A cryptocurrency exchange is an online platform where one can exchange a type of digital asset for another, and the exchange is based on the market value of these assets. In recent times the crypto wave has gone mainstream, with millennials, as well as enterprises, making every effort to understand the force behind this new technology. But even more to this is their quest to be able to cash in on cryptocurrency through the different types of trading platforms
The growth of cryptocurrency and its acceptance in the digital economy. Has resulted in the need for platforms that can facilitate the purchase and selling of these digital assets. Unknown to many are the numerous existing tips that you can piggyback on to benefit from your cryptocurrency exchange this year.
These tips are as shown below:
Understand the Legal Aspects
One of the key recommendations in choosing a cryptocurrency exchange, knowing your location, and how easy it is to adhere to compliance regulations as pertains to the exchange. Most cryptocurrency exchanges are limited to geographical restrictions, therefore think about signing up to crypto exchange in a country where you can legally trade. If your country has banned cryptocurrency, it means you will not access any crypto exchange services. To determine if cryptocurrency exchange is legal in the country:
- Knowledge of the exchange is already covered by relevant certifications and proper licensing.
- Check for any laws and regulations that are meant to govern blockchain and cryptocurrency transactions.
Making considerations for such factors can be a lifesaver for you, in case something goes wrong in the course of your transaction, like funds being withheld. Depending on the existing legislation and your jurisdiction, you can quickly seek legal redress.
Security and Authenticity
In recent times, the cryptocurrency exchanges have suffered hacking attempts- like the Coincheck hacking- which amounted to billions of losses. It is in this regard that security should be on top of your list when settling on a cryptocurrency exchange.
AcroMost centralized exchanges are biased towards liquidity and exchange volumes, which means they are more susceptible to phishing scams and hacks, because of the large volumes of cash these hackers stand to gain from their hacking escapades.
Contrarily, decentralized exchanges are aligned towards maintaining security and anonymity. Users can sign up without exposing their personal information. Additionally, they tend to do away with the vulnerable middlemen, and instead work towards connecting users directly when they are placing and filling their orders.
Identify the Method of Purchase
Having an understanding of the variation in the means of purchase should be fundamental to your choice this year. Most exchanges use PayPal, while others require bank deposits through bank transfers, some also accept credit cards, while still others are solely reliant on crypto when making the purchases.
If you presently have no cryptocurrency, and you want to join the wave. You should choose a platform that will accept fiat currency to enable you to enter the cryptocurrency market effortlessly. Also, make an effort to know how long these exchange platforms take to process transactions.
Know the Fee Structure
An understanding of the fee is vital for any exchange according to a review of Bybit. Different exchanges have varied fee structures, and which is essential when choosing a cryptocurrency exchange. It is advisable to go for the trade that offers a discount on fees, especially when the exchange fee is used to accomplish the transactions. This fee is also highly dependent on the number of tokens held. Some exchanges have transaction fees on sales with free purchases.
Know the Supported Tokens
Bitcoin and Ethereum are the most commonly supported exchange tokens. This notwithstanding, there is an existing variation in the cryptocurrency support across the numerous exchanges, with platforms like Binance trading on altcoins. At the same time, Coinbase trades with at least four significant cryptocurrencies.
Depending on your risk appetite, settle on a cryptocurrency exchange that is able to support as many crypto tokens as possible, which will come in handy when you need to make a purchase. Notably, understand the metrics that influence the exchange rates, for instance, the market cap and the 24-hour volume.
As a best practice, balance your crypto investment with stable coins, such as the True USD, which is backed by the U.S and collateralized cross different bank networks which mean it is not susceptible to the typical volatility that is present in the cryptocurrency markets
Understand trading platforms and the P2P exchanges
Before choosing a cryptocurrency exchange, first, make an effort to know the existing different types. Some of the most common trading platforms include Binance and Coinbase. Users can easily place or buy or sell cryptocurrency orders, with each user being able to interact with the platform.
Additionally, there are P2P exchanges like Cointal, where purchasers and sellers can have direct interactions. They preserve a secure and trustless cryptocurrency exchange as well as mitigating congestion in the network.
This year make an effort to choose a crypto exchange that offers you the best value proposition as per your needs and financial muscle. Some of the tips that will help you make these decisions include looking at: the legal aspects, security and authentication, method of purchase, supported tokens, trading platforms, and the fee structure.