Jan 6, 2018
1 0

How to Choose a Cryptocurrency Exchange, Save Money and Avoid Scams?

Written by

Cryptocurrency exchange is the online platforms that allow to buy and sell bitcoins, ethereum as well as the other types of cryptocurrencies.

There are different types of cryptocurrency exchanges – some of them deal with the same kind of cryptocurrency, while others exchange fiscal money (such as USD and EUR) for the cryptocurrency.

Types of the Cryptocurrency Exchanges

Trading platforms like Bittrex, Bitstamp, Bitfinex take a particular payment for each transaction. The amount of the operation depends on the amount and type of trade.

Cryptocurrency broker platforms sell crypto currency at a price that is set by a separate broker. Most often this amount of payments consists of a market price plus a premium. One of the most common brokerage platforms is Coinbase.

Direct trading exchanges enable the cryptocurrency holders to exchange their funds. Bidding on direct exchanges is carried out exclusively on trust and reviews written by the previous traders.

Crypto traders trade on cryptocurrency exchange, which they absolutely trust. Choose Cryptocurrency Exchange that will keep your money safe as well as your privacy. When choosing a cryptocurrency exchange, it is essential to understand that you trust the exchange despite possible tech difficulties. Reliable exchanges can withstand hacker attacks and solve problems as soon as possible.

Cryptocurrency Exchange – to Trust or not to Trust

Unfortunately, you should not trust every Cryptocurrency Exchange. Losses of cryptocurrency happen very often due to technical mistakes and hacker attacks. The best way to protect your virtual space is to stock up the information properly. Let’s see what is worth knowing about cryptocurrency exchanges before using them.

1. Headquarters, CEO, Staff

First of all, check for available information about the crypto-exchange. Legal organizations have no problems with providing information about headquarters, the CEO, and staff. On the other hand, the lack of this information should serve as an excuse for suspicion that the company wants to hide something from you.

2. The State

If contact information is still present, pay attention to the state in which this organization is registered. For example, if the headquarters is located in a state in which this cryptocurrency is prohibited, then you may also have problems using this exchanger.

3. Cyber-security

It is essential to know whether the exchanger was ever hacked in the past or not. And if yes, then how did the staff respond to the consequences of the hacking. Was the money returned to the affected customers? Have measures been taken to address the reasons for the hack?

4. Security

Learn which security features a crypto-exchanger uses. Keep in mind that every reliable exchange cryptocurrency should offer its users at least the following security measures:

  • 2FA (two-factor authentication) for logins
  • PGP encryption of e-mail messages
  • email and SMS notifications

Also, the exchange must periodically undergo financial and security checks to eliminate possible technical problems.

5. Customer Support

Customer support in the field of trade in cryptocurrencies is usually slow and inefficient. Check if it’s possible to contact technical support via email, hotline or online chat. How long does it take to wait for an answer from the support team?

6. Cryptocurrency Exchange Privacy

If you are thinking about privacy, make sure that there are ways of verification for depositing, trading, and withdrawal of the cryptocurrency from the exchange. Some exchangers ask for only your email address, while others require you to download scan photos before withdrawing your funds. Usually, the most reliable crypto exchanges request a scan of the passport to make money transactions.

7. Reputation

Often the most reliable source of information in the modern world is the fair opinion of the same cryptocurrency traders like you. Study the reviews and note which most frequent claims were made to this currency exchanger? If the exchanger has received a considerable number of complaints about disabling services, blocking accounts and missing funds, think twice before using it.

8. Trading Fees

Usually, crypto exchange take from 0.1 to 0.25% of the value of the transaction made on their stock exchange. The interest rate depends on the volume of the cryptocurrency and the way of trading. Unfortunately for users, there is a relationship between the simplicity of using the exchange and the size of the trading rate. For example, by buying bitcoins through the Coinbase application, you will need to pay about 1.5% extra.

9. Trading Pairs and Liquidity

It is essential to understand that not every cryptocurrency is available on every exchange. And therefore it is trivial to check whether a currency exchange is possible in this exchange, which you want to trade with.
Once you have decided where to get the cryptocurrency you need, use the CoinMarketCap tool to check if the trading volume was the maximum. The higher the congestion of the market, the higher liquidity, which means that it takes a short time to proceed the transaction.
Great liquidity leads to high market stability. The larger the volume of trade, the less the effect each transaction will make when assessing a particular cryptocurrency.

10. Trade Options

Ask yourself – what are the various options for trading represented on the crypto exchange? This question is essential for currency traders with experience who are in search of a flexible platform for transactions. They are also looking for opportunities to participate in the derivatives trade.
At the very least, it is important to know whether a stop-loss option is possible, which automatically sells the currency as soon as its value is below a specific value.
As you can see,  it is not easy to choose a crypto exchange. To do this, one must possess not only knowledge of the cryptocurrency, but also the fundamental principles of completing trading operations online.
To test a specific exchanger, try to register on it and read as many reviews as possible. The more information you own, the sooner it will lead to successful trading. Everything is up to your skills and thoughts. Dare!

Read more on Cryptocurrency exchanges: The Concept and Types

How to Choose a Cryptocurrency Exchange, Save Money and Avoid Scams?
Article Name
How to Choose a Cryptocurrency Exchange, Save Money and Avoid Scams?
Cryptocurrency exchange - should you trust or not? The best way to protect your virtual space is to stock up information properly. Let's see what is worth knowing about cryptocurrency exchanges to keep your money and privacy safe.
Publisher Name
Publisher Logo
Article Tags:
Article Categories:
Currencies · Investing

Leave a Comment