Cryptocurrency Exchanges: How to Pick the Best Crypto Exchange to Trade

As of November 22nd, Binance ranked first among the largest cryptocurrency exchanges in the world in 2021 with a $31.79 billion 24h volume. Now, if you dabble in cryptocurrency, you already know what Binance is and what a cryptocurrency exchange is. However, those who are yet to take their first step are in the right place as here we will discuss what exactly those are.

To begin with, cryptocurrency is decentralized, which means it’s not regulated by banks or any sort of financial institution. To trade cryptocurrency, you’ll need to create an account on a crypto trading platform, also known as cryptocurrency exchanges.

To check out available cryptocurrency exchanges, you can visit bitcoinlogin.net. There you’ll find out all crypto exchanges listed by popularity, rating, ease of use, and other factors. With the number of exchanges operating in the market, it can get confusing for first-time traders.

Experts suggest doing a lot of research and due diligence before choosing a crypto exchange platform. This is because the crypto industry is prone to frauds and scammers looking to trick you out of your hard-earned money. So, here’s what you need to know before picking the right crypto exchange.

Accessibility to Crypto Exchanges

As mentioned before, cryptocurrency is decentralized. To make matters more complicated, it’s either banned or restricted by regulations in some places. China recently banned cryptocurrency deeming all cryptocurrency trading illegal in the country. On the other hand, the US has a lot of crypto regulations at the national and state level.

Thus, before taking the leap of faith, ensure that you can legally and fully trade in crypto where you live. Without being able to fully utilize the cryptocurrency, it’s good for nothing. Check out the state regulations and also look at related accessibility factors like national currencies accepted. This info is usually found on the website of the cryptocurrency or its terms of services.

Make Security Your Top Priority

Any financial transaction that you perform must go through multiple layers of encryption to protect your details from miscreants. Remember, cryptocurrency is not backed by any financial institution, so your money is not as safe as say in the bank or traditional investments.

Before picking a crypto exchange, check out whether they provide insurance policies to protect against hacking or fraud. On the other hand, some exchanges only rely on security measures to safeguard their clients. The importance of security is even more important now as their values keep growing.

Also, find out how much of the asset the crypto exchange keeps offline. Usually, most crypto exchanges keep their client funds offline or in cold storage. Only a tiny part of crypto is actively traded, to keep hackers at bay. Also, look for basic security measures like two-factor authentication or biometric authentication.

For example, one of the oldest cryptocurrency exchanges, Coinbase, claims to store 98 percent of its assets offline. It also offers a $255 million insurance policy to its customers. These factors make it one of the most trustworthy cryptocurrency exchanges around.

Don’t Overlook Fine Details

Next up, go through the finer details like fees with fine-toothed comb. Don’t discard a crypto exchange simply because it’s more expensive than others. Always remember, the cheaper it is the higher the price you pay. A more expensive price tag could be a worthwhile tradeoff if it’s backed by state-of-the-art encryption and insurance.

Now, let’s understand the different types of fees involved. Cryptocurrency exchanges charge a fixed fee, which is often a percentage of the trade value or in some cases fluctuating based on price volatility.

These fees are charged per transaction and may differ based on whether you’re selling or buying and the type of currency involved. Make sure to understand the fee structure of exchange before handing over your money.

Ensure That the Platform Offers Good Liquidity

Pick a crypto exchange that has sufficient trade volume to facilitate the sale, purchase, or trading of crypto whenever you want. This means the popular cryptocurrency exchanges like Binance are more obvious choices since they’re the ones with the highest trade volumes.

Large trade volumes on a day-to-day basis also allow users to buy or sell the crypto they hold, at the best price. In case you’re on a platform with low trade volumes, you may end up paying a higher price because of the price volatility of the cryptocurrency.

Gather Tax Information

Just like any income or gain, you need to file any crypto trades as capital gains while filing the tax return. Traders are required to be aware of the value of the digital currency in the actual currency as well as its value when they sell.

There are crypto exchange platforms that offer tools to track cost basis, gains, and losses, which make tax filing easier. However, popular cryptocurrency exchanges often don’t provide such tools. Since you can move your holdings off the platform onto another platform, there’s no way for them to track your wallet or trades made on other exchanges.

There are several more factors that one must take into consideration like ease of usage, UI, customer support, and more. But, the first step should always be to learn as much as one can about crypto before investing your hard-earned money.