3 Best Cryptocurrency Trading Platforms for Beginners: The Definitive Guide [2020]
By Jaimie Miller on The Capital
2020 is already shaping up to be one of the most significant years in the life of cryptocurrency as we see a new surge of users entering the market.
One thing is for sure, being that whenever there has been a huge rush of new traders entering the cryptocurrency market, the industry has reacted by a huge number of trading platforms popping up to service the growing market.
While competition is always good for cryptocurrency traders, and the more trading platforms are available the more options are available, this situation also presents a problem for beginners because with so many trading platforms to choose from it can be hard to distinguish between them to find the best cryptocurrency trading platforms.
So we’ve taken a look at the market and at all of the options available for beginner cryptocurrency traders in 2020 and, we’re breaking down the top 3 trading platforms that we’ve selected in the cryptocurrency market, as well as looking at some of the metrics that are used to assess them, and some of the features which make them the 3 best crypto trading platforms.
A Rundown of What Cryptocurrency Actually Is
What is cryptocurrency and How Was it Created?
Cryptocurrency is a form of digital money that has revolutionized the way that the world interacts financially, both from a personal standpoint, as well from a commercial standpoint.
Today there are millions of daily cryptocurrency users that are performing a wide range of different activities such as using cryptocurrency to make payments, trading and investing in cryptocurrency, and also running a wide range of different cryptocurrency-based businesses.
However, in the earliest days of the cryptocurrency industry it could not even be called an industry, but instead was a hidden small niche group of computer scientists that had been looking at how to create a digital currency for many decades.
While none of the predecessors of cryptocurrency are widely-known throughout the world today, they were widely-known to the creators of Bitcoin, and many of the mechanisms that were built into Bitcoin and allowed it to grow like it has found their origins in the other digital currencies that came before it.
However, all of the processes of Bitcoin had inherent flaws that meant they never took off, whereas in 2008 the anonymous creator of Bitcoin, Satoshi Nakamoto, released the Bitcoin Whitepaper, which was a research paper that outlined the new invention that Nakamoto had named Bitcoin, and the revolutionary new technology that powered Bitcoin, known as blockchain technology.
Although the earliest days of cryptocurrency were comparatively slow with regards to growth, and only a tiny fraction of humanity had any idea what Bitcoin even was, progressively over time as more people started entering into the cryptocurrency market, the money that they were generating from their investments began to grab the attention of others, who then completed a feedback loop where the more people that heard about Bitcoin, the more people invested, more people then made more money, and so the more people heard about Bitcoin.
Why Do People Use Cryptocurrency and How Do People Trade it?
As we touched upon in the last section, there is a wide range of different ways that people use Bitcoin for a wide range of different goals, and although there are alternatives that are available such as payment processors like PayPal, and financial institutions such as banks, there is something that Bitcoin and other cryptocurrencies have offered which has meant that they grew to level that they have today.
People use cryptocurrency for a range of different reasons, especially now with there being more than 5000 different cryptocurrencies and each one of them having their own particular uses and features that allow a much wider range of value to be provided to users than was there originally was with just Bitcoin.
However, when looking at Bitcoin and other cryptocurrencies, there are a few key forms of value that have been provided and they are the reasons that so many people use cryptocurrencies today for various tasks.
For a start, cryptocurrency-use is either pseudo-anonymous or anonymous in the way it functions for the most part, which means instead of there being a paper trail of every transaction you’ve ever made via bank or using your credit card, when using cryptocurrencies people are able to manage the own transactions without there being public knowledge of exactly what they have and haven’t done with the cryptocurrency.
As well as this, another major feature of cryptocurrency that has attracted many users is the fast transaction times are available of cryptocurrency in comparison to using the mainstream financial system. As an example of this, the transaction from one Ethereum account to another can take anywhere as low as 15 seconds on average, and this can be to a user that has an Ethereum wallet anywhere in the world, whereas often international bank transfers can take up to 3 days or more.
Lastly, another major drawcard for users to adopt in cryptocurrency has been the low fees that are charged in general when making payments in comparison to alternatives such as payment processors and banks. As an example, in order to make a transaction of hundreds of millions of dollars worth of Bitcoin a few months ago, an exchange paid $0.63 in order to be able to do this.
