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Monday, August 15, 2022

How to Choose a Cryptocurrency Exchange

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As obvious from the name, the purpose of cryptocurrency exchanges is to let people buy, sell and trade cryptocurrencies. You will not be able to buy or sell digital assets if you don’t have access to a currency exchange. Nevertheless, this doesn’t mean that every crypto exchange is a good one. If you speak to any seasoned trader and ask them to talk about their first purchase, they will tell you that they ended up wasting significant sums of money and time because they signed up with expensive, buggy and incompetent exchanges in the beginning. It takes time for anyone to separate the good exchanges from the bad ones, but it can be done when you know what to look for.

It takes some time and effort to find the best crypto exchange or cryptocurrency broker, but it is worth it in the end because you find the right partner and can trade cryptocurrencies easily in the long run. Some of the factors you need to consider during your selection process are:

Security

The most important factor that you need to consider when you are looking for a crypto exchange is its security. If you opt for an unsecured exchange, your money could be stolen and so many other advantages it has to offer will be worthless. You don’t want to lose your money, so the exchange you sign up with has to be secure. Make sure their web address begins with HTTPS because that ensures it has the highest standard of encryption. The exchange should also use two-factor authentication for login safety. They should provide cold storage options for storing customer deposits. Lastly, they should also have auditing programs in place that monitor exchange activity round the clock and getting email and SMS alerts is also a plus.

Legal aspects

It is recommended that you find an exchange in the same country you are in because this makes it a lot easier to keep up with regulatory changes. Nonetheless, there is no harm in using exchanges in other countries and some exchanges provide their services to traders in specific countries only. As long as the exchange is regulated, you don’t have to worry because they also ensure their funds, which means that in case of any problems, you will be reimbursed.

Transparency

Another thing to consider is whether the exchange shares information about its owners, headquarters address as well as members of its team. The transparent cryptocurrency exchanges are also known to publish their cold storage address or enable people to check their reserves in other ways, such as audit information. No matter what the case, it is not recommended for traders to leave their cryptocurrency funds on the exchange for very long. Exchanges are often the target of hackers and you don’t want your funds to be compromised.

Liquidity

The liquidity of a cryptocurrency exchange depends on the trading volume. Liquidity is of the utmost importance because it helps in completing transactions more easily, faster and without having to worry about price volatility. You should also check if the exchange offers ‘locked-in’ pricing because this guarantees you the price at the time you are making your transaction, even if it is not immediately completed. However, you should bear in mind that liquidity varies for currency trading pairs.

User Experience

If anonymity is a concern for you, you probably won’t want to sign up with an exchange that requires you to reveal a lot of information about your identity. It is a good idea to take a look at their policies before you sign up. The user interface is also something you need to look at because you want it to be simple and easy to use, both on your desktop and mobile device. One of the best ways to determine what kind of experience it offers to the users is by checking the reviews that have been posted. For instance, StsRoyal Review will tell you about the benefits and drawbacks of the exchange, how its trading platform works and how responsive the interface is.

Fees

One aspect that you certainly cannot take lightly is the fee charged by the cryptocurrency exchange. In most cases, exchanges charge less than 1% per transaction and the fee will decrease when your trading volume goes up. However, this is not the only fee you should be looking at. There are other charges associated with a cryptocurrency exchange that also need to be considered, such as the withdrawal fee they charge. Some exchanges are known to have unreasonably high withdrawal fees for specific cryptocurrencies. Apart from that, you should also check out the deposit fee. Some of the exchanges provide a convenient and quick way to purchase cryptocurrencies with a debit or credit card, but these come with a higher fee.

Customer support

One of the most important elements of any cryptocurrency exchange is none other than customer support. There are times you will get stuck and require help, but if it is not immediately available, it can create a lot of problems for you. You certainly don’t want that to happen because it can lead to losses for you. Therefore, don’t forget to check the customer support offered by a customer exchange. They should provide multiple channels for you to be able to get in touch with them. If there is no information about customer support, it is best to continue looking.

Apart from these factors, you can also check out what the cryptocurrency exchange has to offer. If you are interested in a particular cryptocurrency, make sure the exchange supports it. The best exchange is one that can offer you a variety of cryptocurrencies as this can help you in diversifying your investment portfolio in the long run. As long as you do thorough research and compare the above-mentioned factors, you will be able to choose the right cryptocurrency exchange for your trading needs and reap the profits.

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