At first glance, it might seem that crypto exchanges are a very complicated concept with a lot of strange charts and a bunch of numbers. However, they still represent one of the easiest ways to get your hands on cryptocurrencies.
For those just beginning their crypto journey, using a crypto exchange present a little difficulty, hence the reason we’ve written this article to dispel that myth.
What are crypto exchanges?
A cryptocurrency exchange is an online platform where participants can exchange fiat currency for cryptocurrency or exchange one cryptocurrency for another. For example, Exchanging Rubles and Dollars for Bitcoin (BTC) and Ether (ETH), or Bitcoin for Ether in various combinations.
Basically, to purchase cryptocurrency on an exchange, you need to create an account on the selected exchange and deposit fiat currency (if applicable) through a terminal, bank card, and electronics wallet or payment system.
After funding your account, you choose which cryptocurrency and in what quantity you want to purchase. Next, an order (offer) is created, to which other users of the exchange who are interested in your offer should respond. If everything is confirmed, then the means of exchange go to the accounts of the buyer and seller.
However, keep in mind that some exchanges don’t support fiat deposits, meaning you cannot use your local currency to buy cryptocurrencies on such platforms.
If the exchange you like to use doesn’t accept fiat, then the best thing to do is to buy your preferred crypto from a platform that supports fiat, and the transfer your bitcoin to your desired exchange.
To buy cryptocurrencies like Bitcoin and Ether using SEPA and Bank Cards, please visit this page.
Factors to consider when choosing a crypto exchange
Here are some factors to consider signing up for an exchange to buy or sell cryptocurrencies.
1. Commissions and Fees
You should take into account the fees that are charged in certain transactions. Cryptocurrency exchanges mostly make profits from trading fees and commissions.
Crypto exchange users are often required to pay certain fees for example when depositing or withdrawing funds, or for completing each order, depending on the standards set by the platform operator.
Note that some exchanges offer free deposits and banks with preferential terms on foreign exchange transactions. In this case, it is essential to choose not only a specific exchange but also a bank account or card.
Typically, foreign exchange transactions are most beneficial for holders of large amounts on accounts or for users of premium service tariffs. However, even with a range of benefits, it is unlikely that the commission will be completely avoided: it will be about 0.35%, which is still quite profitable.
2. Number of cryptocurrencies available
Exchanges that support a large number of cryptocurrencies are usually the best as it gives you many options to trade with. Some exchanges don’t support certain coins, for example, in September, South Korean crypto exchange Okex, delisted Zcash, Monero, and three other privacy coins due to regulatory compliance.
3. Processing Time and Safety of Funds
Another essential factor to consider when choosing a crypto exchange is the duration of each transaction. Some cryptocurrency exchanges process transactions faster than others.
Hackers are the nightmare of cryptocurrency exchanges. Every now and then we report cases of exchanges losing customers funds due to security failure. Even the number one cryptocurrency exchange in the world, Binance, was a victim of a security breach in May, losing up to 7,000 BTC ( $40 million as at that time). Although some exchanges like in the case of Binance paid back customers the lost amount, there are also cases when the owners of the exchange ceased their activities like in the case of Cryptopia.
A general crypto rule is never to store your money on exchanges for long term purposes unless you are currently trading with the fund. For large funds and long term storage, use hardware or non-custodial wallets like Ledger or Coinomi to store your funds. However, it is important to keep your private key and recover phrases safe, in case you lose access to your wallet.
Why Crypto Exchanges?
Exchanges arguably represent the most popular way of buying and selling cryptocurrencies because it boycotts the technical difficulties in acquiring cryptocurrencies like Bitcoin and other smaller coins and tokens.
Suggestion: Binance Exchange: A Complete Beginner’s Guide
Merits of crypto exchanges
- On exchanges, unlike other options of buying cryptocurrencies, you can find and choose for yourself the most favorable rate for the purchase of cryptocurrency.
- Most often, exchanges have a large number of different cryptocurrencies to choose from (however, there are also those that work, for example, only with bitcoin).
- This option for buying cryptocurrencies is usually used by traders since there is the possibility of earning money on course jumps;
- The convenience of deposit and withdrawal of funds.
Demerits of crypto exchanges
- Not all exchanges work with fiat (dollars, euros, etc.), some of them work only with cryptocurrencies;
- A long period for withdrawing funds
- In connection with high-profile stories about hacking cryptocurrency exchanges, the security issue is the cons of many. Choose reliable exchanges and don’t store your digital assets for a long time on exchanges.
- Many exchanges offer poor technical support often marked by low response times.
The process of buying and selling cryptocurrencies is known as trading. The primary reason for wanting to trade cryptocurrencies on exchanges is to make profits. However, many traders end up making losses due to the unpredictable and highly volatile nature of the cryptocurrency market, which coincidentally makes crypto trading a profitable venture.
The best way to maximize your chances of making profits from crypto trading is by joining trading groups that send Binance trading signals, thus the possibility of obtaining the most favorable trades while using trusted exchanges.
For the foreseeable future, cryptocurrency exchanges will remain one of the most convenient ways for users to get their hands on cryptocurrency. We believe that reading this article has equipped you with the basic information that you need and you’re ready to go.