What is a Crypto Exchange?
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If you want to start trading or speculating in cryptocurrencies, then you have to start by knowing what crypto exchanges are, and identify the best ones. Ideally, a crypto exchange is a site or platform from where you can buy, sell or exchange digital currency for fiat currency like Euros or Dollars or for other cryptocurrencies.
There are different types of platforms where you can exchange crypto depending on your business or investment goals. These platforms include trading platforms, direct trading and brokers’ platforms. Some platforms will require you to open and verify accounts while others do not need any details from you. Let us go through the various types of details to understand how they operate.
For those of you who want to carry out frequent trades, then these are the platforms you should look for. You will be required to open and verify an account with your details. It is more or less like forex trading. While opening an account is free, you will be required to pay a fee for each transaction you carry out here. There are deposit, trading and withdrawal fees. Do some research to find out those with the lowest fee to optimize your trading.
Direct Trading (Peer-to-Peer)
These are platforms that allow individuals to transact directly. In these sites, people from the same or different countries meet in a virtual marketplace and exchange currency at their own agreements. The market does not determine the prices in these sites. That decision is left to the traders to agree amongst themselves. If you are to trade on such platforms, it would be good to analyze the market first to avoid being short-changed.
These are sites in which any person can buy cryptocurrencies from brokers at different prices. The sites are more or less like foreign exchange dealers. The brokers set their own prices which could be higher or lower than the market prices. It all depends on a particular broker’s trading purpose. You should be very careful in such platforms to find legitimate individuals and also ensure you know the market price of what you are buying or selling.
Identifying the best crypto exchange
Now that you have made that decision to get into the crypto world, it is vital that you identify the best exchange to make the most out of this business. After you have decided what you want to do, whether it’s trading or speculating, there are some parameters that you must check on these platforms to identify the most ideal. Let’s go through the most important ones.
Read reviews online about the various available exchanges. Mind you, they are very many, but there are those that people have rated highly. These means that people trust those sites. Check if they have been ever hacked or have issues releasing their clients’ money. Consider if they have suitable trading tools and if other experienced traders trust them. You can also check independent individuals’ comments on sites such as Reddit and BitcoinTalk.
You will find different exchange platforms with different exchange rates. This is the conversion rates for fiat currencies. Find those that have favorable rates to save some money. You will always see those fees on the sites’ platforms or from other users’ reviews.
Some exchanges are only available in specific regions or countries. Check if the site you intend to use is available in your country. You will have to find one that is supported in your country to avoid complications with depositing and withdrawing funds, especially if you intend to use wire transfer.
Check for any limitations trading or otherwise. There are platforms that put a limit on the amount you can trade until you complete your verification process. There those that have a cap whether or not you have verified your account and there the highly liquid ones where you can carry out unlimited transactions. Check also the ease with which you can use fiat currency for digital tokens and the ease of trading tokens for tokens. The highly liquid exchanges are some of the best crypto exchange platforms as you can use most digital coins. You can check this info on the exchanges official websites.
Most exchanges will require you to verify your identity to exchange crypto on their site. This includes uploading your identity card and location details. Some also need you to take photos of yourself holding your identity card. This verification is crucial to preventing fraud. It is a way the exchange platforms cushion themselves from unscrupulous traders whose aim is to swindle others. The verification also protects traders as you only get to interact with verified individuals with clean records. It minimizes the chances of getting conned.
Check the fees or commission an exchange charges. Ensure you carry out due diligence on these as there are some exchanges that have hidden fees. You must identify their deposit, trading and withdrawal commissions. Keep vigil as there are some platforms that have unreasonably low fees. Such sites could be operated by con artists just out to get your money. Information about fees should be freely available on all the platforms official websites.
Different exchanges support different payment methods. There are those that support debit and credit card transactions, bank wire transfer, PayPal, and others. Check the options available in the exchange you choose and their fees. The more the payment options, the better since you will have a variety to choose from.
It is important that an exchange has a good and helpful customer support. Many are times when the frequently asked questions fail to provide a solution to clients’ queries. An exchange that has especially a chat that is available for 24 hours is the best since you can ask anything regarding your transactions at any time. Using emails can be helpful only if they are responded to on time.
Best Cryptocurrency Exchange Today
There are so many digital currency exchanges today. Let’s look at a few that dominate this space.
This platform was developed in London, the United Kingdom as a Bitcoin exchange in 2013. It was also a cloud mining provider, but this service was closed in January 2015. It is registered under FinCEN in the United States (U.S) and ICO in Europe and UK.
Transactions are based on FOK (Fill-or-Kill), where you receive the exact amount of coins you buy for an agreed price. Other exchanges match you with a willing seller of your set price. This feature sets this exchange apart from the rest. There are four account limits depending on your verification. These include the Basic, Verified, verified plus and corporate.
- Basic– You can buy up to $500 of coins per day and $2000 per month.
- Verified– Up to $10,000 per day and $100,000 per month.
- Verified plus and corporate – no limitations.
