This is in spite of the fact that cryptocurrency exchanges aren’t always safe and are not recommended for holding your assets.
You need an exchange to buy crypto assets, but this is not mandatory as you can also buy using other options such as crypto ATMs.
However, such ATMs aren’t available in all locations and you may not have access to one.
This makes it necessary for you to have an exchange account that you can use to buy, sell, and even trade crypto assets if you like.
The hard part is how to decide which exchange to pick. As a beginner, this can be confusing because there are several of them.
The following are five things you should keep in mind when choosing an exchange for your cryptocurrency activities in the future.
The team behind any crypto project is a critical factor in deciding if you should use their services or not. This is because an unknown team can just set up a scam project and then use it to cheat unsuspecting users.
This is also speaking about the reputation of the exchange in the crypto space. Is it a recognized crypto exchange with many years of operation?
If not, it is better to stay away from such an exchange unless it has an asset you wish to buy that other prominent exchanges don’t have.
Liquidity is the ease with which you can buy and sell assets on a crypto exchange. This refers to the availability of another person on the other end to fill your trade orders, and it is an important factor in choosing a crypto exchange.
A crypto exchange that doesn’t have sufficient liquidity can leave you stranded in the middle of a trade, especially for tokens that are not very popular.
This can leave you with a useless token you can’t trade for cash or other crypto assets.
It isn’t easy to measure the liquidity of a crypto exchange because there are many indices involved. However, one way you can tell is that the exchange’s trading volume isn’t dominated by sell orders.
The most important thing to check about a crypto exchange you wish to use is the security of the platform.
Check that the platform doesn’t have a history of incessant security breaches. Even if it does, what measures have been taken to ensure it doesn’t repeat itself?
It’s also important to ensure that they have a cold storage where customers’ assets are secured. Going as far as having insurance and a security fund is an added advantage.
Fees are an important decision-making factor for some traders or investors, particularly beginners.
For some, this may not be a problem but if it is an issue for you, check that the exchange charges reasonable fees.
For example, does it charge deposit, withdrawal, spread and other fees? These fees vary from platform to platform, and you can find the information on the website.
Exchanges like Coinbase are known for charging higher fees than others, especially for non-U.S users.
This is not necessarily a bad thing, but you should consider if fees are important to you.
Ease of Use
You should pick a crypto exchange you can easily use. Some exchanges are designed with beginners in mind, while some are clearly for pro users. If you’re a beginner, an exchange that is easy to use should be your priority.
This reduces the risks of you making mistakes that can cost you your investment.
Starting out in crypto is challenging enough, but with these guidelines, you should easily pick an exchange that suits you.
One factor may be more important than another depending on your situation, and you should prioritize them appropriately.