7 Factors To Consider When Choosing The Best Crypto Exchange

7 Factors To Consider When Choosing The Best Crypto Exchange

The term best crypto exchange can be thrown around pretty loosely these days, but here are seven factors to consider when looking to choose the best crypto exchange that matches your needs. For convenience, I’ve divided them into three major categories: 1) Technical factors; 2) Customer service and tools; 3) Reputation and trustworthiness. Though they are not necessarily listed in order of importance, I’ve included my top picks of crypto exchanges that excel in each category, which will hopefully make it easier for you to find the perfect partner!

7 Factors To Consider When Choosing The Best Crypto Exchange
7 Factors To Consider When Choosing The Best Crypto Exchange

1) Security

Security is one of, if not THE most important factor to consider when choosing a crypto exchange. If your exchange doesn’t offer top-tier security, it may be vulnerable to security breaches which could have serious implications for you and your portfolio. Always research an exchange before deciding where to invest by reading reviews and learning as much as possible about security measures in place. There are many ways exchanges can provide excellent security; cold storage is a widely accepted practice that requires assets to remain offline in order to keep them safe from hackers.

2) Regulation

One of your biggest concerns when choosing a crypto exchange should be its regulatory status. Many exchanges set up shop overseas to avoid strict governmental oversight, but doing so puts you at greater risk for fraud and other scams. Be sure that your crypto exchange is registered in a reputable jurisdiction and/or has passed third-party audits of its operations and security protocols. Without these safeguards, it’s possible that thieves could gain access to your private keys, allowing them to drain your accounts with little recourse or protection on your part. Fortunately, there are ways to minimize your exposure; if an exchange has been operating for a significant period of time (ideally more than 5 years), it may be worth going with it even if its location isn’t favorable. If an exchange does have issues—whether due to inexperience or outright malice—they likely won’t last long enough to cause much harm before their reputation tanks.

3) Functionality and Usability

When choosing a crypto exchange, look for an exchange that is easy to use and has all of your favorite features—the ones you would expect from any other service or website. Does it have multi-factor authentication? Is it intuitively designed? Are there charting tools and advanced trading options? Make sure your preferred exchange is top-notch when it comes to ease of use. Reliability and Security: If reliability and security aren’t a primary concern, they should be. Some exchanges employ higher levels of security than others do; if you plan on investing in cryptocurrency over time, start with the one that has reliable 24/7 customer support as well as an adequate track record with security breaches. Liquidity: Liquidity refers to how many coins are available on an exchange at any given time—you want high liquidity if you plan on making regular trades. Look for low spreads (difference between buying and selling price) as well as active markets (liquidity); high transaction fees might indicate lower liquidity.

4) Liquidity

Liquidity is a measure of how many units of cryptocurrency are traded on an exchange over a given period. The more liquid an exchange, i.e., how many assets it has and how quickly you can trade those assets, will mean you get more value for your investment. Check to see if exchanges charge any fees; some do, while others are free to use. Note that liquidity isn’t necessarily correlated with size; a large exchange might be illiquid because there aren’t enough users buying or selling at any one time. So when choosing an exchange, look for one that allows you to buy and sell with ease—and is quick to react in times of volatility or changes in market sentiment.

5) Support

I often get asked what is my favorite cryptocurrency exchange. Well, there are so many factors that determine if an exchange is right for you, it’s hard to answer. Here are some things to consider: Liquidity – If you’re looking to trade in larger volumes, it is important that your chosen crypto exchange has liquidity on par with (or greater than) other exchanges in its category. Currency Support – In addition to various fiat currencies, certain crypto exchanges offer support for coins besides Bitcoin. This can give traders additional flexibility and more investment options but may come at a cost of decreased anonymity. Fees & Commissions – Some crypto exchanges may have transaction fees or minimum/maximum deposit/withdrawal limits associated with moving funds onto and off of their platform. Keep in mind that currency conversion fees may apply as well when depositing/withdrawing funds back into a local currency.

6) Fee Structure

Fees are an important factor to consider when choosing a crypto exchange. Many exchanges charge transaction fees, and these can vary depending on a variety of factors. Keep in mind that you’ll want to choose an exchange with reasonable fees that won’t squeeze your profits too tightly. Other exchanges, such as Robinhood and Circle Invest, charge no trading fees at all. This means they’re ideal for new cryptocurrency investors who are still building their portfolio and just want access to established coins without paying extra fees. It is also important to pay attention to how much each cryptocurrency exchange charges its customers for depositing fiat currencies like USD or EUR into its accounts.

7) Altcoins Listings

Some of these factors may not be as applicable to altcoin exchanges, which list hundreds (or thousands) of coins rather than four or five. But if you’re looking for more reliable options, it’s a good idea to compare different crypto exchanges and make sure they offer some of these key features: A wide range of coins: Even if your only interest is Bitcoin trading, it’s a good idea to invest in an exchange that offers a wide range of coins. Several exchanges cater exclusively to specific kinds of cryptocurrency; others let users create their own specialized baskets called smart exchange-traded funds (ETFs). This can help ensure that no matter what happens with certain coins, there will always be at least one option available to fill whatever role your portfolio requires.