Cryptocurrency exchanges are your portal to the crypto industry. They provide the basic things you need to get started with crypto and grow - whether as a simple investor or full-fledged trader.
Today, thousands of crypto exchanges are available for investors to choose from. CoinMarketCap’s rankings alone highlight 311 exchanges, but there are many more than those listed on this aggregator site.
With this many options, choosing a crypto exchange can be difficult. But it doesn't have to be - as long as you narrow down the elements to consider when making your selection. We’ll go into some of them here:
You Could Just Stick With the Big Players
If you’re new to crypto and don’t necessarily want to go through all the work involved in researching exchanges, you could simply go with some of the most popular. Binance, Coinbase, Kraken, and many more have made names for themselves for their ability to deliver impressive customer service. Choosing one of them is an easier option for some users.
User experience is an important element here. Make sure that whatever exchange you choose is convenient and well mapped out, that you won’t get lost trying to navigate the platform. Everything else flows right into place once you’re happy with user experience.
Other Factors to Consider
For those more meticulous types, some other priority factors to consider include:
Liquidity is a big one. In a nutshell, an exchange’s liquidity deals with its ability to process orders for a cryptocurrency.
Most big exchanges don’t have issues with liquidity. They process large volumes of cryptocurrency transactions all the time, so your orders should go through without a hitch. But, smaller exchanges could run into liquidity problems. For these, be prepared for potential issues with timely order processing and fulfillment.
Imagine you’ve done some research and decided to buy Bitcoin once the price hits $50,600. Given Bitcoin’s price volatility, you know it won’t stay at that point for more than a few seconds at best. So, you set the order to buy Bitcoin at the $50,600 mark. If your exchange isn’t liquid, your order could be slightly delayed, delayed long enough to miss that target price and potentially suffer a loss.
For most people, nothing beats good security.
In the early days of crypto, hacks were disturbingly familiar. But the volume of crypto exchange hacks and thefts has been dropping. One source claims that exchanges only lost $300 million in 2020 - even with rampant security issues and attacks on other internet-based industries.
Today, many exchanges have been able to beef up their security, decreasing hack frequency significantly. Still, you'll want to double-check security ratings.
Be especially careful with not-so-popular exchanges. Established exchanges have spent years improving security and can offer more of a guarantee. For the others, ask what they offer. Consider their authentication options, passwords, PINs, coin storage, and other security measures that indicate they take it seriously.
This isn’t a serious problem, but can be an inconvenience. Coins like Bitcoin and Ether are a surefire hit with any crypto exchange. But, if you’ve got other altcoins in mind, they may not be readily available.
In short, be sure the exchange can support the coin you hope to purchase. This information is readily available from the exchange.
Payment channels can also play an important role in personal compatibility. Try to select an exchange that allows you to make seamless and convenient payments and offers a variety of methods for you to try out.
When choosing payment channels, you should also consider fees. Credit card fees tend to vary between providers and countries, so watch to make sure that you’re not being charged more than you'd like to pay.
Some additional factors to consider include:
- Support: It’s always nice to have someone available to answer your questons and walk you through any problems.
- Fees: Watch out for transaction fees - and trading fees if you’re a trader.
- Upgrades: Periodic upgrades show that the exchange is committed to staying on top of the latest technology - including speedy order processing and strong security.
- Community: Most exchanges have communities on platforms like Telegram, Reddit, and Discord where their users can gather and discuss tips, methods, and user issues.