5 Things You Should Know Before Choosing a Cryptocurrency Exchange
by Fintechnews Switzerland March 19, 2021Cryptocurrency has become a regular part of online commerce, but it is still a fairly enigmatic concept to many people. It’s a form of currency that companies issue that can be exchanged for goods and services that they provide. Those who use cryptocurrency do so because it provides a more secure transaction process. You buy this currency with real money, like “Disney Dollars” or casino chips. A cryptocurrency exchange allows you to change your cryptocurrency for other assets, such as real or other digital currencies. But there are some things you need to keep in mind before deciding on which cryptocurrency exchange to use.
1. Not All Exchanges Offer the Same Amount of Security
There are cryptocurrency exchanges whose services are cheaper and easy for beginners to use, but their security may not be as stringent as the more expensive options. Look for an exchange that stores their data on more than a couple of servers. The more decentralized their storage, the harder it is for your information to be compromised by a hack. A two-step verification process for logging in is preferable for additional safety.
One of the biggest problems facing the cryptocurrency industry is pump-and-dump schemes. This is when someone manipulates the market by artificially inflating the price of assets that were purchased at a low cost and selling them back at a higher value. After this happens, the price crashes, costing investors their money. You want to choose an exchange that will protect you against fraud. Some of the fees you pay are part of this protection, so look over what your fees actually cover before you invest your money with an exchange.
2. Some Exchanges Will Try to Hide Additional Costs
When using a cryptocurrency exchange, there will be fees when trading. However, some will claim that they don’t charge any fees but will apply hidden charges to your transactions somewhere else. Compare the costs of different cryptocurrency exchanges in order to determine which ones offer competitive fees and are upfront about what they charge.
Look for an exchange that offers guaranteed pricing. This ensures that you will get the price shown when you make a transaction, even if it doesn’t finish processing right away. If a service forces you to convert your real money before trading, be wary — this can be when they charge you additional hidden conversion fees that they don’t warn you about.
3. Reliability of Cryptocurrency Trading Is Important
You want to make sure that the cryptocurrency exchange you choose has the ability to run reliably when processing a high volume of trades or when conversion rates are fluctuating wildly. If an exchange halts trading, you could lose a lot of money, so it’s imperative that the one you choose can be depended on to remain up and running.
4. Look for Good Customer Support and Easy-To-Use Systems
Any time you invest money with a company or service, you want to feel like your business is important to them. You don’t want it to be a chore just to get in touch with customer support to resolve any problems. An exchange’s user interface should be intuitive and simple enough for anyone familiar with cryptocurrency trading to understand without much difficulty. Complicated systems are often a sign that an exchange isn’t running as efficiently as it should be, which could cause trouble for you when trying to make transactions.
5. Pick a Cryptocurrency Exchange With a Solid Reputation
Look into an exchange’s public information and online presence. If they’re open about the people involved in managing the company and are upfront about their fees, you can feel confident that your money is safe with them. More reputable companies may even offer resources to learn more about cryptocurrency and how it works. They know that having knowledgeable traders using their services will only help improve the fortunes of their business.
The most popular cryptocurrency exchanges include CoinBase, Etoro, and BlockFi. These are companies with a proven track record of reliability, easy-to-use systems, and trading in many popular forms of cryptocurrency. Customer satisfaction with these services is very high, so they are very good options to consider when you start trading cryptocurrency.
Photo by MayoFi on Unsplash
Once you’re ready to choose a cryptocurrency exchange, make sure you consider these factors before making a decision. The trading of digital currencies will only become more prevalent as more businesses put a greater emphasis on online marketplaces. Getting into cryptocurrency now could mean being in a better position than someone who waits until it becomes the primary form of monetary transactions. The future is looking really bright for cryptocurrency.
Featured image credit: Photo by MayoFi on Unsplash
