Want to start trading cryptocurrencies? Do you feel like entering the world of cryptocurrencies to exchange and acquire your USD, GBP or EURO converted to Bitcoin or Ethereum? To do so, a user must have a clear understanding of the following key concepts:
- What is cryptocurrency exchange?
- What are the available types of cryptocurrency exchanges?
- What are the parameters to consider before joining an exchange?
- What are the best cryptocurrency exchanges?
Now, let’s proceed further and see each one in-detail to simplify the exchange process.
What is Cryptocurrency Exchange?
Cryptocurrency Exchanges are online websites where a user can buy, sell or convert cryptocurrencies for other cryptocurrency or fiat currency like US dollars or Euro. It works similar to the stock exchange or a currency exchange.
What are the available types of cryptocurrency exchanges?
Here are the available types of Cryptocurrency exchanges:
- Traditional Cryptocurrency Exchange – This exchange type works like the traditional stock exchange based on the current market price of the cryptocurrencies. Here, trade between buyers and sellers takes place involving third-party intermediaries. But, this type of trading exchange generally charges a fee for each transaction.
- Direct Cryptocurrency Exchange – This exchange platform provides direct peer-to-peer trading between buyers and sellers from different geographical locations without third-party intermediaries. On this platform, sellers can set their own rate of exchange as there is no fixed market price.
- Cryptocurrency Brokers – This exchange platform is a website-based exchange which works like a currency exchange at airports. Here, the broker sets the exchange rate (which includes market price and a nominal premium) and then allows users to buy or sell it.
- Cryptocurrency Funds – This exchange platform is a pool of professionally managed assets which allows users to buy the cryptocurrency through funds.
What are the parameters to consider before joining an exchange?
A user must do a little research before beginning to trading or joining an exchange platform. Here are some of the parameters to be considered before joining an exchange.
- Fees – Most of the platforms display fee-related information on their websites. Make sure to understand deposit, transaction and withdrawal fees for exchange as this differs considerably depending upon the currency exhange you use.
- Reputation – Reputation is a also an important parameter. The best way to find out about the reputation of the exchange platforms is to search for reviews from well-known industry websites and also from individual users. There is also a privilege to post your queries on forums like Reddit or BitcoinTalk.
- Payment Methods – A user must make sure about the type of payment methods available on the cryptocurrency exchange. Confirm whether the payment mode is debit card, credit card, wire transfer or PayPal. It won’t be a good idea and is not convenient if there are limited payment methods for users.
- Geographical Restrictions – There are a few geographical restrictions while working with cryptocurrency exchanges. Some of the specific user functions are accessible from certain countries only. For this reason, user must make sure that the exchange platform you are planning to join must allow you to fully access the tools and functions in the country you currently live in.
- Exchange Rate – Different exchange platforms have different exchange rates. Users can see the fluctuation upto 10% or even higher in some instances.
- Security – This is the most important parameter that users should consider. Users must make sure that every transaction that takes place is secure.
What are the best cryptocurrency exchanges?
Today, there are plenty of host platforms that offer cryptocurrency exchange services but all platforms have not created equal impact in the market. Here are some of the cryptocurrency exchange platforms in no specific order but listed according to the user reviews on user-friendliness, accessibility, security and fees. Let’s have a look at each exchange platforms and its pros and cons.
- Coinbase IMAGE
- Cex.io IMAGE
- Kraken IMAGE
- ShapeShift IMAGEI hope this blog article has helped you understand the concept of exchange and the best cryptocurrency exchanges available in the market.To learn more about Blockchain technology, join us at Acadgild.