What is a cryptocurrency exchange?
Since the emergence of Bitcoin in 2009, cryptocurrencies have been growing exponentially year over year with news about introduction of new cryptocurrencies emerging every week. Growing demand for digital currencies has further necessitated the emergence of cryptocurrency exchanges – professional trading mediums where users can buy, sell or exchange cryptocurrencies for other digital currency or traditional currencies like EUR or USD. There is quite a diverse selection of good exchanges offering services to buy or sell cryptocurrencies online.
Though all of them provide similar range of services, the quality of services may fluctuate wildly. For example, while some exchanges offer easy to use interface with limited functionality, others provide users with top-notch cryptocurrency exchange platforms enhanced with pro trading tools and diverse payment options. As such, identifying the criteria for choosing the best cryptocurrency exchange is more of a matter of personal preference rather than a textbook example. Above we have compiled the list of our cryptocurrency exchanges reviews where we have selected what we believe are the most popular exchanges currently operational on the market.
Types of crypto exchanges
- Trading Platforms – websites where buyers and sellers connect to each other to buy and sell digital currency at market prices Fee is being charged on each transaction
- Direct Trading Exchanges – these crypto platforms take advantage of offering users advanced peer-to-peer exchange network where buyers and sellers can exchange digital coins at their own exchange rate.
- Brokers – These are websites that anyone can visit to buy cryptocurrencies at a price set by the broker. Cryptocurrency brokers are similar to foreign exchange dealers.
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Binance Bittrex Poloniex YoBit Hit BTC CoinExchange Latoken KuCoin Changelly Bitfinex Gate.io Liquid
What to take into account before joining an exchange
It’s crucial to do a deep, through research before starting with any of the exchanges. Many factors like exchanges’ trading volume, fiat currency support and transaction fees should be taken into deep consideration before making final choice.Below we have compiled a list of factors we suggest a trader should take into consideration before arriving at a final decision to join the exchange.
- Reputation – the best way to find whether the exchange is trustworthy and if it fully suits your needs it so spend some time scoping through comments and user reviews. You can ask questions in the comment section below each of the exchange review.
- Payment Methods – One of the key factors that traders should take into account when choosing a cryptocurrency exchange is the availability of the desired payment method. While some exchanges like Binance provide crypto-to-crypto solution only by allowing the user to deposit from his existing Bitcoin or other cryptocurrency wallet, others like Coinbase or Gemini have a nice selection of deposit options including CC, Bank Wire or Pay Pal. Making some research on this factor will help you to avoid getting stuck on deposit stage, which might add to frustration should it occur after spending time on cumbersome verification process.
- Verification Requirements – The vast majority of the Bitcoin trading platforms both in the US and the UK require some sort of ID verification in order to make deposits & withdrawals. Some exchanges will allow you to remain anonymous. Although verification, which can take up to a few days, might seem like a pain, it protects the exchange against all kinds of scams and money laundering.
- Exchange Rate – depending on the type of exchange chosen, you may get different prices. Some exchanges offer direct market prices while others utilize peer-to-peer network where users buy and sell at their own exchange rate. Don’t be surprised if after making some research you realize the magnitude of price discrepancies in some cases going above 10%.
- Deposit /Withdrawal fees – These fees may vary greatly depending on company and payment method used. For example, if you were to buy bitcoin from Coinbase with your credit card you would have to pay 3.99% and the money would arrive instantly. If you were to complete the transaction via Bank Wire transfer this amount would be reduced to 1.49%. Regardless of how good-looking the exchange may be and how promising and customer-oriented its services seem – is always worthwhile to do some homework and research this subject before arriving at final decision.
- Trading Fees – Most of the exchanges charge a fee of 0.25% for every trade. Also, most companies provide discount on trading fees once you’ve reached the required trading volume. That said, fees may eventually be reduced to as low as 0.1% for accounts with high trading volume.
- Number of coins available – If you’re looking for Bitcoins, then there is nothing to worry about as every exchange without exception gives you an opportunity to buy or sell world’s most highly traded digital currency one way or another. Today, Bitcoin represents almost 47% of the entire cryptocurrency market cap. But before you part with your money, it’s a good idea to research other currencies. There are more than thousands of cryptocurrencies in existence and more are being introduced on the daily basis.Making some research to narrow down the list of coins you’re willing to trade is a necessary step before moving further. After that, you have to check the listing of coins available on the exchange you‘re planning to work. Some exchanges, like Coinbase, offer trading services on Bitcoin, Bitcoin Cash, Ethereum and Litecoin only, while others like Binance and Bittrex offer a vast selection of altcoins regardless of their traded volume and market capitalization.
- Location – Cryptocurrency market is still in its infancy. That is why many countries have not yet came up with any ideas of how cryptocurrency services can be integrated in their regulatory framework. For example, many exchanges are not accepting US Residents due to regulatory requirements. Most exchanges will clarify this issue during the initial registration process and will give you notification if their services are not available in your country of residence. Using workaround solutions as VPN can help you to go through initial account registration stage easily but the restrictions will surface once you move forward with full verification. That is why make sure that the exchange you are planning to open an account with is giving services to residents of your country.
We hope that factors outlined above will help you choose the right exchange, where everything will be tuned to your liking. Under all circumstances, always consider sparing some time on additional research unless you want your first cryptocurrency investment experience take the wrong track.