Best Exchanges 2022
- Dennis M.
- Read time: 14 minutes
- Updated March 1, 2022
Overview
A wide range of crypto exchanges confuses beginners with which one to go for. Even the advanced and pro trader looks for a reliable crypto trading and staking source. The investors require full proof security for their funds and want to restrain from any monetary loss when working with a platform. So, this makes every level trader vigilant in selecting any exchange, as this is, most probably, once in a lifetime decision. So, here we will guide you on what you must check out in a crypto exchange before making your first deposit to earn your fortune.
So, we have compiled the list of the important aspects you must look for before opening an account with a broker.
Trading Instruments
Many traders look for exchanges that provide a full range of crypto assets. However, this could not be the priority for every trader. Some exchanges are good with the coins that remain on the top in market capitalisation. Although crypto is a highly volatile trading asset, every crypto coin has a different magnitude of volatility. The traders classify different crypto according to their market volatility and then make trading decisions. Some traders opt to open an account with such exchanges that deal with top cryptocurrencies only.
On the other hand, the advanced and pro level traders want to diversify their risk to optimum and hence choose exchanges that offer a huge range of cryptocurrencies. Binance is one of the best exchanges that offers 500+ cryptocurrencies and offers an ultimate portfolio diversification opportunity.
Another notable thing that a trader must look for is the type of coins the exchange offers. Despite the same fundamental functionality, not all cryptocurrencies work identically. They have different use cases, technologies, and projects, making them more or less popular among the investors accordingly.
Different exchange offers different types of cryptocurrencies with different applications in sectors like payments, infrastructure, financial service, media, and entertainment. A good exchange is then called to offer coins and tokens with all use cases. Offering an NFT platform is an additive for an exchange.
Trading Platforms
A trading platform is essentially a network-based marketplace that allows users to place trades, browse catalogues of financial instruments, and monitor accounts via financial institutions other than the bank dealing community. Most trading platforms include a mix of additional features, such as premium research information, real-time quotes, news feeds, or charting tools to promote real-time trading information availability and ensure seamless negotiation among traders.
Trading platforms may also be customised to meet the demands of specific markets, such as futures markets, stocks, options, or currencies. But the trading platforms offered by the crypto exchanges mere restricted to dealing in crypto only. Trading platforms provide more options to execute and manage trades by offering tools tailored to different market structures. When contemplating a trading platform, an investor should evaluate both the underlying features and the required fees. There are probably no fees to use the trading platform provided by any exchange.
For example, market depth charts and Level 2 quotes are vital features for day traders and other short-term traders. On the other hand, tools designed to visualise options strategies are beneficial to options traders.
Most traders prefer low-cost trading platforms when it comes to fees as a selection criterion. A trader who uses a scalping trading strategy is an example. Although lower fees are generally preferred, there are usually trade-offs to be considered in the offering. An exchange that charges a lower price but only offers a few features and limited research won’t make a complete good deal. Other methods for assessing and comparing different platforms include reviewing various mechanisms such as feedback ratings and customer reviews; however, keep in mind that not all reviewers are free of bias or independent.
Some have their in-house trading platforms with mobile desktop and web versions, while some crypto exchanges like Bitstamp have integrated third-party TradingView platform that offers a range of trading, charting, and educational tools in one place. So, if you have expertise on such third-party platforms, you can go for the one, given the set of your priorities.
Fees
Trading Fees
Trading cryptocurrencies is like trading stocks on a stock exchange; however, you can only trade on cryptocurrency exchanges. Most cryptocurrency exchanges impose fees in a tiered structure that charges a percentage of your 30-day trading volume or a flat fee. It is mandatory to learn more about the fees you will incur while trading cryptocurrency so you can devise strategies.
There are three important factors that traders and investors must consider when thinking about buying or selling cryptocurrencies from an exchange:
Fee schedules: You might encounter wire fees (to transfer funds to and from your bank account), mining fees, account fees, spot fees, and tiered transaction fees.
