With the latest cryptocurrency hack of Japan’s Zaif, it is clear that safety is a top factor to consider when it comes to choosing a cryptocurrency exchange.
So, you could be a newbie who has just started looking into cryptocurrencies. Or, you could be a savvy investor looking to diversify your portfolio with cryptocurrencies. No matter your level of experience, these are key traits to look for in a cryptocurrency exchange.
Here are five things to consider when choosing a cryptocurrency exchange:
1. Ease of Verification Process
Essentially, this is you verifying your identity before the platform on-boards you as a registered user.
When you initially register on a platform, the first thing you are required to do is a KYC (read: Know Your Customer) process. This is so that exchanges know who you are. If you liken it to opening a bank account, you are typically asked to fill out a personal data form and show your official identification documents to verify your identity. Ultimately, KYC is a security measure for exchanges that want to conduct due diligence and for users to know that they are dealing with fully compliant exchanges.
Various exchanges can differ vastly in terms of verification times, as well as the amount of information they need from you before KYC is completed.
2. Ease of Purchasing Cryptocurrency
Each platform offers different way to purchase cryptocurrency. The following are examples of various methods for deposits:
- Bank transfer
- Paypal
- Credit cards
- Debit cards
- Only cryptocurrency (ie. crypto to crypto exchanges)
For users who are just starting and do not already own cryptocurrency, it is pertinent to choose a fiat-to-cryptocurrency exchange. This means that you go with a platform that accepts Fiat currency. The other thing to note is also the speed at which transactions are processed, which ranges from instantaneous to days, all the way to weeks.
3. Supported Cryptocurrencies
You are probably already familiar with Bitcoin and Ethereum, and most platforms offer the two cryptocurrencies. That said, investors in cryptocurrency know that there is a whole universe of tokens out there. The number of cryptocurrencies available over the internet as of 19 August 2018 is over 1600 and growing.
In addition, some platforms trade a long list of altcoins, whereas some only trades four to five major cryptocurrencies.
For ease of use, its easier to go with an exchange that supports all of the cryptocurrency tokens that you want to purchase. The usual metrics for monitoring and evaluating cryptocurrencies you hold are:
- Current price
- 24-hour change
- 24-hour trading volume
- Market cap
- Supply issued
4. User Experience (Including Security)
Ultimately, one of the most important factors is the ease of use on a platform. One should look for the following:
- Intuitive user interface
- Platform loads swiftly with no lag
- Easy to use functions that keep you informed in every step
- A highly secure exchange which keeps funds in cold storage
5. Fee structure
Fee structures ranges across various exchanges. Here are the following structures to look out for:
- Some exchanges only charge a low transaction fee on sales
- Others may offer zero-fee trading for a limited time
- Some exchanges also issue their own token for users to complete transactions, effectively discounting fees for the user.
In Conclusion
Each exchange is built differently. With all things considered, it is important to know your own preferences.
Ultimately, it is key to be informed of all your options.
This article first appeared on https://learn.eurekapro.com/5-things-to-consider-when-choosing-a-cryptocurrency-exchange/
