If you are only just starting your crypto journey, the first step in the process is finding a right cryptocurrency exchange that you will use to buy and sell your crypto coins. Nowadays, with crypto being as popular as it is, there are so many exchanges to choose from that it is difficult to know which one is right for you.
However, there are some tips and important factors to consider before you make your first deposit and trade. Here are seven factors to research and consider before choosing the right cryptocurrency exchange for you.
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What is a Crypto Exchange?
Simply put, a crypto exchange is a cryptocurrency marketplace that also enables crypto trading. You will first deposit your fiat currency and then use your deposit to purchase coins on the exchange; or, in some cases, you purchase one cryptocurrency that you then use to buy another.
The concept is easy to follow; you can use your dollars to buy Litecoin, for example, and then once you think your coin has made enough profit, you then exchange LTC for fiat currency and then take the fiat out of the exchange.
Security & Safety
The first thing you need to consider is the safety and security of the exchange. Much like any other platform where you deposit money or use your banking details, you want to ensure that the exchange isn’t prone to hacks or data theft.
This is fairly simple to find out by checking a list of the top crypto exchanges, as the biggest exchanges in the world are popular for a reason; traders feel secure in the ability of the platform to protect their money and data.
Token Options
This aspect is fairly self-explanatory, but you want to find an exchange with the most token options possible. Not all exchanges have the same library of tokens; while almost all of them have Bitcoin, Ethereum, etc., not all will have the most popular alt-coins, such as Shiba or ADA (Cardano).
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Fiat Currency Support
This aspect of exchanges is important for those that live in a country that doesn’t use one of the major world currencies. A platform like Binance, arguably the biggest in the world, won’t allow every currency in the world to be deposited.
While this isn’t a dealbreaker, as there are legitimate ways to exchange your currency for an accepted one, it is still something to remember and something you need to research.
Fees
When it comes to fees, most of the bigger platforms are fairly reasonable, but you must still do your research. Fees can be attached to multiple things, such as when you make a trade, when you want to take your money out, etc.
Fees can also be attached if you are depositing crypto or fiat from a wallet into a platform. These fees can sometimes be relatively high; therefore, you need to know if it makes more sense to deposit from a wallet or exchange your wallet crypto for fiat, and then exchange, for example.
Available Liquidity
Liquidity in an exchange means the amount of fiat available at any time. Liquidity is important as you will want to get as close to your crypto value in fiat when you are trading, and visa versa.
Sufficient liquidity also adds to the speed at which you can do transactions, as you will not need to wait around for other users to trade to ensure there is enough fiat for you.
Insurance Policy
You never know what can happen in the world of trading, and using a platform that has a solid insurance policy will give you the peace of mind you need. A major crypto exchange is aware of the need for its customers to feel protected.
Many will offer a wide range of insurance policies that will protect you and your investment in the event of an incident that is out of your control.
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Rewards
Finally, make yourself aware of any potential awards you may be eligible for when using an exchange. These rewards can range from being one of the first to buy a new token to being allowed to stake your investment and potentially earn a more significant profit.
These rewards vary and may not be something new investors want or need, but it is still important to know that they are available.