Location: In many nations, cryptocurrency exchanges are unregulated. In some of the world’s largest trading markets, most regulators have maintained a hands-off approach to cryptocurrency regulation. On the other hand, cryptocurrency exchanges in the United States must register with the Financial Crimes Enforcement Network. This implies that exchanges based in the United States are regulated and may not provide the same services as exchanges based elsewhere.
Availability: The majority of well-known cryptocurrency exchanges do not provide access to all coins. Some offer a few dozen, while others may give hundreds. To access the cryptocurrencies you’re interested in, you may need to go for different exchanges.
The most common fee structure used by cryptocurrency exchanges is a tiered “maker” and “taker” scheme. It creates tiers based on trading volume and charges maker and taker fees based on your trading volume.
A maker is a party that creates a market on the exchange by selling cryptocurrency, while a taker is a party that takes it from the market by purchasing it. Each party pays transaction fees, although creators generally pay less.
Fee schedules at cryptocurrency exchanges are designed to encourage frequent trading in large transaction amounts worth thousands of dollars. Fees often decrease when a trader’s 30-day cumulative trade volume increases.
For example, trading at Coinbase with a trading volume of less than $10,000 incurs 0.50 percent maker and taker fees, however, trade volumes more than $10,000 decrease in tiers based on your trade volume. You also pay less as a maker in the higher tiers since makers enhance market liquidity, allowing exchanges to continue trading.
Some exchanges may still charge a per-transaction fee, but for the most part, they have transitioned to a combination fee schedule similar to Coinbase’s. As a result, unless you’re just looking to acquire a cryptocurrency, small and infrequent trades at cryptocurrency exchanges are not cost-effective. Most exchanges will charge a spot trading fee to purchase and hold a digital coin if this is the case.
Deposit/Withdrawal Fees
Most of the crypto exchanges offer free deposits on most of the mediums. However, there a withdrawal fees. Crypto exchanges offer various modes of payments and withdrawals options like ACH Transfer, Wire Transfer, Debit/Credit cards and Cryptocurrencies. Since the crypto exchanges have regulatory concerns and security issues, they do not offer third party payments like PayPal, Apple Pay, and Google Pay.
Research and Education
Research and education are must haves for crypto traders. Top-notch crypto exchanges provide blogs, news about coins, a dedicated academy, telegram community to educate every level trader. Besides these conventional options, most exchanges also offer exchange-dedicated tools like Bitstamp offers Crypto Pulse to know what reasons retail and institutional market participants make investment decisions, how they are working in groups, and the global sentiments about the crypto investing.
Privacy and Security
The more steps it is to open an account at a certain exchange, the better. If it’s too simple to generate an account, it’s a sign that the exchange isn’t very trustworthy. You may have a far more difficult time tracking down and reclaiming your money if it missing out somehow. Whatever exchange you choose, it’s good to keep the majority of your digital assets in an offline storage facility, like a cold wallet, which is often an option for staked coins.
If you are more concerned to the reliability of exchange the first thing to consider before selecting an exchange for investors is if it is legally permitted to operate in your jurisdiction. Even with well-regulated legal exchanges, don’t deposit all of your investment into one exchange simultaneously. In other words, spread out your investments and keep as much as possible in cold storage. There are numerous unscrupulous actors in the crypto world, and the best way to prevent them is to use well-known regulated exchanges, your own wallets, and trusted custodians.
It is the quality of good exchange if it is providing cold storage systems, they are relatively safer.
Centralised exchanges, like as Coinbase, are regulated, simple to use, and reliable, and they enable for the trading of digital for fiat currencies (i.e., dollars). They do, however, need that you have faith in your counterparty. Users control decentralised exchanges, sometimes at the sacrifice of user experience.
Because of their simplicity of use, newcomers to cryptocurrency should begin with centralised exchanges before experimenting with decentralised ones.
Conclusion
A crypto exchange can be good or bad depending on if the exchange satisfies the priorities a particular trader expects for that exchange. However, some basics like low pricing, nice security, wide range of crypto, good trading platforms, easy deposits, and withdrawals attract every trader. So, choose intelligently and find the one that matches your experience and provides a nice mix of all of these.