Tags: choosing | cryptocurrency | exchange | bitcoin

5 Tips on Choosing a Cryptocurrency Exchange

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Friday, 25 January 2019 08:27 AM Current | Bio | Archive

Cryptocurrency exchanges are like banks. They hold your money. They manage your transactions. And they should keep your funds safe from robbers. They should also be friendly, reliable, and easy to use.

But when you’re looking for a place to manage your cryptocurrencies, there are also a few special considerations you need to bear in mind.

Here are five factors that you need to look for as you choose a cryptocurrency exchange:

  1. Location: Cryptocurrencies are supposed to be international but the exchanges that buy and sell the coins are based in regions and have to obey local laws and regulations. That means that not all exchanges are licensed to serve every country. Coinbase, for example, serves North America and Europe, but skips the entire Middle East and South America. BitMex’s terms of service state that residents of the United States or Quebec are forbidden from holding positions or entering into contracts on the site. As you’re assessing exchanges, locations should be the first thing you check.
  2. Coin Pairs: If you’re just looking to swap Bitcoin for US dollars and vice versa then just about any exchange should offer that service. But if you’re hoping to build a portfolio of different coins, you’ll need to look a little harder. The large exchanges in particular can demand high listing fees, so you might need to turn to some of the smaller exchanges. It’s fine to use a large exchange for Bitcoin and Ethereum and number of small exchanges to trade lesser coins.
  3. Liquidity: The reason you don’t want to only use a small exchange is that they’ll have less liquidity. With fewer users, they’ll have fewer buyers and sellers which means that you might have to wait to complete a transaction or accept a price that’s higher or lower than you’d like. Exchanges won’t always advertise the size of their liquidity but they do like to boast about the number of traders they have. The more people buying and selling on the platform, the more coins there are to buy and sell, and the easier the trades will be.
  4. Fees: The importance of an exchange’s fees will depend on the frequency with which you trade. Cryptocurrency transactions are supposed to be close to free… which is true if you’re sending coins directly from one blockchain address to another. But if you’re using an exchange to find a trader to swap one currency for another, then the exchange will charge for that service. The more frequently you use that service, the more you’ll pay for it. If you’re planning to buy and hold, the fee will be less important than the platform’s stability. But if you’re planning to trade, those costs could be the difference between profit and loss.
  5. Security: You can usually trust your bank, but can you trust your cryptocurrency exchange? Before you pick an exchange, give it a quick Google to see whether it’s been hacked in the past. Make sure it offers two-factor authentication, sends confirmation emails after transactions, and keeps its deposits in cold storage so that they can’t be grabbed by electronic thieves.

    The cryptocurrency market is now mature enough for stable exchanges to have developed, with high liquidity and tight security. But do make sure you do your homework as you’re searching for the right place to manage your transactions.

    Joel Comm is New York Times best-selling author, blockchain enthusiast, professional keynote speaker, social media marketing strategist, live video expert, technologist, brand influencer, futurist and eternal 12-year old. His latest project is as co-host of The Bad Crypto Podcast, a top cryptocurrency show making the future of digital payments easy to understand.

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Cryptocurrency exchanges are like banks. They hold your money. They manage your transactions. And they should keep your funds safe from robbers. They should also be friendly, reliable, and easy to use.
choosing, cryptocurrency, exchange, bitcoin
606
2019-27-25
Friday, 25 January 2019 08:27 AM
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