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How to Choose Crypto Exchange

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by Godfrey Benjamin · 5 min read
How to Choose Crypto Exchange
Photo: Unsplash

There are crypto exchanges operating in each region, and independent reviews can be sought to know which outfits are the best around.

The digital currency ecosystem is advancing, and crypto exchanges are gateways through which many people interact with the industry. Considering the vital role they play in the cryptocurrency industry, crypto exchanges have proliferated over the years, and per data from CoinMarketCap, there are over 300 trading platforms around today.

That a trading platform is in operation is not a yardstick to patronize them. Choosing a digital currency trading platform, like one of the best crypto exchanges UK, is a task that must be done diligently and with all kinds of information available at a trader’s disposal. This is the essence of this guide, to give brief insights into what matters the most when choosing a crypto exchange to pitch tents with.

What Matters When Choosing a Crypto Exchange

It is crucial to understand that different crypto exchanges may brandish the same business models, but it does not imply that they have similar features and business advantages. Overall, here are some of the key things to look out for:

  • Regulation: Regulation is one of the foremost things that defines an exchange that is trustworthy or not. A trading platform that is regulated by local authorities is more likely to be safer and more responsible with investors or traders’ funds. As a startup, regulation is a piece of vital information to seek before pitching tents with any platform.
  • Tradable cryptocurrencies: Depending on the technological infrastructures in place by a trading platform, the types and number of cryptocurrencies tradable on a platform should also be considered. In a permissionless world, there are no restrictions to the type and number of cryptocurrencies one can invest in or trade, however, if the exchange you pitch tents with does not have support for those coins/tokens, this may be a frustrating impediment.

In all, it is important to patronize or choose crypto exchanges that have a larger number of digital currencies on their platform.

  • Fees: Charging fees are how crypto exchanges generate their own revenue, and none can be faulted for charging fees on trading. However, the rate can be exploitative as some exchanges charge quite a lot for transactions that are meant to be cheap. Traders need to compare fees between trading platforms before deciding to do business with them or not. Some platforms are even becoming very creative and are no longer charging fees, users need to do their own research in order to identify exchanges that offer the best incentives.
  • Wallets available: Cryptocurrency exchanges typically come with a built-in wallet through which traders or users can store their crypto assets. These kinds of wallets are called hot wallets as they are connected online. While integrating wallets is the most common practice, there are some emerging exchanges that are non-custodial in nature, and users will typically need to connect their own non-custodial wallets to gain access.

While decentralized exchanges are the common trading platforms in this sense, some centralized exchanges too also do the same. In-built wallets bring convenience and are less complicated. These are recommended for traders, particularly those new to the system.

  • Trading tools: When making the decision on which trading platforms to choose, users need to ask themselves what trading tools are available to track market progress. Does the exchange have an inbuilt chart? Does it have an alert system? Technical analysis tools?

The presence of these features generally helps traders engage with the markets with understanding and trading platforms that offer this is good to go with.

  • Payment methods available: There are a few known payment methods including cryptocurrency deposits, the use of credit/debit cards, and other channels such as Paypal, and CashApp. While some trading platforms based on regulations have limited payment methods, a host of others have a broad provision. Users who want flexibility in their payment methods will need to conduct extra checks to see if the exchange they are considering offers this or not.
  • Customer service: This is a very crucial factor to consider before trading with any exchange. A good customer service system makes life easy for traders, especially when they are at a crossroads or have challenges with any aspect of their trading endeavors. A good review of an exchange’s customer service profile has to be done before becoming too invested in any platform. Trustpilot reviews can give a very good insight into how rates an exchange is overall.
  • Is there a mobile app and Educational material: A mobile app makes it easy for traders to connect to their trading accounts at any location provided there is an internet connection? Trading becomes more flexible when an exchange can be accessed on the go. While this does not matter for so many traders, it is important to confirm this if mobility is crucial for you as a trader and choose an exchange that offers you that.

An exchange MUST have resources to equip its users as the industry is dynamic and traders only get better by poring through educational materials made available on exchanges. An exchange without education materials should be double-checked before pitching tents.

Key Takeaways

This brief about what to watch out for in choosing an exchange is non-exhaustive. Everything boils down to enhanced user experience, security of funds, and the propensity to become profitable over time. If an exchange cannot guarantee some of these basic things, it probably is not the best one for you.

There are crypto exchanges operating in each region, and independent reviews can be sought to know which outfits are the best around. Some of the best crypto exchanges in the UK include Binance, Coinbase, eToro, and AQRU amongst others.

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