- With the advent of more and more acceptance of a wide range of cryptocurrencies, new crypto exchange platforms are emerging frequently.
- Before investing in any cryptocurrency, it’s important to consider different a lot of factors in order to save time and money, such as liquidity, availability of the exchange, and usage familiarity, among a lot more.
Basically which crypto exchange platform suits best for someone depends upon their objectives and targets. But who doesn’t want to save on money and time? Most important factors to consider while choosing a crypto exchange to save money and time are – liquidity provided, availability of the platform in your area, and familiarity with the crypto exchange platform.
Factors to Consider Before Crypto Exchange Selection
When investing in crypto, investors have thousands of cryptocurrencies to choose from and dozens of exchange platforms to choose from. One can consider certain factors particular to the different crypto exchanges out there.
There can’t be one answer to which exchange is the best. It depends on the personal objectives and targets of the investor. Most people investing have one aim – to gain higher returns in a smaller amount of time. However, some might focus on long-term benefits. Let’s have a look at the various factors involved —
- Liquidity: An investor in the crypto market needs greater liquidity because they need to execute a trade at any given moment due to the high possibility of market volatility. This necessitates having a significant number of orders flowing on the platform, as more people with crypto assets means more activity leading to improved liquidity as a larger audience can perform trade at any given moment. In other words, the popularity of an exchange is a strong indicator of its liquidity.
- Availability at the respective location: An obvious point to look out for is whether a given exchange is available and operates in your country/region. Even if an exchange is available in a particular region, there may be variations in the enabled features.
- User interface: Like any application, user-friendliness is important. A beginner may find the exchange overwhelming or even get discouraged to invest if it does not have an easy-to-operate interface. Understanding the exchange is crucial to carefully investing for better fund utilization.
- Security and reputation: Security issue is a grave concern for all exchanges. One must look carefully into the security features provided, protocols, and policies adopted by the exchange including KYC (Know Your Customer) and AML (Anti-Money Laundering). Security is a strong reputation determinant of a crypto exchange in the market.
- Features offered: Insurance options, matching engines, reward offers, and customer support are the main features to look out for on an exchange. Others can be – whether fiat trading option is available, or leverage trading over derivatives exchanges.
- Asset choices and pairs available: Most exchanges offer coins with larger market caps. You can also look for other trading options and assets that can be traded. The availability of the desired asset pairs is very important.
- Trading fees and gas fees: Investors are also concerned about the trading fees a platform charges and gas fees for the network. It is common for different platforms to charge different fees for different cryptocurrencies. Some exchanges may also provide rewards and other offers.
- Transparency: Transparency refers to how much policy and protocol disclosure an exchange offers. It must include the transaction fees, security protocols, and the time it takes for the various transactions.
- Jurisdiction: A careful go-through of the jurisdiction and regulatory compliance is advised. The exchange must comply with the administration regulations otherwise it becomes complicated to carry out trade. Do verify the controlling authorities and other teams backing it for taxation and other legalities.
- Trading limits: Every exchange sets its own deposit and withdrawal limits. One must check if it sits in sync with your targets.
