Issues one ought to consider before choosing an exchange include security, liquidity, fees, and user experience. Choosing the best cryptocurrency exchange for your needs involves going through several factors and evaluating them.
For reviews of top exchanges and comparisons, follow this link.
How to pick the best cryptocurrency exchange is answered in our guide, but keep in mind that your mileage may vary. Once you find an exchange that meets your basic requirements — support for the currencies, trading pairs and any advanced functionality you need — check these other aspects as well:
Security:
If an exchange is not secure, your funds could be stolen, leaving any other advantages it offers with no real value. In this respect, consider the following aspects.
Technology:
- The exchange’s web address should start with HTTPS. Avoid HTTP.
- For login safety it should use two-factor authentication (username and password plus a piece of information only you have).
- Customer deposits should be stored offline, in “cold storage”.
- Auditing programs that monitor exchange activity 24/7 and the use of SMS and email alerts all give exchange customers additional security guarantees.
Legal aspects:
- It’s recommended you use an exchange based in the same country you are, as that can make it easier to comply with regulatory changes. It’s also possible, though, to use other exchanges in other countries. Note that some exchanges support only a limited number of countries.
Transparency:
- Does the exchange reveal its owners and the members of its team?
- Transparent exchanges also publish their cold storage address or help check their reserves in other ways, such as audit information.
In any case, remember not to keep more funds on an exchange than you need for trading. Store the rest of your bitcoin in wallets you control.
Other things to consider for when you are learning how to choose a crypto exchange:
Liquidity:
The higher trading volume is, the more liquid an exchange is. That makes it possible to complete transactions faster, more easily and without having to deal with so many major price changes. Also check whether an exchange offers “locked in” pricing, which guarantees you the price at the time of your transaction even if it doesn’t settle immediately.
Be aware that liquidity can be very different for different trading pairs. It can be high for BTC/EUR, for example, but low for BTC/GBP. You can check the exchanges with highest trading volumes here.
Fees:
- Compare all the fees an exchange charges. They’re usually less than 1% per transaction and may decrease if your trading volumes is bigger.
User experience:
- If you care about anonymity, you probably won’t choose an exchange that requires you to reveal much about your identity;
- Is the user interface simple and easy to use on both a desktop and a mobile device?
- What do other users say about the benefits and drawbacks of a specific exchange, the support it offers and so on? Check community forums like Bitcoin Reddit or Bitcoin Forum.
Some exchanges are listed on the official website of the Bitcoin Foundation (bitcoin.org).
Prices on different exchanges differ. You can find the best sell/buy prices here.
Bear in mind that Bitcoin and all its infrastructure is still in development and things might change quickly. New regulations may be introduced and new technologies or even new problems may arise. So follow the news and keep up to date. How to choose the best bitcoin or cryptocurrency exchange is not always a question answered once and for all — do your own research and good luck!
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