If you are new to the crypto market, choosing a platform that makes trading seamless is essential. There are several factors to consider when choosing a crypto exchange. These include fees, customer service, security, and liquidity.
Fee tiers
A cryptocurrency exchange’s fee tiers determine how much a user is charged when depositing, withdrawing, or executing trades. Each exchange has a different fee structure based on the type of trade and volume. Some offer a variety of deposit methods and charge between 2% and 5% of the deposit amount.
The fees associated with making and taking trades can be reduced by account verification. Some exchanges even offer tiered fee structures based on trading volumes, like Bitfinex, which charges 0% maker fees and 0.1% taker fees for users with $30 million or more of the trading volume.
Customer service
Customer service is one of the most important factors when choosing a crypto exchange. A good exchange should provide excellent customer support, which will help you get through any problems you may have with your account. The exchange should offer support via email or live chat 24 hours daily. The exchange should also assist in various languages.
Cryptocurrency exchanges should provide good customer service since new investors often have questions. They should also support a specific cryptocurrency, making it easier for them to answer your questions.
Security
While looking for a crypto exchange, you should pay special attention to its security features. Two-factor authentication and strong security safeguards against hacking and phishing attempts should be features of good crypto platforms. Some allow biometric authentication as well.
Additionally, good exchanges include coverage for theft, robbery, property damage, and cyber fraud.
Moreover, ensure that your chosen exchange is licensed to operate in your country. Although the cryptocurrency industry is relatively new and there is still a great deal of regulation, countries like the U.S. and Europe have taken steps to rein in this new industry. In Europe, specific authorities regulate and license crypto exchanges.
Liquidity
Regarding trading cryptocurrency, liquidity is a crucial aspect to consider. It refers to how easy it is to buy and sell an asset without depreciating. As cryptocurrencies grow in popularity, their liquidity is increasing as well. High-liquidity assets can be bought and sold quickly and at a reasonable price. However, there are still some crucial differences between high and low-liquidity crypto assets.
On the other hand, low-liquidity crypto assets can be hard to purchase and cannot be sold quickly. As a result, traders risk paying more for their assets than they intended.
Low liquidity on crypto exchanges can lead to significant price changes, which could hurt the exchange’s operations and image.
Consequently, only a few businesses can increase their customer base while providing good liquidity. It means that you must compare multiple options before choosing a cryptocurrency exchange.
Security features
If you’re going to invest in cryptocurrency, selecting a secure crypto exchange is essential. Many good crypto exchanges have security protocols to protect customers, such as two-factor authentication and robust security measures against phishing attacks. They also may have biometric login capabilities. The best exchanges even run bounty programs that reward ethical hackers for discovering security holes. Lastly, major crypto exchanges enforce Know Your Customer standards, which require that you provide government-issued proof of identity before you can use their services.
When choosing a crypto exchange, look for a platform that supports the most popular cryptocurrencies. There are over 20,000 cryptocurrencies currently in existence. While finding an exchange with many of these is possible, you’ll need to know about various investment features. It is crucial since many crypto exchanges have been hacked in the past. In addition to security, check to see if your chosen crypto exchange is licensed to operate in your country.
Insurance coverage
Insurance coverage is a crucial feature to look for when choosing a crypto exchange. It can protect your money in the case of a hack. Most good exchanges offer cybercrime insurance to protect their customers. Some exchanges, like Coinbase and Gemini, offer insurance for up to $290 million in digital assets.
Investing in cryptocurrencies and other digital assets is highly speculative, meaning the price can fluctuate daily. As a result, insurance coverage costs can be high. Moreover, because this is a relatively new industry, no regulations regulate it.