How Does Cryptocurrency Actually Work and Is it the Future of Money?
But what is it about cryptocurrency that has allowed it to provide these unique kinds of value to users and what is it about Bitcoin that is allowed it to not only survive for the past decade other cryptos, where are the digital currencies had failed, but also to thrive to the point where it is grown in value by more than 27,000,000% during that time?
The answer is blockchain technology, which was Nakamoto’s key invention when creating a cryptocurrency in 2008, and represents one of the most important scientific discoveries of the 21st century so far.
Blockchain is essentially a digital ledger which records all of the transactions that take place between different accounts in a network, and from this list of transactions, it is easy to deduce which users own how much of a given cryptoasset.
The key difference between blockchain technology and all other comparable forms of money management that have existed previously is that decentralization is built into the core of all blockchain systems, and it’s decentralization which not only provides ideological benefits to many users but provides practical benefits to all users and allows the system to thrive.
Where in the traditional banking system a central bank or other central authority is required in order for all users to be able to know that the system is being managed by someone, this is not the case with blockchain-based cryptocurrencies.
Blockchain replaces a central bank with a system of algorithms, mathematics, and computational mechanisms that work autonomously to manage the production, creation, and distribution of the cryptocurrency, and to incentivize users to become involved in the network.
Because of the way that blockchain has been designed, there are no users that control a cryptocurrency such as Bitcoin, and it cannot be shut down at a central point or by turning off a single computer, and this has a protected Bitcoin from both internal threats of greed and corruption, as well as the external threats of regulation and governments around the world.
What are the Different Ways to Generate Revenue with Cryptocurrency?
The primary reason most people have interacted with cryptocurrency over the past decade is for one reason and one reason only, being to figure out ways of generating significant amounts of revenue.
In the earliest days of Bitcoin, there were a relatively limited number of ways to be able to generate an income with cryptocurrency, however, these few different activities were all highly profitable at that point.
The main ways that cryptocurrency users have always been able to generate an income are by cryptocurrency trading, cryptocurrency investing, and cryptocurrency mining.
Cryptocurrency trading and investing are both ways to interact directly with the cryptocurrency market in order to generate profit from creating trades over given periods of time.
Cryptocurrency mining is the process of connecting a computer system to a cryptocurrency network and then running software on the computer that will allow the hardware of the system to try to solve complex computational problems.
When a cryptocurrency miner is the first one to solve the puzzle at that point in time, they are rewarded with an amount of free cryptocurrency, and throughout the life of Bitcoin and cryptocurrency market in general, this has been one of the most profitable ways of interacting with cryptocurrencies.
More recently, a popular way of generating revenue within the cryptocurrency industry has been to take part in cryptocurrency referral programs, and also to take part in giveaways such as airdrops and bounty programs.
While cryptocurrency trading and investing have remained the two primary ways that users can generate an income in the cryptocurrency industry, even within those fields there has been a huge diversification of the kinds of ways the traders interact with the market in 2020.
There have been a wide range of new sub-niches of cryptocurrency trading and investing that has become prominent over the past few years such as cryptocurrency margin trading, cryptocurrency social trading, and cryptocurrency algorithmic trading, which is the use of software programs called bots but in order to be able to autonomously generate profit in the cryptocurrency market.
What are the Metrics Used to Compare Crypto Trading Platforms?
Design and User Interface
In the early stages of the cryptocurrency market, it was very common to see a majority of trading platforms having very low-grade and unappealing user interfaces.
At that time it didn’t matter so much because most of the users were computer science-oriented anyway, and having any kind of graphical interface to be able to trade with was more than enough for them.
However, as time progressed, the typical cryptocurrency user moved from being a computer programmer or computer scientist to being a normal user that was used to seeing nicely designed websites with appealing user interfaces.
This has meant that since then until now one of the key features for any cryptocurrency trading platform is how attractive the interface is, and more to the point, how intuitive it is for users to be able to access, navigate, and understand the trading platforms they use.
Trade Volume/Liquidity
A key determining factor in the quality of a cryptocurrency trading platform is the liquidity that is present on the platform, being that platforms that have low liquidity provide sub-optimal opportunities for entry and exit points in cryptocurrency trading.
