Cryptocurrency Exchanges: 6 Things To Consider

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Cryptocurrency Exchanges

The early entrants in the crypto market were mainly through crypto mining, which involves solving complex puzzles for crypto rewards.

But unless you fully understand what this entails and have the right expertise to mine cryptos, you may be looking for easier ways to gain from the crypto market. Fortunately, there are easier ways to earn crypto without the struggles the initial adopters had to go through.

One of the best ways to get started in crypto investing is through trading. A cryptocurrency exchange development company builds trading platforms to help investors buy and sell digital assets. But for you to be successful, you need a trading platform that fully supports your goals. A suitable exchange platform has various characteristics that help you meet your investment objectives.

While investment needs are not all the same, there are some basic and essential factors you need to consider when picking your platform. This article discusses the important things to look for when choosing a crypto exchange platform.

What is a crypto exchange?

These are platforms that have been developed to help you exchange your fiat money for cryptocurrency to enable you to trade and earn profits. They act like traditional stock brokerage accounts where you’re able to trade stocks or bonds from the funded accounts you hold with the brokerage. Fortunately, with the right platform, you can have an easy trading experience regardless of your trading experience.

Here are the essential things you need to keep an eye out for when picking a trading platform for a better trading experience and profitability.

Ensure sufficient liquidity

As much as possible, find an exchange platform with high liquidity. This is the ability for the platform to turn your cash into crypto coins and the other way around without having to pay a huge markup.

The reason this is highly significant is that prices fluctuate fast in the crypto market. You need to be sure that when the prices are moving up, your purchase will be relatively close to the prices indicated on the platform. The same case applies when you want to sell, and the prices are dipping fast.

The best way to evaluate an exchange’s liquidity is by simply looking at its trading volume. In the case of a good crypto exchange platform, the higher it is, the better. High trading volume signals the platform has many users.

Exchanges without many users mean you might not be able to be matched with a trading partner when you need it most. Look around for resources that provide constant crypto trading information to see the exchanges with the best trading volumes to help you inform your platform.

However, you shouldn’t just look at the trade volume without the length of which the platform has been around. A good platform is one that has existed for a reasonable duration of time and with consistency in trading volume is proof that it is highly liquid, and therefore a good place to trade.

Trading asset choices

Apart from the major and popular cryptocurrencies, there are other smaller coins in the market to choose from. But since there are thousands of crypto coins, there’s no single platform where you can trade all these coins. That means you need to pick one that has at least the asset selection you want to trade. Think about what you want. Are you looking to go with the big coins? Are you more interested in the smaller ones? Whichever your choice, ensure your platform of choice supports your goal.

Most major exchange platforms are more likely to trade coins with a higher market cap while smaller exchanges go for lesser traded coins. Do your research and align your needs with the best platform that will help you trade the assets that you want. The best way to go about this issue is by having a sort of wish list and finding the most suitable exchange for you.

Trading fees

Obviously, you should expect to pay some fee in any exchange platform you choose to trade in. However, the trading fees and how an exchange platform structures its fees are other issues you need to evaluate. Consider how much it will cost you to make deposits and withdrawals, execute trades, and effect transfers.

Generally, the number of fees you pay will be related to your trading volume and the higher your volumes, the more the fee you’re likely to pay on the platform. Most of these popular platforms will charge between 0.2-0.5% fees. But you should always check for other fees that you may incur in the course of making your transactions.

Ease of use

You don’t want to be stuck with an exchange platform that isn’t intuitive and makes it difficult for you to trade. A good platform has an easy user interface that helps you along your trading journey, particularly if you’re a new trader.

Platform’s security

There have been numerous cases of security breaches and hacking in crypto exchange platforms leading to massive losses for investors. That means you need to be really careful when picking a trading platform. The best way to go about this issue is by evaluating what security measures an exchange platform has put in place to ensure the security of its users’ assets in storage and during trading.

A good indicator of high security is multi-factor authentication protocols and other measures against cyber threats. In addition, there should be an elaborate Know Your Customer (KYC) policy to ensure that only real investors are signing up on the platform. This minimizes the risk of having scammers flood the forum and manipulate trades and scam, other genuine users.

Jurisdiction

Lastly, you need to know if the exchange platform accepts users from your region. It’s important to know that if a crypto exchange platform does not accept users from your region, it won’t matter that it fits all your other requirements. You won’t be able to trade.

Conclusion

These are the basic checks you should do before enlisting and investing your money in a crypto exchange platform. Ensure the platform has good enough trade volumes consistently over time, is secure, has a good range of coin options, is easy to use, and is able to serve your jurisdiction.