How to Choose a Crypto Exchange

Cryptocurrency exchanges operate like brokerage accounts. You create an account, fund it, and trade cryptos. Exchanges make it easier to buy and sell virtual currencies. Your crypto investing success significantly depends on the exchange you choose. Knowing the features to look for in your preferred crypto exchange is key to helping you find the right platform for your investment. Discussed below is how to choose a crypto exchange.

Consider fiat currency support

Fiat currency support is a significant factor when looking for a crypto exchange, particularly if you're a newbie in the cryptocurrency market. Such exchanges are known as fiat-to-crypto exchanges. They allow investors/ traders to convert traditional currencies, like EUR and USD, into digital coins, such as Litecoin and Bitcoin. Such exchanges serve as intermediaries that facilitate the conversion of fiat currency into crypto and the exchange of crypto into fiat money.

When you use an exchange that supports fiat currency, you can buy or sell crypto depending on the market conditions and exchange rates. If you intend to trade cryptos like Bitcoin using dollars, compare several crypto exchanges' BTC to USD exchange rates to select the platform offering the best rates.

Prioritize security

While cryptocurrency’s blockchain technology's complex nature makes it hard to hack, additional security measures are required to safeguard user data and ascertain user safety from possible threats posed by malicious users/ hackers. To find a secure crypto exchange, look for security measures like:

KYC protocol: This ensures that only legit users can access crypto platforms, averting illicit activities like money laundering
Cold storage: It keeps funds in a wallet that isn't internet-connected to ensure cybercriminals don't access user assets
Encryption: This security measure protects customer communications and data from unauthorized access
Multi-signature authentication: It’s a system that needs two or more financial transaction and account access keys, with one held by the user and the other retained by the exchange

Compare trading fees

Trading fees, including funding, gas, deposit and withdrawal, copy trading fees, and more, are inherent in crypto exchanges. They’re charged by exchanges when users trade crypto, complete transactions, or invest in cryptocurrency-related financial instruments. Based on the service, exchanges charge varying fees. As an active trader, observing crypto trading fees closely is important because they can quickly crash your profitable crypto strategy. Choose an exchange with the lowest trading fees to ensure a high return on investment.

Ensure sufficient liquidity

Liquidity’s presence makes the cryptocurrency market more stable and safeguards crypto exchanges and traders from price swing effects. Sufficient liquidity ensures equitable, fair pricing for each market participant. A majority number of sellers and buyers account for reasonable pricing.

A high liquidity level is a sign of a high number of traders, meaning purchase orders and sell orders are filled faster than in an exchange with low liquidity levels. This results in an increased trading pace, contributing to a better user experience. In addition, high liquidity comes in handy. Low liquidity aggravates volatility, raising the risk of price falls and rises.

Look at the crypto choices

Thousands of crypto types are available in the market, and no one exchange can provide all of them. Most crypto platforms will likely offer the most popular coins and a few less popular ones. Settle for an exchange that provides the most types of coins, including the ones you’re interested in.