Liquidity allows traders to secure the entry and exit points they want to trade, and it also provides a level of confidence that the platform has a high enough number of users that it will be around tomorrow, as well as being around today.
Trading platforms that have high liquidity and high trade volumes instill confidence in the quality of the platform, and also provide advantages trades are being developed and executed on the platform.
Although slippage may have a relatively limited impact on the profitability of a trading strategy across a single trade, over the course of a year of trading, repetitive slippage events can lead to higher efficiency in the way that traders operate, and this can lead to a buildup of loss that is unnecessary and harmful to profits.
Fee Schedule
The fee schedule of a cryptocurrency trading platform is critically important in comparison between other trading platforms that may provide a cheaper way to trade.
The success of cryptocurrency trading activities can be boiled down to a very simple calculation, which is the revenue generated from trades, taking away the cost of being able to secure that revenue, equals the profitability of trading activities.
As well as improving the way the traders generate revenue in order to increase profitability, the other way that they can increase profitability is by reducing the cost of trading, and this is directly correlational to the fee schedule of the trading platform they’re using.
While fee schedules can often be quite similar between trading platforms, there are some outliers which are either extremely expensive or extremely cheap in comparison to others, and the latter of these two are the ones that should be sought out if at all possible.
Features and Tools
Not all cryptocurrency trading platforms are treated equally, and one of the biggest distinctions between them is the kinds of tools and features which are additionally built into a platform on top of standard trading tools.
While some trading platforms may be bare-bones interfaces to simply be able to create buy and sell orders and that is it, there are other trading platforms that put extensive effort into designing and integrating advanced features into the platforms.
These platforms provide additional ways for the users to generate profit within the cryptocurrency market, and also often provide other advantages which are not present on other trading platforms.
By seeking out trading platforms that have a wider range of features and tools available that could be used to generate profit, traders can reap benefits which can often have significant advantages, and therefore this makes platforms with a wide range of tools more attractive.
Security and Accessibility
The final metric to be able to decide whether or not a cryptocurrency trading platform is better than another platform is something which is critically important, being the security of the platform itself and its propensity for being hacked.
While hacking is something which is common in many different industries, it is particularly common in the cryptocurrency industry and many trading platforms have been destroyed overnight by hackers, taking their user’s funds with them.
There is no point in putting effort into developing a profitable trading strategy and selecting a platform with low fees and multiple advanced and unique features just to have the profit that you earned stolen by hackers because of substandard security on the platform.
It’s because of these points that platforms which implement high-quality security features and have a track record for defending their users’ funds against hackers that take top priority over other trading platforms.
3 Best Cryptocurrency Trading Platforms for Beginners in 2020
PrimeXBT
Design and User Interface
PrimeXBT has an attractive and intuitive user interface that makes it easy for beginners to learn to use the tools on the platform quickly and provides advanced users with an easy way to create more sophisticated strategy strategies.
The design of the platform is modern and fresh and suits its place as a professional cryptocurrency trading platform that is a part of the next generation of exchanges and brokerages that have launched in the past few years.
Trade Volume/Liquidity
PrimeXBT has high liquidity on all assets throughout the platform, and this is provided by a range of 12 liquidity providers to ensure that optimal entry and exit points can be achieved by traders.
PrimeXBT has grown over the past years to becoming one of the largest cryptocurrency trading platforms on the market today, and PrimeXBT manages up to $2 billion worth of global trade every day.
Fee Schedule
PrimeXBT fees are some of the lowest of not only the cryptocurrency industry, but of traditional asset trading as well, with a low flat rate of 0.05% applied to all trades across the platform, irrespective of the size of the trade, or of the asset class which is being traded.
Since its launch, PrimeXBT has consistently provided the lowest fees of any major cryptocurrency trading platform, and this has heavily contributed to the exponential growth of the platform over the past two years.
Features and Tools
PrimeXBT packs a wide range of advanced tools and features that are uniquely available on the platform such as it’s recently released short-term Bitcoin-settled accounts platform, PrimeXBT Turbo, which allows traders to make up to 90% profit in 30 seconds.
As well as this, PrimeXBT has entered the crypto social trading market by releasing a new platform that was created in partnership with Covesting and allows traders to partner together in order to maximize their collective profit.
