Understanding Crypto - Different Exchanges
We have written about exchanges in general and how to get free coins. Now that all of that is done, you will want to trade those tokens and coins for something else. Is there a single best exchange to use? The answer is predictable - no. If there was a single leader, there would be no need for many exchanges. And no one can advise you the best, because everyone has their own preferences. What should you take into consideration when choosing your own exchange?
Before you even start dealing with crypto, look up the laws of your country. How is the whole crypto world even regulated in your jurisdiction? As it is a new field, everything is still a work in progress and bound to sudden changes. That is why many exchanges have a limited range of operation. It is impossible for a single company to follow all the rule changes of every country, but it does have to follow said changes and comply with them.
That is why many exchanges do not operate in various countries where the rules are not clear. In the USA said rules even differ from state to state, so a single exchange might be a good fit for someone from one state but bad for someone in another.
And there are many regions where almost no exchange operates in because of international restrictions. It is very important to figure this all out, because you can place yourself in a situation where you lose all your assets. Either the exchange finds out you are not allowed to trade due to international restrictions or your own government might decide to issue various bans.
When you have the rules figured out, you have to look for the exchange that offers you the assets you want. If you are looking to trade bitcoin, you can be sure that almost all exchanges will have that possibility. But if you are looking for something more specific, an exchange can simply not have that exact coin or token. The best bet is to go to the website of the project you want to support and look at the exchanges they are in.
From those look for the exchanges that have the most trades happening. While this is an oversimplification, it is a good indicator that this is the right exchange for you. Sometimes a bigger and more popular exchange can have a smaller interest in the specific coin you wish to trade. So always look if people are actively trading the assets of your choice there.
If the volume is high or sufficient, that also means that people who trade there trust the exchange. It is deemed safe and fitting by many people. While not a bulletproof security, it is reaffirming.
This is the most complicated and tricky part of the choice. Every exchange has itsown fees and costs of service. You have to pay a bit when you trade, a bit when you withdraw. Your goal is to decide what you will want to do with your assets. If you plan to take out small amounts every week, it is obvious that you need an exchange with the smallest of fees for withdrawals. If you plan to invest a bigger amount of money, then the withdrawal fee is not that important. Sometimes there are various hidden fees that you can not really notice when you sign up, but with the exchange market becoming more competitive, everyone generally strives for fairness.
Always find out the methods of payments the exchange offers. If it offers only bank transfers, it can take a long time and then present you a currency conversion fee. Or it has gone the opposite way and you can only deposit funds by transferring some other cryptocurrency. And this is important when you want to withdraw too. In many exchanges you can’t withdraw USD or other FIAT money and you can only take out coins. If the amount of funds is not big, all the transfer fees to and from different exchanges can pile up. So sometimes the smart play is to compromise on volume to save on fees or the other way around.
You want to keep your assets safe, but that is something you both have to take part in - you and the exchange itself. You yourself should fill out the KYC and look for a service that offers you 2FA. So if you lose your phone, password or email, there are other ways to retrieve the account and the funds in it. Sure, it might be a hustle, but a few seconds of annoyance is much better than losing everything you own. And, after a while, you do not even notice these steps.
At the same time the exchange itself is also a target for hackers. So read up on how they safeguard the money you have entrusted them with. Are they storing all of the coins online or actually using cold wallets as banks?
Or maybe you do not trust the exchange at all? The feeling of giving anyone your coins and letting them keep them makes you uncomfortable? Then look at decentralized exchanges. When using one of those services, you are not transferring your funds to any third entities and are keeping them yourself. Only when you trade them they leave your wallet. As there is no huge “vault of a company that holds all coins”, hackers have nothing to attack. You do have to be more careful with the security of your own computer, but that is something you can actually control yourself.
These are just the things that we think are the most important. When others have to choose their exchanges, they sometimes find that the user interface is the most important thing of them all. If they don’t feel comfortable or get confused in the menus, then it doesn’t matter how secure the exchange is, they just won’t like it. And sometimes a popular exchange is so overwhelmed with clients, their customer support response takes weeks or more. So if you ever run into an issue, there is no one to help you.
At the end of the day, there is no one answer. Telling someone which exchange to use is like telling them which shoes to buy - everyone has their own size and taste. So do your own research, because it will be well worth it.
Thank you for reading our blog. If you have any questions about the topic or want to suggest a new one, please write an email to [email protected].