Cryptocurrency exchanges – beginners edition
What are cryptocurrency exchanges?
Cryptocurrency exchanges are platforms that offer their users to buy, sell, or exchange cryptocurrencies for other digital currencies or fiat currencies like the US dollars or Euro. Crypto enthusiasts that want to trade professionally will most likely need to use an exchange that requires ID verification and opening an account. On the other hand, if you just want to make an occasional trade, there platforms that don’t require an account or any form of verification.
Things to look out for before joining an exchange
It’s important to do a little research before you start trading on a specific exchange. These are a few things that you should check before making your first trade on an exchange:
Reputation – Exchanges are extremely public, which means that the best way to find out if an exchange is legit is to search the reviews from individual users as well as well-known industry websites. On top of that, you can ask any questions regarding these exchanges on forums such as BitcoinTalk or Reddit.
Most exchanges have an information page on their websites, which lists the exchange fees. Before joining any specific exchange, make sure you understand what the deposit, transaction, and withdrawal fees are. Fees may differ substantially from one exchange to another.
Exchanges can differ greatly in terms of what payment methods they support. They can accept credit & debit cards, wire transfer, PayPal, etc. If an exchange has limited payment options, it may not be as convenient for everyone to use. Purchasing cryptocurrencies through a credit card will always require an ID check. It will also come with a premium price since credit cards carry a higher transaction and processing fees. Purchasing cryptocurrency via a wire transfer will take more time as it takes time for banks to process.
The majority of trading platforms and exchanges require some sort of an ID check in order to make deposits & withdrawals. However, some exchanges will allow you to remain anonymous. The verification can take up to a few days, but it protects you from most forms of fraud.
Exchanges may offer their services to the whole world or just a part of it. Some specific user functions may only be accessible from certain countries. Make sure the exchange of your choice allows full access to all platform tools and functions to the residents of your country.
Exchanges may vary slightly in exchange rates. Shopping around may save you a lot of money in the long term. It’s not uncommon to see the rates fluctuate up to 10% between exchanges, as the prices are dictated by the supply and demand of that particular exchange.
Cryptocurrency exchanges are a valuable addition to the cryptocurrency space, which would not function efficiently without them. However, not all exchanges are made equal. Make sure to check every aspect of an exchange before deciding to join and trade on it.