What to Consider when Choosing a Cryptocurrency Exchange

Crypto mania is still with us. Financial institutions are joining enterprising Millennials to learn about this technology. People want to know how to cash in on the craze, and, knowing the safest bitcoin exchanges is part of the fascination.

As the possibility of a global recession looms due to the ravaging effects of Covid19, cryptocurrencies are likely to experience widespread growth and adoption. You want to know what platform to use to buy a cryptocurrency and make a good bitcoin investment. There are several features to examine the best cryptocurrency exchanges since people have different levels of knowledge.

The Importance of a Good Cryptocurrency Exchange

Choosing a Bitcoin investment in 2020 to buy cryptocurrency like Bitcoin, Ethereum, and other crypto-assets can be a hard nut to crack. The reason is there are close to 300 cryptocurrency exchanges in the cryptosphere today whose 24-hour trade volumes hit billions of dollars.

Danger of Hacking

Hackers stole over USD 1 Billion worth of Bitcoin investment in 2018. It is suspected that this contributed to the sharp drop Bitcoin experienced during that year. The following year wasn’t any different, despite the significant improvement in crypto exchange security following the infamous Mt. Gox hacking incident.

The cryptocurrency industry began 2019 with the hacking of Cryptopia Exchange and the inexplicable QuadrigaCX scam. The CEO of the Canadian-based cryptocurrency exchange “died” mysteriously in India and took with him the private keys of the firm’s customers’ $250 million to the grave.

Don’t Become the Fool

There is a saying in the world of crypto that says, “A fool and his crypto tare soon parted.” Whether you are a newbie or expert in the cryptosphere, there are chances you are looking for a top list of the best exchanges. Choosing the most secure exchanges isn’t easy. The process goes beyond getting exchanges with the lowest fees or having an attractive website.

There are five main characteristics to consider when choosing the best cryptocurrency exchanges. These are:

Security

Conduct thorough research to ensure you are choosing a secure and legitimate platform. The type and level of security protocol of the most secure exchanges are essential in ensuring the safety of your bitcoin investment. The best security practices of the best cryptocurrency exchanges include:

1. They keep your deposits in cold storage, meaning they are offline, and hackers can’t access them.
2. They offer 2-factor authentication to increase your account’s security
3. Availability of email or SMS encryption and verification to confirm every transaction

Legal Aspects

Most cryptocurrency exchanges are restricted to specific geographical locations. You want to sign up for an exchange that is legally accessible in your country. The blockchain and cryptocurrency are still in their infancy, and most countries are yet to put in place the relevant policies and legislation.

Some countries have restrictions on the access and operations of exchanges. For instance, Binance may be the largest exchange by trade volumes, but it’s restricted in countries like North Korea, Syria, and Iran, among others. Before signing up, ask yourself whether:

1. The cryptocurrency exchange has the necessary licensing and certification
2. Your country has laws and regulation regarding blockchain and cryptocurrency

Some of the most secure exchanges insure their funds, meaning you can get a reimbursement when they lose your funds.

Liquidity

Another good indicator of the safest bitcoin exchanges is a large trading volume. This translates to the exchange’s liquidity and ability to fill your order, whether big or small, any time of the day or night. When you are trying to exchange bitcoin, an exchange’s liquidity is at the heart of your ability to buy cryptocurrency or sell any crypto asset.

If you want to fulfill your orders almost instantly, sign up with the best cryptocurrency exchanges with your preferred trading pairs. Good trade volumes and liquidity give the exchange support and a good reputation. An exchange that handles hundreds of millions of dollars in volume daily must have the requisite infrastructure and support mechanisms.

User Experience

There are hundreds of platforms beckoning anyone who wants to make a bitcoin investment. Some are open, while others are waiting to exploit inexperienced investors. One crucial aspect to consider is the platform’s user-friendliness. The best cryptocurrency exchanges have:

1. An intuitive user interface that applies to most devices
2. A platform that loads fast

III. Simple functionalities with step-by-step explanations

1. High-level security

A quick way to tell a suitable exchange is by checking online reviews. Read what other users have to say about a platform’s pros and cons on online communities like Bitcoin Forum and Bitcoin Reddit.

Fees

It costs money to exchange bitcoin or sell and buy cryptocurrency. The profit is an incentive for any exchange. Some cryptocurrency exchanges charge a percentage while others charge a flat fee irrespective of the transaction size. Consider the following when looking for exchanges with lowest fees:

1. Compare the fees with other exchanges
2. Compare withdrawal fees to avoid unreasonably high charges

III. Check for the cheapest way to make deposits

Conclusion

Cryptocurrency and its infrastructure is work-in-progress, and things change quickly. New cryptocurrency exchanges are entering the market while technologies and regulations keep changing. Since every exchange is built differently, knowing the best cryptocurrency exchanges depends on your continued education.