Trading in the cryptocurrency marketplace can be little daunting for traditional investors as putting up your capital directly into digital money needs proper utilization of new tools and new ideas. So, if you want to dip your toes in cryptocurrency market, you will need to have excellent knowledge about what to do, when to do, and what to expect.
Selling and purchasing of cryptocurrency involves choosing a crypto exchange that deals in the products you are interested in, whether they are litecoin, bitcoins or any of other virtual currencies in existence. There are several exchanges around that do things in their individual way, offering you relevant services at their best. Choosing a crypto exchange, however, should be done in the light of few important things that certainly matter when you put your hands into practice in the crypto field. These include the following:
- Deposit policies
- Methods of deposits and cost of each method
- Withdrawal policies and expense
- Currencies the exchange deals in for deposit and withdrawals
- Types of products the crypto exchange offers, such as cryptocurrency, gold, and silver
- Transaction costs
- Crypto exchange base
Setting Up for a Crypto Exchange
As a cryptocurrency trader, you need to prepare yourself for the exchange setup. Dealing with a crypto exchange is just like setting up a new bank account since it will also take your details, including your name, address, source of income, date of birth, and so on. Most of exchanges want to make sure that you are exactly who you claim to be and that you are a trustworthy client to deal with. Seemingly, the matter of ‘trust’ takes some time because a crypto exchange typically allows small investment outlay to start with.
Role of Crypto Exchanges
Crypto exchanges are designed to keep your cryptocurrencies in a safe storage for you. The majority of these exchanges have ‘cold storage’ that is used to keep your coins ‘offline’ until you tell them that you want to make a transaction with your currency. It is very much similar to keeping your traditional money in a bank account at the exchange. It is worth to mention here that cryptocurrecny is virtual money only and all the transactions you make through blockchain are not reversible. Unlike banks and other financial institutions, crypto exchanges do not offer deposit insurance. Therefore, you need to be aware that your cryptocurrency can be at risk as hackers are always there, attempting to reach your virtual money and steal them. A good crypto exchange will generally offer password-protected accounts and 2-factor authorization schemes in order to protect your crypto account from hackers.
Digital Wallet
Since hackers are always trying to prey on exchanges and your account, it is strongly recommended to use a digital wallet to store your crypto coins. A digital wallet not only acts as a safe storage for your coins but also is a device that you will be using to spend your cryptocurrency with merchants who accept digital currency as a payment method. It comes with the private key that authorizes the transaction to take place. Also, there is a public key that is usually shared on the network, allowing all the users to identify your crypto exchange account when involved in a deal with you. If hackers get the access to your private key, they can send your currency anywhere. Since no transaction is reversible with digital currency, once the money gone, it cannot be recovered. Make sure to pick a wallet that has the ability to handle the currency you will need for trading. The best part of a digital wallet is that it allows you to easily move your coins between your crypto exchange account and the wallet.
Although trading cryptocurrecny involves many challenges and varied instability, the basic technology of blockchain can turn out to be a game changer. Developers are trying to bring improvements in the system, anticipating that they will revolutionize how crypto transactions can be conducted more safely.
Small Reviews of 5 Best Crypto Exchanges of 2019
Coinbase – Based on California, USA, Coinbase is the most beginner-friend crypto exchange that comes with a simple yet attractive user interface. It also works as a brokerage, allowing you to directly buy cryptocurrecny from Coinbase instead of dealing with other users. The crypto exchange offers comparatively lower fees for transactions and brokerage than other similar platforms.
Coinmama – This is another beginner-friendly crypto exchange that focuses on the purchases done with debit or credit cards. Coinmama offers instant delivery of the products and deals in almost all digital currencies, such as bitcoin, ripple, Bcash, litecoin, ethereum, and Cardano. This crypto exchange however does not offer a digital wallet on the exchange. Instead, they ask the users to provide them with a valid wallet address so that they can send them the purchased cryptocurrecny.
Bitpanda – This is a popular crypto exchange that sells various cryptocurrencies, such as litecoin, ehereum, bitcoin, ripple, and IOTA for Euro, Swiss Francs, British pounds and US dollars. Bitpanda uses a simple user interface especially for beginners so that they can successfully trade cryptocurrency. The best part of this crypto exchange is that it allows users to choose from one of numerous payment methods, such as credit cards, debit cards, bank transfers for purchasing digital money.
CEX.IO – With this crypto exchange, you get high liquidity, security, and cross-platform trading. It has relatively high fees, margin trading, and almost 100 percent uptime CEX.IO supports excellent support for the payment method you use.
Kraken – Like Coinbase, this is another crypto exchange that is based on the USA. Kraken provides its clients with high security, reliability, and advanced order types, such as stop-loss orders. Also, they allow you to enjoy low transaction fees.
In addition to the abovementioned names, there are many good crypto exchanges, such as LocalBitcoins, Bitstamp, Gemini, Binance, Changelly, Bittrex, Bitfinex, and Poloneix. To sum it all up, a crypto exchange acts as key player in the world of cryptocurrency trading. All exchanges have their own characteristics, features, advantages, and disadvantages. In view of that, if an exchange works the best for you, it might not be the same for another.
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