If you’re familiar with the crypto world, you know that in order to trade and purchase cryptocurrencies, you need to open a digital wallet and access a crypto exchange platform. There are tons of crypto exchanges available for investors to trade through. However, not all of these exchanges are reliable and secure for your financial goals. Regardless of the exchange you use, investing in cryptocurrency is a high-risk investment you should prepare for with ample research and the establishment of a solid financial base. You can join online crypto communities such as FTX to learn everything you need to know before making a crypto investment. Once you’re ready to make the investment, consider the following factors when selecting the best crypto exchange for you.
Security
The security of an exchange is a high priority for all crypto investors. When selecting an exchange, keep in mind that many exchanges out there are fraudulent or unreliable and can collapse quickly. The exchanges that have been around for long periods are typically more reliable as they already have large numbers of users endorsing their legitimacy. Always do your research on various exchanges before investing in any exchange.
Check the exchange’s reputation online and how they have addressed issues facing their users in the past, or if there are any outstanding issues with the exchange that current users are noticing. You can get a good idea of the security of an exchange by how difficult it is to create an account on that exchange. The easier, the less secure your account will be. The most secure exchanges will often require multiple passwords, multifactor authentication, or a master phrase to access your crypto.
Fees and Currency Pairs
One of the most important aspects that set exchanges apart is their fees and currency pairs. Fees, of course, are interests charged for every transaction and purchase you make on the exchange. The fees can be calculated based on the size of the transaction or one fee for all transaction types. If you’re planning on making crypto transactions daily, you will need to select a cryptocurrency app with minimal exchange fees.
The other factor potentially impacting your trading ability is the cryptocurrency pairs offered on the exchange. One of the most popular exchange apps, Coinbase, only provides a small selection of crypto for investors. Other exchange apps will allow investors to trade in multiple forms of cryptocurrency, including the more obscure altcoins. Though the most used exchanges typically offer better security features, they may not allow investment in the cryptocurrency you’re searching for. Do your research before opening a wallet with any exchange, and be sure you can trade the crypto you want on the exchange you select.
Centralized VS Decentralized
Some exchange apps will be centralized, meaning they act as the third party intermediary between yourself and other users on the blockchain, collecting fees and enforcing trading regulations. On the other hand, decentralized exchanges strive to offer free and unregulated trade between users. Though centralized exchanges offer complex security measures, decentralized exchanges are generally more secure. Because while a hacker can take down many funds in a centralized exchange, they can only impact one user in a hack of a decentralized exchange.
However, centralized exchanges are more popular with the general public and can offer in-app tools that assist with trading and portfolio management. Decentralized apps cannot provide these services yet. Still, the decentralized crypto community is growing day by day, with the benefits of free crypto trade being recognized by more members in the space. Decentralized exchanges will most likely increase in popularity and may overshadow many centralized exchanges in the future.
Selecting the right crypto exchange is an essential step in your investment journey, as it will impact every transaction you make. Do your research and choose the most reliable and beneficial exchange for your financial goals.
