If you are involved with crypto, choosing the right exchange is one of the biggest challenges you face. Currently, there are dozens of exchanges in operation, with new ones mushrooming every week. It’s explicable — despite the fact that the crypto market is plummeting, more and more people get aware of the potential benefits of crypto and seek to become part of the game.
Picking the best crypto exchange is a top-priority task, as a mistake may cost you dear. You may lose everything to a cyber attack, and there will be no corporate headquarters to reach out to, and no insurance company to help you recover damages. We are all familiar with the biggest hacks: Mt. Gox lost $450,000,000 in 2014 when their system was hacked, Bitfinex lost $73,000,000 in 2016 for the same reason, CoinCheck lost $50,000,000 in 2018. Some of those exchanges are working to reimburse their users, and maybe they will. But we’re sure the users would be happy to avoid this situation in the first place.
This article is aimed at helping you find the exchange meeting all your needs. The tips below will be useful, especially if you’re a beginner.
3 steps to start with
- The first thing is to check the list of the cryptocurrencies traded on the exchange — the coin your are interested in may not be there, especially if it’s new or rare. Make sure your coin is offered in the trading pairs you want (say, Tkeycoin against USD/EURO/RUB etc.) Use this website to check the availability of your coin on different crypto exchanges.
- Second, you must be sure that you are eligible to trade on this exchange. Surprise — the chosen platform may not be available just because you live in a wrong place. Your citizenship may prevent you from becoming the exchange customer, and the most common country to exclude is the United States. To know if you are welcome, see the FAQ list on the platform web site.
- Third, check the exchange fees, as this parameter may greatly influence your gains and losses in the long term. The trading fees may vary significantly: some platforms will charge you 0.10%, the others — up to 2.00%. Low fees do not necessarily mean you have found The One — often, exchanges with higher level of security (like Coinbase) tend to charge more. Also, low trading fees may be balanced by the existence of a withdrawal fee, meaning you will be charged up to 0.5% if you take out all your money from the account.
How to define the exchange is credible?
There are several things to be analysed before you trust your funds to the exchange. Those things are: trading volume, security, transparency, ratings, news & community.
Take a look at the trading volume
Volume indicates how many users are buying and selling crypto here.
This criterion implies a lot of things — normally, the higher the volume, the more reliable the exchange is. Trading volume not only reflects the exchange overall popularity, safety and credibility, but also provides valuable statistical data about every coin traded. It helps you understand where each coin is now, and in what direction it is moving. By the way, some exchanges tend to inflate trading metrics by bots, but again — the bigger the trading volume of your platform is, the less they are inclined to tamper with numbers.
Try Bittrex, Kraken, Bitfinex, EXMO, IDEX and other well-reputed platforms, or use CoinMarketCap website to compare volumes.
Make sure it’s secure
It’s not only the size that matters: the exchange of your choice must offer you some tools to ensure safety of your crypto money. A secure platform should at least implement mandatory 2FA (2-factor authentication). Additional measures like captcha, strong password requirements or anti-phishing code feature are recommended, too.
Also, make sure the exchange keeps at least 95% of its customers’ funds offline, in a safe place.
To see if the exchange has a record of successive hacker attacks, make an online research. Lack of major breaches points to a strong cybersecurity team that has experience with blockchain and will instantly notice a double-spending attack and other evil acts.
Check the transparency level
Transparency is important. The exchange does not reveal its address on the web site? it’s a big red flag. If you don’t know where the guys are located, it will be really difficult (or impossible) to find the right jurisdiction where you can sue them in case your funds are stolen.
The more details you can find about the platform, the better. We do not recommend you trading on unknown or secretive exchange just because you like their transaction fees and their fancy interface. Don’t make the same mistake as the BitGrail exchange users who collectively lost $195,000,000 in NANA tokens last year.
Use the community
Before making final decision, reach out to the crypto community for advice. There are numerous online forums where people share their knowledge and first-hand trading experience, both good and bad.
Check the social media pages of the exchange to see what is going on there. What kind of content do they post, and how often? What does a typical community member look like? Are there any regular complaints from the users, and how does the team deal with them? Answering all those questions may help clear things up and avoid failure.
Follow the news to know if the exchange is undergoing any important changes that are likely to affect its work. Hold your finger on their pulse.
Choosing the best platform for crypto trading requires some research on your side, especially if you are not very experienced. There is a lot of criteria to consider, but in the end it’s worth the effort and time spent. If you don’t feel like it, you may also contact a professional, or use an online tool like CryptoWisser.
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