5 Tips to Help You Choose a Credible Cryptocurrency Exchange
Entering the nascent crypto markets can be exciting yet daunting, especially for beginners, since there are up to 500 cryptocurrency exchanges in the industry according to CoinGecko and new crypto tokens are listed every single week. With all these options and information out there, choosing a credible cryptocurrency exchange as well as crypto-related sources are as hard as winning the lottery. So what factors should we consider when trading crypto online? To help you select the wheat out of chaff, below are the five tips that you should pay attention to before investing in cryptocurrencies.
1. Security
Security is extremely important for both retail and institutional investors since the digital assets are stored on exchange-generated wallets. Although they are not entirely fool-proof, with sporadic hacks in the past, most crypto exchanges offer basic protections like Two-Factor Authentication (2FA) or Two-Step Verification to prevent users from falling victim to phishing scams or other crypto theft. Still, it’s better to always stay alert of any strange URLs, email addresses, and even social media channels when you first sign up on a crypto trading platform or even when exchanging trading strategies with community members, and it’s advisable to take the following steps to keep safe:
- Check the spellings of URLs and email addresses to make sure that there are no alternate letters or numbers which look like the names of the authentic exchanges
- Make sure the crypto exchange’s web address starts with HTTPS instead of HTTP since the former is used for secure communication over a computer network
- Once your account is successfully registered, you will receive an alert from the exchange to indicate the login IP address, so if you suspect that you have been scammed, just freeze the account immediately, and notify the administrator.
For API users, you should use a unique API key for each bot, third-party service, or application, and don’t forget to always delete the keys that you are no longer using.
2. Reputation
Comparing the traditional financial world with the crypto one, the latter industry is still maturing, which is why, for instance, there’s no universal KYC/AML policy present in the crypto space. As policies vary in different cryptocurrency exchanges, it’s important to invest in a reputable platform with a long history. For example, Poloniex Crypto Exchange, a global cryptocurrency platform, has been in the industry for more than eight years since 2014 and provides amateur and professional crypto traders from all over the globe with 400+ tokens for trading, earning it a good reputation in the industry. As shown on CoinMarketCap, Poloniex ranked 26th and 15th for spot and derivative trading respectively at the time of writing. As one of the world’s oldest cryptocurrency exchanges, Poloniex has a strategic partnership with TRON, DeFi ‘s third-largest blockchain in terms of total value locked. Therefore, their collaboration will create more innovative projects on cryptocurrencies in the future, which not only gives more confidence to investors, but also reassures the reputation and reliability of Poloniex to be backed by TRON. Apart from checking the most trusted data platform like CoinMarketCap to understand the company background, users should also check reviews of the exchange from platforms like Investopedia, Traders Union and CryptoMeister. That’s why you should always DYOR:
- Check the cryptocurrency exchange’s history
- Check credible crypto data platforms (e.g. CoinGecko and CoinMarketingCap)
- Check trustworthy news websites (e.g. CoinDesk and Cryptonews)
- Check review sites (e.g. Investopedia and Traders Union)
3. Liquidity
Every trade occurs between two parties: the maker and the taker and they represent the concepts of a person whose order exists on the order book prior to the trade, and the person who places the order that matches the maker’s order, respectively. Makers are named because their orders create liquidity in a market. Meanwhile, takers are the ones who remove this liquidity by matching makers’ orders with their own. Therefore, liquidity is an indicator of the stability and vibrancy of a marketplace to enable participants to trade quickly, easily and fairly. Please bear in mind that liquidity can be varied for different trading pairs. To encourage market liquidity, different crypto exchanges have their maker-taker structure, like this one, where fee rates differ depending on which side you are on.
4. Asset choices
Since the emergence of Bitcoin (BTC), many altcoins including Ether (ETH), Tronix (TRX), Ripple (XRP), and more crypto projects have mushroomed in the recent decade with accumulation of over 20,000 different coins and tokens now, according to Exploding Topics. Cryptocurrency prices are constantly changing and should be tracked over time to make the best investment choices. Although none of the cryptocurrency exchanges offer all digital assets for trading, an organized one should allow investors to trade as many as possible, especially for hot coins like BTC, ETH, and other popular altcoins. Besides, if the cryptocurrency exchange provides traders with spot, future, and NFT markets, with some even allowing investors to make use of leverage when trading futures, as well as zero-fee trading policy to revitalize trading activities, then you can foresee that the overall liquidity will be improved, making the marketplace more stable, fair and vibrant.
5. User experience
As a new investor, you must feel intimidated by the displays of order books, candlestick charts, and all the unfamiliar icons and abbreviations. That’s why a neat UI/UX helps investors have a better understanding of the market to make faster and smarter moves. While some cryptocurrency exchange sites have “basic” and “advanced” interfaces to prevent users from making any mistakes, Poloniex launched a new trading system with optimized functionality and higher speed as well as better stability and usability. Poloniex also provides 24/7/365 multilingual customer support to customers in over 100 countries and regions to cater to everyone’s needs.
For more information on the crypto industry, please don’t forget to visit and subscribe to Poloniex’s channels on Medium, Instagram, Twitter and LinkedIn. And, don’t forget to always DYOR before investment!
