There was a time when the concept of owning and earning from any form of digital money was a concept as outlandish as the existence of alien life. But today we live in a world where we know that the planet Pluto has a heart and Bitcoin owners are rightful millionaires. Times have changed, for sure. Everybody wishes to get in on the action. But before you take the plunge, the first task is to pick a cryptocurrency exchange where you can trade in digital currencies. And if you are new to buying crypto and unsure of how to start, this is where you will find all the information you need to learn the basics. Here goes:
What is a crypto exchange?
Selecting the best cryptocurrency exchange is one of the first steps you will take when beginning your investment journey. In simple terms, these are platforms (websites usually and even mobile apps) where you will be buying and selling cryptocurrency. They act as intermediaries between buyers and sellers of digital currency and they charge relatively low trading fees for their services.
Cryptocurrency exchanges allow users to trade in exchange for other digital currencies or against traditional fiat assets. Some of them accept deposits through various modes of payment while others deal in crypto only. There are even exchanges that let you withdraw assets to your own wallet and provide a variety of coins, fees, and apps. Plus, the more complicated options allow for trading in crypto derivatives and decentralized exchanges allow for trades without an intermediary.
Getting started with the crypto trade will require you to:
· First, pick one of the top cryptocurrency exchanges and open an account with them.
· Second, add your trading funds to your account.
· Third, but cryptocurrency that can then be used to either keep within the exchange or move to a wallet.
· And finally, start trading!
How to register yourself on a crypto exchange?
Most cryptocurrency exchanges have a pretty straightforward sign-up process but it may not be quite like opening a new bank account. There are different factors to consider here and different aspects to be prepared for while starting out. Here are some elements that you need to be aware of when registering yourself on a crypto exchange:
· Pick an exchange: Now that cryptocurrency has gained in popularity, there are many places now where you can buy it. You need to, therefore, pick out the best cryptocurrency exchange that suits your needs based on its design, usability, and security.
· Ensure availability: The next step would be ensuring the services of the exchange you like are available in your region. Different exchanges have different geographical limitations and it can be a huge disappointment going through all the rigors of setting up an account only to realize that you cannot access it in your country.
· Identity verification: Every exchange will require you to provide basic KYC documents and proof of your identity and physical address. Make sure you have valid IDs available at the ready as and when you may need them during the signup process.
· Set up authentication: Most exchanges offer high-end security features like 2FA to secure your account. Make sure you layer on as many security features as you can handle to keep your hard-earned wealth safe in the bad-bad cyber world.
· Get started: There may be an initial lag time to starting crypto trading but you are almost done here. As soon as your account set-up process goes through, you are good to go!
What are the different types of crypto exchanges?
To start your journey toward becoming an investor, you also need to understand the different types of cryptocurrency exchanges out there. Here they are:
· Centralised Exchanges: You may find the idea of centralized crypto exchanges a little absurd, owing to the fact that cryptocurrency trading is fundamentally decentralized but the concept at play here is different. These are the most common types of exchanges out there that use third-party services to conduct transactions. The third-party entity in the platform is tasked with providing security, monitoring trades, and providing help to investors in finding trading partners.
· Decentralised Exchanges: Simply put, decentralized exchanges eliminate the middle man. They fulfill this function with the use of blockchain and distributed ledgers. Transactions here are carried out through peer-to-peer smart contracts. There isn’t a third party holding the currency on the platform for users. These types of crypto exchanges are a little less common out there. Elimination of the middle man often leads to investors losing their trust in the exchange.
What are the top cryptocurrency exchanges out there?
Here is a crypto exchange list that you can refer to when looking to pick out the most suitable option for your trading journey:
· Binance: Founded in 2017, Binance is one of the most popular crypto exchanges out there. It offers a huge variety of currencies to trade in along with the option to have your own wallet. The fee is considerably lower on the exchange but the interface can be slightly intimidating for beginners.
· Coinbase: This happens to be one of the most popular exchange platforms in the United States. Coinbase offers high levels of security and transparency with an easy-to-follow interface that makes it the perfect choice for most investors out there.
· Gemini: Gemini offers the option to upgrade your platform with advanced features as you begin to get comfortable with the interface. The platform is quite transparent when it comes to their security features and they store their stock in cold storage.
· Kraken: This cryptocurrency exchange is one of the oldest ones out there. The platform offers comparatively lower trading fees and amazing security features, making it the most preferred choice of seasoned crypto traders.
· Bittrex: If you are looking for access to the widest possible variety of tradable stock, this is the exchange you should choose. Bittrex offers over 140 types of cryptocurrencies for trading and its security and ease of use make it a good choice for beginners.
Are there any other ways one can trade in crypto?
Yes, it is possible to trade in cryptocurrency without having to use an exchange platform. You can use a web wallet service like Electrum or similar to transfer your crypto holdings to another wallet. Making the transaction is, therefore, not a problem. But finding buyers or sellers to trade with without an intermediary exchange can be a huge challenge, especially for unsuspecting newbie traders who haven’t been on the ropes yet. Security is another factor that pushes the scales in favor of trading through a cryptocurrency exchange.
How to choose the best cryptocurrency exchange for your needs?
Every trader has their own definition of what the best cryptocurrency exchange should be like. But there are still some important factors that you should consider before making your final choice:
· Accessibility: Different exchanges have different geographical limitations. Make sure you are able to access the platform from your location before setting up an account with them. The terms of service of the exchange will be a good place to get this information.
· Coins offered: All exchanges don’t offer all coins for trading. New stock on the market often comes with a smaller market cap and will therefore be limited on many platforms. Think about the different coins that you wish to trade beforehand so that you can pick out an exchange that allows you to trade in all of them.
· Trading fee: This factor happens to be the most decisive one when picking out the best crypto exchange for your trades. Transaction fees is how the exchange platform will be remunerated for the services they are providing you. Competitive rates will help save you a lot of money here so choose wisely.
· Security features: Picking a secure platform to keep and trade in your wealth is imperative. Exchanges offer insurance against frauds and hacking losses, additional authentication features, security layers, and so on to make their platforms more secure for investors to carry out their trades.
· Asset Liquidity: You should be able to sell your stock as and when the need arises. Any undue limitations on the same on the crypto exchange’s part should ideally be a dealbreaker. Popular platforms with high trade volumes are able to offer better liquidity to users for their assets.
· Add-on tools: Anything extra is always appreciable and cryptocurrency exchanges are no exception to that rule. Compare different platforms for the many features and tools they offer and choose the one that provides you with all the necessary add-ons to make your trading journey easy.
Cryptocurrency Exchange – A conclusion
Trading in crypto is a journey that begins with education. If you started out with a mind full of questions about cryptocurrency exchanges, we hope that this article has provided some data on some of your queries. Taking informed steps forward is the best way to insure yourself against unpleasant encounters in volatile market scenarios. Now that you know everything of importance related to crypto trading platforms, it is time to FINALLY start trading. All the very best!