Security and Accessibility
PrimeXBT employs bank-grade security throughout its platform, protecting assets of users, and ensuring a secure and robust environment in order for traders and investors to interact with the cryptocurrency market.
Some of the security features used on the site include mandatory Bitcoin address whitelisting feature and hardware security modules with a rating of FIPS PUB 140–2 Level 3 or higher.
Coinbase/Coinbase Pro
Design and User Interface
Coinbase has a modern design and uses simplicity in the layout of its pages in order to make it easier for users to navigate the platform.
Since its launch until today, Coinbase has consistently placed a lot of focus on ensuring that its design makes the experience of using the platform enjoyable for traders and investors.
Trade Volume/Liquidity
Coinbase has one of the highest liquidity of any trading platform in the cryptocurrency industry, and this is something which again has been true throughout much of its life.
Whereas other trading platforms such as PrimeXBT are highly attractive to retail investors who can enjoy a range of benefits at that platform, Coinbase’s high liquidity is mostly as a result of the institutional investors that use the platform widely.
Fee Schedule
Although Coinbase is a professional and well-designed platform, one problem that many users have brought up is the expensive fee schedule that is used by the platform.
This was only exacerbated when Coinbase’s exchange, GDAX, rebranded itself as Coinbase Pro and in the same process upped its fees by 30% at the same time.
Features and Tools
Coinbase is a relatively simplistic and minimalist platform that does a few things very well and does not attempt to do a wide range of different things.
For traders looking to make purchases of cryptocurrencies and to have them stored on a platform that is secured, Coinbase is one of the more popular platforms to achieve this, however, it does not offer much else outside of this.
Security and Accessibility
Coinbase is a very secure cryptocurrency trading platform that has invested a large amount of money and resources into ensuring that its platform is hack-proof.
Today there have been no hacks at Coinbase, and this is notable especially considering it’s a long history within the cryptocurrency market.
Binance
Design and User Interface
Binance is another well-designed and attractive cryptocurrency trading platform that uses a dark mode design in order to distinguish it from many others.
The platform itself is well-designed and well-built, and both the Binance website and app are easy to use and fast.
Trade Volume/Liquidity
Binance also has some of the highest trade volumes and liquidity in the cryptocurrency industry like PrimeXBT and Coinbase, and this has been consistently going over the past few years.
Binance’s high prevalence within social media has meant that a large number of users that enter the cryptocurrency market for the first time are introduced to Binance.
Fee Schedule
Binance’s fees can be reduced by holding an amount of its native token, the Binance Coin, and this reduction can be up to 25%, which is a significant discount for any trader to be able to use.
It’s important to consider, however, that Binance has some of the highest fees in the cryptocurrency industry, and therefore even with the 25% reduction in fees it is still more expensive to trade costs of other platforms by up to 10 times.
Features and Tools
Binance is progressive in the way that it addresses its place in the cryptocurrency market, and although it’s main business has always been providing for the currency a centralized cryptocurrency exchange, it has explored many other areas as well.
Examples of this are Binance’s decentralized exchange that it has been developing, as well as Binance’s initial exchange offerings platform, Binance Launchpad.
Security and Accessibility
Until early 2019, Binance was considered to be a safe trading platform with robust security, however, all of this changed when the platform was hacked for around $40 million.
Although today it is speculated that Binance has fortified the security on the platform, it still has cast a shadow over whether or not its security is up to the task of protecting its users' funds.
In Summary: Best Cryptocurrency Trading Platforms for Beginners
In 2020 there is a veritable smorgasbord available for beginner traders looking to find trading platforms to be able to buy and sell cryptocurrency.
However, although there are a large amount of trading platforms available to choose from, there is a great disparity between the best cryptocurrency trading platforms on the market and the rest in 2020.
When choosing a cryptocurrency trading platform, it’s important to look at a number of metrics which directly correlate to the quality of the platform and explain the different types of value that traders enjoy when they use a given platform.
Really these kinds of value all boil down to either being able to increase the amount of profit that traders are able to generate with the platform, or reducing the risk of using that platform.
The three platforms we’ve selected are the best in the cryptocurrency industry based upon the metrics that we’ve investigated, and this is reflected in the high number of users that all of these platforms have, as well as the high trade volumes.
