance to make easy money through scams and other illegal transactions.
Find out if the exchange has a history of falling victim to hacks, as this can tell a lot about how lax its security system is. You could also check online forums to know what people and cryptocurrency communities are saying about a particular exchange in terms of technology, policies, and the like.
7. Trading fees
Certain fees apply across exchanges when you’re buying or selling cryptocurrencies, but their rates differ from one another. Of course, you’ll want to choose the exchange with the lowest transaction fees so you could enjoy higher margins on your transactions.
8. Margin
Some exchanges have functionalities that enable you to participate in margin trading, which is the practice of borrowing money from a broker to buy or sell more coins than you could afford. You could go for this type of exchange if you’re into using your crypto assets to go into investment.
9. Ease of use
As with any other online sites, your exchange of choice should be user-friendly when it comes to how the platform looks or functions. A simple and easy-to-navigate user interface will help avoid confusion for anyone who’s trying to transact on the platform.
Some exchanges also have a mobile app that helps crypto users monitor trading and pricing.
Wrap-up
Choosing an exchange signals the start of your journey in the cryptocurrency space, so you have to do it right at the outset. To help you come up with a right decision, you have to identify what your goals or needs are. It’s worth mentioning that there are now at least six crypto exchanges (YoBit, LiveCoin, BTC-Alpha, Changelly, HitBTC and Mercatox) that offer support for Noah Coin users like you.
Originally published at noahcoin.org on July 17, 2018.
