Choosing the right crypto exchange can make all the difference when it comes to keeping your funds safe, maximizing returns, and having a positive trading experience.
But with over 700 crypto exchanges worldwide, it's not easy to pick the best one. Many platforms have been hacked, charge massive hidden fees, or don't offer the specific features you need. And how are you supposed to compare so many options?
In this post, we identified 5 categories and 52 variables that you can use when choosing a crypto exchange.
We identified 52 variables that can help you research a crypto exchange. To simplify the process, these can be grouped under five main categories:
While every investor has different needs, the common criteria everyone should look for will fall under these categories. You want robust security, low fees, high liquidity, ease of use, and convenient deposit and withdrawal methods. Let's look at the specifics of each category.
Shockingly, between 2011 and 2020, approximately $15.6 billion was stolen from crypto exchanges. However, crypto exchange hacks aren't the only concern. Other potential risks include bank runs, account freezes and bankruptcies, all of which can cause a loss of funds.
When looking for a secure crypto exchange, it's important to consider multiple variables instead of any singular aspect. You should assess everything from their track record to their account security features to the overall company security protocol. The more boxes they check off, the better. Here are 12 variables to help you evaluate a platform's security:
While there is a lot of things to look for when it comes to security, it's important to do your research to ensure your funds are safe. With that being said, you should not hold large balances on exchanges either. No matter how safe a platform appears, you should only use it for trading and store the majority of your funds in a crypto wallet.
The next big category to look at is fees, which vary widely from each exchange. Fees can be hard to compare, because some platforms lack transparency and make information hard to find. Furthermore, many platforms advertise "commission-free trading" and "no trading fees" which can be very misleading. Often times, those are the most expensive platforms because they hide fees in the spread.
All of this causes you to pay more money than required, eating into your returns. Other sneaky fees to watch out for are the crypto withdrawal fees, fiat withdrawal fees, and credit card fees. If you want to get the best rates when trading crypto make sure you understand these fee types:
3. Cryptocurrencies and Features
Third on our list is the functionality and services that the platform offers. While some platforms only focus on the buying and selling of Bitcoin or large-cap altcoins, others have dozens of services like trading bots, NFT marketplaces, crypto reward cards, and more.
Understanding which features you need is important as services differ widely on every crypto exchange. You also have to check if it's available in your jurisdiction. For instance, derivatives trading is often banned for Canadians. It's common to use multiple crypto exchanges for this reason.
Overall, the most common considerations to look for include the altcoin selection, beginner trading tools, advanced trading tools, account types (spot trading, margin trading, etc), and mobile app availability. Here are 21 features we've seen crypto exchanges offer:
4. User Experience
If you want to have a enjoyable platform where you can make trades reliably, a good user experience is important. While most platforms have a great mobile app, responsive customer support, and simple interface, some platforms struggle in this area.
Things you want to look for include the account opening process, customer support, platform uptime, and more. Remember, preferences vary among traders, so prioritize the factors that align with your specific needs. By considering these user experience elements, you can select a crypto exchange that offers a smooth and enjoyable trading environment.
5. Deposit and Withdrawal Methods
Look for hassle-free deposit and withdrawal methods so you can quickly transfer funds between your bank account and the crypto exchange. You'll want a platform that offers a range of options that's both easy and reliable to use. You can consider the following factors: