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Mizar | How to choose a cryptocurrency exchange?

Finding the perfect cryptocurrency exchange for your needs

Mizar branded banner titled How to choose a cryptocurrency exchange?

“Fortune favors the brave” Matt Damon said in the now infamous crypto.com superbowl advert that seemed to beckon forth the bear market.

Whilst tempting fate and tanking the markets the reality was that yes Crypto.com customers were brave, they were facing the crushing hardship of paying 0.4% maker and taker fees.*

Whilst the mainstream trader can be convinced to sign up to an exchange by an admittedly pretty cool advert, the type of trader that is going to be deploying DCA bots on Mizar is going to need to get a more detailed look at their chosen exchange.

You’ll want to asses

  1. Function: Is the exchange compatible with the Mizar services you want to use?
  2. Fees: What are the trading and transaction fees?
  3. Security: How safe is the exchange?
  4. Liquidity: What is the liquidity of the exchange?
  5. Service: How is the customer service?

Function

Is it integrated with Mizar?

If you are reading this I’m guessing you at least have a passing interest in Mizar.

Whilst new exchanges and features are being added daily it’s probably worthwhile ensuring that your current exchange is compatible with the Mizar services that you want to use.

For example, if you are in the market for a great DCA bot (we have a few) then after signing up head to the marketplace.

Each bot listing will tell you not only its current 30-day performance but also the exchanges on which it can trade.

Overview of the Blockpartytrade bot type and performance on Mizar

If your current exchange is not listed your new one should be!

Fees

“No such thing as a free lunch” as Matt Damon might have once said, and this is again true when it comes to exchanges.

Whether it’s immediately apparent or not you are being charged for the privilege of having an exchange account.

Fees are how exchanges make money and they apply throughout their services. You’ll pay;

  • Trading Fees
  • Deposit / Withdrawal Fees
  • Interest / Borrowing / Liquidation Fees

And then there’s the myriad of fee reduction options;

  • Volume-based reductions (the more you trade the more you save)
  • Limit order reductions (basically a discount given to ensure you place your upcoming trades onto their order book).
  • Exchange token discounts (increasingly popular this allows exchanges to reward holders of exchange native tokens to be rewarded with discounts).

An excellent resource for comparing exchange fees is CoinTracker.io.

Their comparison table is updated regularly and gives a quick simple reference point to compare fees.

Fee Quicktake:

Binance & KuCoin offer the lowest taker fees at 0.1%
Gemini & Coinbase have the highest trading fees at 1%+

Security

Crypto wallet and the security of exchanges

Almost $2.6bn has been stolen from crypto exchanges since 2012 affecting 46 separate exchanges.

That’s pretty scary but since 2021 we have seen a big decrease with improvements to enterprise double storage solutions.

There is however still a lack of clarity on most exchanges' internal security processes.

With only one major exchange hack in 2022 (crypto.com) most exchanges offer enough security and size to give investors peace of mind but please always follow best practices and ensure that you only store funds for trading on your exchange keeping excess funds on a personal hardware wallet (e.g. Ledger or Trezor)

Liquidity

Think of liquidity as demand on an exchange.

Is there a demand to buy what you are selling on the other side of your exchange transaction?

Low liquidity means slippage, and slippage means lost profits.

Exchanges are ranked by their liquidity and you can stay up to date with this information updated live at coinmarketcap.com.

Service

Trader rating a cryptocurrency exchange’s customer service

Not every company in crypto has the kind of amazing customer service that Mizar and BPT offer.

Live agents are few and far between so I’d suggest ensuring you are minimizing potential problems prior to encountering them.

Luckily whilst most exchanges don’t offer live support they generally do provide a bank of tutorials and guides for all features.

I’d suggest working through these tutorials to find the exchange that feels most natural and logical to use.

If you did want some feedback on support issues a quick google search will give you some insight (spoiler alert most aren’t great) and there’s a good deep dive of support various exchange support experiences in this 2021 Laptop Mag article.

Conclusion

The reality is there is no ‘best’ exchange. There’s probably not even a ‘best exchange for you’, but there is a ‘best exchange for a given purpose’.

My recommendation would be to start with an idea of what it is you wish to do.

If for example, this is using Mizar to run a DCA bot on a 6 figure account then I would say you need to identify an exchange that is:

  • Compatible with your chosen bot on Mizar
  • Has good fees or at least a mechanism (token holding etc. to reduce fees) as your volume will be large.
  • Is secure so that you can be confident leaving your six-figure balance in their custody.

I think most major exchanges will be able to offer you this. If service is important to you create an account with exchanges and test their service by making inquiries. You’ll soon discover who’s responsive and able to meet your needs.

Lastly, this is crypto. You don’t need just one exchange and that exchange is probably not for life. These institutions are very new and are developing very quickly so expect dramatic improvements and be prepared to give them second chances.

Having several exchange accounts might serve you well and different exchanges for different purposes is probably the sensible way to go while we have no definitive market leader.

Happy trading.
*Joke. Crypto.com is actually pretty good, even if the timing of their advert wasn’t!

Make sure to follow BPT’s Social Channels!
Twitter: https://twitter.com/blockpartytrade
Website: https://www.blockpartytrading.com
Telegram: https://t.me/BPTbotchat

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