Crypto Exchange Selection: What are the Key Factors?

Crypto Exchang

Crypto exchanges are businesses that store cryptocurrencies, match buyers and sellers, and make it possible to trade cryptocurrencies in the same way that stocks can be traded using a brokerage account. The vast majority of well-known stock trading companies, including Schwab and Merrill Lynch, do not support cryptocurrency transactions.

Trading cryptocurrencies, on the other hand, has become significantly more approachable than at any other time in history. There have been a multitude of issues, including security breaches that made headlines and trading fees that were significantly higher than what other investors would pay to trade assets.

You are free to deal any number of coins.

As a result of the increasing demand for cryptocurrencies, there are now more than 10,000 coins available. Every digital asset is not available on every exchange; therefore, you should check that the one you use provides the assets you require. Think about whether bitcoin, Ethereum, and the few Defi tokens that drive smart contracts are the primary cryptocurrencies that interest you, or whether you would rather have a more straightforward or complex menu.

Both Coinbase and Kraken are excellent starting points for cryptocurrency trading. They provide a diverse assortment of tokens and coins to meet the needs of all types of investors. Kraken has more than 160 different coins, including so-called “meme coins” like Shiba Inu and dogecoin, whereas Coinbase gives users the ability to trade more than 450 different cryptocurrencies.

There are a lot of exchanges that let you trade obscure coins, and most of them are headquartered in other countries. Caution is advised because they do not always follow the laws of the United States and do not provide investors with the same level of regulation as U.S. stock exchanges do.

Examine the various costs.

Your brokerage account at Schwab or Fidelity will allow you to trade stocks, bonds, and ETFs; however, there is no such thing as a free lunch when it comes to cryptocurrency exchanges. Every trade, deposit, and withdrawal made on a cryptocurrency exchange is subject to a fee. The fees that are assessed to businesses can range anywhere from 0% to 5%, depending on the type of transaction being processed and the mode of payment that is being utilised. The total volume of trades you execute within a given time period will determine which fee tier you fall into. The more trades you make, the lower the percentage of the commission that you pay. The fees for using Bitstamp would come to $75 per month if you traded $1,000 worth of tokens fifteen times. The fee would be $50 for a single transaction that was worth $20,000.

At the major U.S. exchanges, there are fees associated with trading.

FTX US–0% – 0.4%

Coinbase’s fees range from 0.5 percent to 4.5 percent, depending on the nature of the transaction.

The Kraken fee ranges from 0.9% to 2%, depending on the nature of the transaction.

KuCoin– 0.0125%-0.1%

BlockFi–0% Distribution of 1%

Depending on the method of payment, the fees range from US-0.1% to 5.5% for Binance.

Bitstamp, ranging from 0% to 0.50%

Check to see that there is an adequate amount of liquid.

Locating an exchange that provides liquidity is an absolute necessity. This allows you to convert your cash into coins or vice versa in a short amount of time without having to pay a significant premium. This is of utmost significance in an age in which the values of digital assets are subject to rapid fluctuation. You want to make sure that your order is placed as quickly as possible and at a cost that is comparable to the coin price that is displayed on your screen. It is the same thing if you want to sell your product.

This information is readily available by inspecting the trading volume of the exchange; keep in mind that the higher the book, the better. The 24-hour trading volume of hundreds of companies can be found on the website CoinMarketCap, which is a cryptocurrency information resource. In recent times, the highest trading volumes were seen on Kucoin and Coinbase.

You should also look for an exchange that has a proven track record that spans at least five years, according to Alexander Enter, the founder of MyCryptoAdvisor. In addition to this, you should make certain that the company takes the necessary steps to demonstrate that it possesses the assets that it claims to hold on your behalf. Users of Kraken have the ability to view the date that their coins were verified by an independent audit by clicking a button on the exchange’s interface titled “verify my auditor.”

Check to see that there is an adequate amount of security

Cryptocurrency exchanges are not immune to attacks by hackers. One of the most well-known early exchanges, Mt. Gox, went out of business in 2014 after having more than 460 million dollars worth of customer assets stolen. In December of 2017, the cryptocurrency exchange BitMart was given $150 million. BitMart has made the statement that it will compensate investors. It is common practise to steer clear of cryptocurrency exchanges that have a previous record of being the target of theft or cyberattacks.

A number of crypto exchanges offer fundamental safeguards, such as two-factor authentication for users. Protect yourself from phishing attacks and other forms of cryptocurrency theft with one of these apps, which typically include Google Authenticator and Authy. You always have the option of seeking additional protection. The mobile application for’s Exchange supports the use of biometric authentication. The verification of your identity is accomplished through the use of both your fingerprints and your face.

If you want to open a new account on a major exchange like Kraken or Gemini, you will need to provide a form of identification that is issued by the United States government, such as a passport, driver’s licence, or another form of identification. This is done to prevent imposters and to beef up the level of security. You will also be required to authenticate yourself whenever you sell or buy something, alter the amount of money in your account, or make significant changes to your account, such as freezing it.

Examine the terms of the insurance policy.

The protection of sensitive data should be our top priority. Hackers won’t be able to steal customer assets if this is in place. 1 for a digital currency trading platform. In the event of a crisis, the best ones will be covered by a reliable insurance policy.

A good number of marketplaces have theft, robbery, and property destruction covered by their commercial crime insurance. Gemini, for instance, asserts that it possesses digital assets insurance in the amount of $290 million to cover particular losses. Because the coverages offered by different exchanges can differ, you should double check what aspects of your health are covered. You can find this information in your user agreement, which you receive when you sign up for the service, and frequently in the section of the exchange website that is dedicated to frequently asked questions.

Check to see if any exchange provides protection for your cash through the Federal Deposit Insurance Corporation. This is the second important question. It’s possible that your cryptocurrency trading account holds more than just coins. When you trade money into and out of the cryptocurrency market, you will also require deposits in the form of United States dollars. This money needs to be kept in a custodial bank account at a financial institution that is FDIC-insured. In the event that the bank fails, it will protect deposits of up to $250,000 from loss. Although the vast majority of significant exchanges provide this level of protection, some do not.