Cryptocurrency has now become a mainstream household topic, and you want in on the action. So how do you get started? Finding the best cryptocurrency exchange is your first step.
How Does Cryptocurrency Work?
Like the stock market, cryptocurrency offers a way to buy, sell, and trade portions of a certain coin (stock). The difference being that the cyptomarket is decentralized (although some exchanges are a centralized entity), independent, and still well in its infancy. This means you have many cryptocurrency investment options, not only in what coins you buy but also in how you buy them; some are safer and more reliable than others.
What to Consider When Buying Cryptocurrency?
With new cyptocurrency exchanges and wallets popping up overnight and disappearing just as fast, it is important to take certain precautions when choosing where to put your money. Not only are some exchanges vulnerable to hacking, newer ones can disappear without a trace if they legitimately go bankrupt or if they were a quick scam. Other factors can play into your decision as well. Here is a list of characteristics to think about before choosing your exchange:
- Longevity– How long has the exchange been in operation? The longer they have been around, the more of a reputation they will have in the crypto community. Check out Reddit and Bitcoin forums to see what other users are saying.
- Verification process– Obviously more verification means more security. This is most important when loading your wallet with fiat currencies because you enter credit/debit card or bank information. Once you have your crypto coins you can trade with much ease. The verification process can take days depending on the company, but this initial set up is worth your security, in my opinion.
- Coin options– If you are looking to buy a certain coin, especially smaller altcoins, then you want to make sure the exchange offers it. You can simply use coinmarketcap.com to see which markets offer which coin.
- Buying options– Exchanges with wallets offering PayPal, debit/credit cards, and bank transfer make buying coins easy, plus when you withdraw you do not have to go through hoops of third party platforms. Do remember to look at transfer fees for credit cards and processing times for bank transfers. This can affect your convenience when trying to make quick and cheap transactions.
- Trading Options– Once you buy your preferred coin, how easy is it to trade with other coins? Many exchanges are starting to widen their trading options, so that you do not have to convert your coins into Bitcoin or another expensive coin in order to purchase a cheaper coin. This comes in handy when trying to avoid fees and exchange rates.
Here are some of the top cryptocurrency exchanges based on popularity, usability, and reliability.
This platform has been the go-to for many new crypto users with over 35 million customers in over 100 countries. It provides an easy-to-use interface that buys you Bitcoin, Litecoin, and Ethereum using your debit/credit card or bank account. You can know even withdraw using PayPal. Coinbase acts as a secure wallet rather than a market exchange, so it provides extra verification and ID proofs to complete your account. This makes it a secure place to store your higher coin currencies when you are not trading.
- All deposits are ensured
- Uses multiple fiat currencies
- Has a user-friendly mobile app
- Can withdraw directly to your bank account or PayPal
- Can link credit cards to your wallet using Shift Card to make commercial purchases
- Only allows 5 large crypto-currencies and ECR tokens to be purchased by fiat
- You must transfer to other exchanges to purchase many altcoins
- Large fees especially for Bitcoin transfers
- Long wait times for verification
- Corporately financed and heavy on flagging users for “suspicious activity”
Created in 2017, Binance is one of the world’s most popular exchanges based in Hong Kong and operating in over 40 other countries. It sees over $2 billion in transactions a day from over 15 million users in over 180 countries. With almost 600 trading combinations it makes buying, selling, and trading within the exchange simple.
Binance is a centralized exchange where the company holds the rights to your assets by owning your private key. While this may seem counterintuitive to crypto, it does, in some cases, offer more security if the platform is trustworthy, which, after several breaches, Binance seems to be as they have handled their users money responsibly. And even though Binance can be used as an online wallet, it is best to trade then store your coins in an offline cold storage wallet.
- Basic and enhanced verification options: enhanced levels require more information and allows larger withdrawal amounts, basic only requires your email verification
- Advanced security with 2-factor authentication using Google authenticator or SMS
- Options for locked savings to earn interest like a bank
- 25% fee discount if you hold BND (Binance coin)
- Customer support is slow and often overloaded
- Private key is not owned by the user
- No staking options to POS coins
- No longer available to U.S. citizens
Unlike the first two exchanges, Bisq is a decentralized autonomous organization (DAO) meaning it has no central management team. Rather, it is run by its users through a voting system. Traders are also rewarded through a BSQ token via fee transfers, keeping third-party middle-institutions like banks out of the picture.
Other great aspects of a DAO is that the system holds no data like who is trading nor does it store any coins or fiat held on the exchange. Instead, crypto is kept in a Smart Contract between its traders. The traders control these contracts and their own funds.
While Bisq is easy to sign up, easy to maintain control over your private key and funds, and keeps you completely anonymous, it also means it is not a company that can help you if your funds get stolen. Traders are responsible for their own cryptocurrency, so it acts as a software rather than a website.
- Offers autonomous trading with no registration required
- Limits theft by disallowing easily charge-backed payment methods like bank transfers, SEPA, Western Union, and several others
- Extremely low fees when using BSQ
- Traders own their private key
- Involves a community of traders and projects that continuously improves the network
- Does not allow debit/credit card purchasing
- No company backup if money is charge-backed
- No company information provided, anonymous team
- Only buy and sell Bitcoin
Kraken is one of the oldest U.S.-based crypto exchanges, established in 2011. They are known for their transparency and advocacy toward creating a safe and easy way to buy, sell, and trade cryptocurrency in 48 U.S. states and 176 countries with over 40 coins and 6 fiat currencies to trade.
The exchange is centralized which makes your account secure but not autonomous. This means your private key and coins are held by the network, but Kraken does hold 95% of its coins offline and encrypt your personal data. Another great feature is their 24/7 live chat to ensure your issues are resolved quickly.
- Highly secure and reliable: using 2FA, email verifications with lock options, chargeback fraud protection, and much more
- Low volume-based fees
- Staking options to earn reward for holding your coins
- 24/7 support
- Offers a range of cryptocurrencies
- No debit or credit card fiat deposits
- Long registration and verification process
Don’t Put All Your Eggs in One Basket
The best cryptocurrency exchange helps you securely sell, buy, and trade your BTC and altcoins, but they aren’t meant to be wallets. Keeping your coins safe requires more security than an online platform has to offer. Even the biggest exchanges can get hacked, and you might not always get your money back, depending on the situation and exchange policy.
Trade smartly by using several exchanges that fit your current needs and purpose then transfer your assets to an offline wallet such as a ledger.
Remember exchanges change all the time. This list will be updated as much as possible to ensure the information stays current, however always check the exchange’s official website for the most up-to-date policies and features. And as always, this information should not be taken as financial advice. Coincolony is not responsible for losses or damages that occur due to trading, selling, or buying cryptocurrency.