How To Find The Right Cryptocurrency Exchange

As the markets become more uncertain, there's never been a better time to diversify your portfolio and spread your trading risk. Indeed, in this climate, many people believe this is the time that cryptocurrencies will finally thrive and reach the heights that advocates dreamed. 

As more traditional avenues seem less stable, cryptocurrencies' volatility is no longer so unattractive. Cryptocurrency trading surged throughout 2020, reaching a new high in February. Of the 15% of Americans who own some form of cryptocurrency, 44% say they feel ‘much better’ about their finances since the start of this year. This is a pretty remarkable statistic, all things considered, as just 5% of all Americans feel the same. 

In this context, it is time we start seriously considering the rise of cryptocurrency into the mainstream. And for those who aren't deep in that world yet, here are few great tips to find the right crypto exchange.

Finding A Good Exchange

An exchange is an online platform where users can exchange digital assets based on current market value. While wallets and wallet brokerages enable you to buy and sell a small number of popular digital assets — which you then may go on to trade again for another digital asset on an exchange — you can only trade one digital asset for another using exchanges. Some exchanges, though, do allow the trade of fiat currencies.

There are loads of good exchanges out there, and they are constantly evolving. This Paxful review explains how the bitcoin (BITCOMP) exchange platform wants to become the Uber of crypto. 

A lot of what makes an exchange good for you depends on your priorities and what you need. 

Security

This is easily the most important factor to consider, you don't want to lose your money. There have been high-profile hacks in recent years, so you risk losing your money if you use an insecure exchange. 

A centralized exchange supports higher volume and greater liquidity, but that also makes them a likelier target for hacks. Decentralized exchanges protect your security and privacy as you don't have to volunteer personal information, but they may not be able to support the same levels of liquidity.

Consider your priorities, and pay close attention to security features. 

Reputation

Crypto is still an emerging industry, so reputation is powerful. 

For each of the exchanges, you are considering, research the news surrounding them. Google their names alongside ‘scam’, ‘hacks’, and anything else you are worried about. The crypto world has had its fair share of dark activities; make sure your exchange isn't part of that world or has worked to shed that reputation. 

Volume

If there are lots of trades being carried out on a platform, that suggests it has great liquidity levels and can always fulfill orders. 

A high volume is a good indicator if you are looking to trade the main trading pairs. Centralized exchanges can fill those orders often in a matter of seconds because they are extremely liquid. But avoid these exchanges if you are interested in buying or trading smaller coins, and opt instead for decentralized or lower-profile exchanges. These projects often can't afford to list on bigger platforms so list on smaller ones instead. 

Geography

Across different jurisdictions, exchanges are subject to different laws, such as Know Your Customer and Anti Money Laundering practices. These require you to reveal some personal information when you create an account. 

This reflects a wider concern that most exchanges have limited geographical scope.  Make sure you can legally use an exchange before signing up to it!