Name Price24H (%)
Bitcoin (BTC)
$42,655.00
-0.54%
Ethereum (ETH)
$2,956.78
-2.16%
XRP (XRP)
$0.97
3.81%
Litecoin (LTC)
$157.55
-1.04%
Important Things To Know Before Choosing a Cryptocurrency Ex...
Instruction

Important Things To Know Before Choosing a Cryptocurrency Exchange

Choosing the right exchange is one of the top tasks that a trader or investor needs when entering the cryptocurrency space. Choosing the wrong trading platform easily puts you at risk of hacking, wasting time, and wasting effort.

Here are the important points that you need to consider before choosing a cryptocurrency exchange to invest in:

KYC / AML

Each exchange will comply with different laws and regulations, based on their geographical location, practices, and services. Some exchanges have KYC (Know Your Customer) and AML (Anti Money Laundering) procedures, which require participating users to submit personal information about themselves during account creation.

Reputation

Since cryptocurrencies are still a new industry, it’s important to consider the credibility of each exchange that interests you. You should research the different exchanges, learn about them on Google, Twitter, or any other social network, along with terms like “scam”, “hack”, then judge on the results obtained.

Security

Each exchange will have its own security methods. You should check to see if the exchange offers two-factor authentication (2FA). If not, then maybe you should rethink choosing this platform. Because 2FA is one of the basic and essential elements that an exchange must-have today.

Insurance fund

Many exchanges are covered under the US Federal Deposit Insurance Company (FDIC) – which can protect a certain amount of US users’ funds. You should pay attention to whether the exchange has insurance funds or not. An exchange has funds available to compensate customers for specific situations, such as hacks.

Fiat support

Each exchange will have different fiat options that are compatible with specific banks, and some won’t. You should check to see what banks the exchanges work with, as well as which fiat currencies are supported.

Leverage trading

Leverage will essentially allow traders to borrow a certain amount of money based on the amount currently available on the exchange to trade. Leverage can be important for traders wanting to enter short positions on a larger scale.

Transaction volume

The volume factor can be very important as it affects whether you can enter or exit your position easily or not. If a trader is looking to sell 100 BTC, he/she will not be able to complete on an exchange with low volume because not enough sellers can exist at the current listed market price, forcing the seller traders must sell to offer lower prices on exchanges.

Another way to evaluate a volume is to check third-party websites that provide this type of data. Coin360, CoinMarketCap, and OnChainFX are three options that list different types of volume data.

Price

Asset prices are also different in each exchange. Spreads can also be a “red alert” that a given exchange is subject to liquidity/low volume.

Property selection

Major digital assets like Bitcoin, Ethereum (ETH), and Litecoin (LTC) are commonly available on most cryptocurrency exchanges. However, the smaller coins and tokens may not be available on certain exchanges. It is important to know which coins that exchange supports, and then choose the right exchange.

Transaction fee

The majority of exchanges charge a fee per transaction on the platform. Fees may not be as important for investors as traders. These fees will vary by exchange and are usually based on a percentage of each transaction.

The above are good examples of things you should consider and study when choosing a cryptocurrency exchange. They can vary from person to person based on each person’s goals, values, ​​and activities.

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