You need to provide a government-issued identity card for verification.
This platform charges very high fees due to FOK. You will part with up to 7% of your cash when you place a trade. For instance, if you want to spend $1000, you will get coins worth $930. This fee applies to direct purchases. Other trades are charged 0.2% of the amount you spend. Funding your account from your bank account is free while using a credit card will set you back (3.9% + 0.25 commission).
- Quick transactions.
- Cushions against fluctuating exchange rates.
- Multiple payment systems.
- 2-factor authentication security.
- Supports Bitcoin and Ether.
- Stringent verification requirements.
- High transaction fees.
- No dollar withdrawals.
This is one of the largest crypto exchange platforms based in San Francisco U.S.A. It is available in the U.S and other 32 countries in the world. The exchange accepts payments via wire transfer, debit and credit cards, and PayPal.
Coinbase charges 3.5% commission for transactions as a standard charge, but there are other charges depending on the payment system you use and the country you are trading from. Users are required to provide identification details and personal details.
- You can buy and sell the coins directly in about 32 countries in the world.
- Supports Bitcoin, Ethereum, Ethereum Classic, Bitcoin Cash and Litecoin.
- You can fund your account and withdraw cash via your bank account.
- You can also transact using credit and debit cards and Paypal.
- About 38, 000 business including Dell and Expedia support this exchange.
- It works with both web and mobile wallets.
- High buying and liquidity limits (you can buy up to $50,000 worth of bitcoin every day if you are fully verified).
- Does not give you anonymity.
- Supports limited altcoins.
This is one of the best altcoin exchange in the cryptocurrency space. It was developed in 2013 in Prague, Czech Republic as a bitcoin mining pool by the Minergate team, but later upgraded to an exchange platform on April 2015.
This platform is very popular as it is available in many countries around the world that allow digital currency trading. You can exchange crypto of your choice on this platform. Visa and Mastercard are excepted on Changelly.
- Available in many countries.
- Buying with Fiat currencies.
- Low transaction fees.
- Supports a lot of altcoins exchange.
- High liquidity and trading limits.
- Slow transactions (about 5-30 minutes).
- Limited payment options.
This exchange is based in San Francisco, U.S and was founded in January 2014. This platform supports major digital currencies such as Bitcoin, Litecoin, Dash, Zcash, Monero, and Ethereum among others. It supports more than 80 altcoins.
Until recently, Poloniex has been very popular, but it is quickly losing this popularity as many clients are complaining about being unable to withdraw their coins from the exchange. Their transactions are now very slow and the customer support is slow or never responds at all.
Apart from those complains, the site is easy to set up and has advanced charts and data analysis that can be good for trading if they solve their issues. Their fees depend on the amount you are trading. It decreases gradually as you increase the volume of trade.
- Supports major currencies and a lot of altcoins.
- Has two-factor authentication for enhanced security.
- Simple set up process.
- Stringent verification details.
- Was hacked in 2014 and lost 12% of its bitcoins.
- Doesn’t support buying with Fiat currencies.
- Delayed response from customer care.
Coinmama is a crypto exchange owned by NBV International from Slovakia. This is a daughter company of New Bit Ventures, registered as a money service business in Israel. It is available in about 217 countries and 24 U.S states. You can use your credit card to buy bitcoins from anywhere in the world, apart from the regions that have restrictions on digital currencies.
It accepts payments in master and Visa cards, debit and credit cards as well as western union and cash. You can pay using your local currency subject to foreign exchange fees. This is one of the oldest and largest platforms from which you can buy Bitcoins and Ethereum.
When it comes to fees, expect to part with about 6% of your transaction amount when buying ether or BTC. You also pay an additional 5% on debit and credit transactions.
- Multiple payment options including cash.
- Easy to buy bitcoins and Ethereum.
- Does not hold any cryptocurrency on the investors’ behalf.
- No major issues so far.
- You cannot sell bitcoins or any other cryptocurrencies.
- You can only buy bitcoins and Ethereum.
- Considerably high transaction fees.
- Stringent verification process.
Binance is an exchange platform that focusses on crypto to crypto trading. It is relatively new, but quickly becoming popular, with over 20,000 registered users.
The only available payment method is via cryptocurrencies. You deposit and withdraw using digital currencies. The platform supports bitcoin, Ethereum, litecoin and more than 45 altcoins.
The platform has low trading fees. It charges a flat rate of 0.1% on every transaction. If you fund your account using BNB, you get a 50% discount. BNB is Binance’s token.
- Neat user interface.
- Fast transactions/processing speeds.
- Available in multiple languages.
- There are no fees on deposits.
- Has two-factor authentication for security.
- Does not support fiat currency.
- It’s a crypto to crypto exchange.
- Limited payment options.
All the exchanges we reviewed:
In a Nutshell
It is important that you understand cryptocurrency exchanges before you start trading. There is no shortcut when it comes to this since you will need to use one to buy some coins. If you are a seasoned investor, it is also good to update yourself on new developments. You never know when something better will come up in this space.
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