After three years of relative pain and disappointment, Bitcoin bulls are relieved as new highs have been set. With Bitcoin’s rise in popularity after a brief downward graph, it is no surprise that Cryptocurrency trading is on the rise. The past year has seen many long-term investors and day traders come into the cryptocurrency landscape to get a piece of the action.
At the forefront of the crypto-revolution are large and dynamic arrays of cryptocurrency exchanges, which allow traders to trade different cryptocurrencies against one another or fiat currency. Unfortunately, each platform has its own set of pros and cons, which makes choosing them a daunting task.
The flourishing ecosystem of cryptocurrency exchanges has entities in various forms such as the following.
- Centralized and decentralized
- Automated or brokerage
- Peer-to-peer or swap technology
- Bulletin board-type communication portals
- Fiat/non-fiat gateways.
How To Pick An Appropriate Cryptocurrency Exchange In 2021?
Selecting a cryptocurrency exchange is probably the first step in trading these digital assets. Unlike 5 or 6 years ago, there is a multitude of options right now. However, it’s up to the trader to be well-informed and evaluate the pros and cons of each platform as there are a lot of fraudulent ones as well. Check out the following features which will assist you in selecting the best cryptocurrency trading platform as per your preference.
There are certain salient features you should look for in any crypto trading interface. It should offer a clear, no-nonsense view of all your assets and active markets. Other useful features you should look for include educational guides, recurring buy/dollar-cost averaging, a price notification system and appropriate mobile apps to enable trading on the go.
With the growth of crypto usage comes an increased risk of theft. This extends to an exchange where client funds must be protected at all costs. There have been past instances of exchanges losing client funds due to a data breach. Additional security features you can look for include: 2factor verification, customer funds stored in offline cold storage, a KYC policy, regularly updated security protocol and regular security reviews.
Fees and expenses
Different cryptocurrency exchanges have different fee and expenditures. It’s a good idea to review different options and make a shortlist before choosing a particular exchange. Some exchanges who advertise that they charge no fees can take their cut via hidden currency conversion fees. So make sure the exchange accepts your preferred currency before signing up.
The Best Cryptocurrency Exchanges In 2021
As different brokers and trading platforms have different strengths, it’s up to the trader to figure out which function or feature he/she prioritises the most. Here are some of the most popular ones.
Headed by founder Changpeng Zhao and currently headquartered in Malta, Binance is one of the most well-known crypto-exchange platforms in existence. It offers a cryptocurrency offering that dwarfs the majority of other platforms. Binance also allows their users to delve into crypto futures trading and allow them to access high leverages of up to 125:1.
Headquartered in San Francisco, California, Coinbase offers over 25 cryptocurrencies for trading, investment and staking. With an extremely simple user interface and high liquidity, Coinbase has expanded its offering to include several cryptocurrencies. It also has a compatible app for android and iOS devices.
Uniswap is a permission-less decentralized exchange that allows users to trade any ERC20 tokens directly through a web wallet. It doesn’t require any deposits or withdrawals to a centralized order book. Perhaps its best feature is that its liquidity pools do not have any price impact on most of its transactions. Uniswap uses a feature called Constant Product Market Maker Model which allows it to consistently provide liquidity no matter how large the order size or how small the liquidity pool is.
eToro is a multi-asset investment platform that has added over 5 million new registered users since its inception. According to its company website, the platform has processed 27 million trades per month in 2020 with no signs of stopping. It was one of the first-ever regulated platforms to offer cryptocurrency trading and is thus well-positioned to benefit from mainstream crypto adoption.
As traders, you need to gather all the technical know-how including the core concepts of cryptocurrencies, before even trying to profit from this market. Selecting an appropriate exchange makes things a bit easier.