How to Choose a Cryptocurrency Exchange
A suitable exchange for your cryptocurrencies is an essential step if you want to save yourself some trouble in the future. The coin values are oscillating every day in major amounts, so a trustworthy exchange must execute your requests without causing trouble. There are diverse exchanges located around the world, and the best one for each depends on such factors as currencies you want to trade, your current location, and your preferred payment method.
Let’s look at the currencies you might want to trade. At first, there isn’t much to think about, as you would first need one or more of the big currencies to be able to dive deeper. Some of them are Bitcoin, Ether, Dash, and Litecoin. If you have already decided to invest in a specific currency, you will have to make a research where does it trade best and if you can exchange it at all with your specific currency. For example, on poloniex.com you can exchange Ripple for Bitcoin, but no other currencies. In most exchanges you might not be able to get or sell your currencies for the one you want, so choosing a suitable exchange must match your requirements.
Not only that but also regarding the amounts you would like to trade, certain exchanges will have different fees for selling and buying. If you want to buy your currencies quickly, you would need an exchange with a 24-hour trade volume.
Some of the most popular exchanges that have more currencies to choose from are:
Kraken – offers a wide variety of currencies with a more complex user interface.
Poloniex – exchange is possible between cryptocurrencies having its main market split by Bitcoin, Ether, Monero, and Tether.
Bitfinex – the largest exchange by volume, but if you are from the US, trading is not supported.
Bittrex – one of the biggest exchanges, being secured by former Amazon engineers.
Another important moment is your current location. With the major growth of Bitcoin, the governments became more aware of the impact of cryptocurrencies and started implementing new regulations. This led to many of the exchanges that have been around for longer not being anymore available in some countries, as for example Bitfinex in the US. Most of the pages will let you know immediately if you can trade there, during the sign-up process. Below are some examples of exchanges accepted in some regions:
CEX.IO – supporting US traders, a site with a good reputation that has been around for longer time.
GDAX – is a branch of Coinbase, that offers insurance for your US dollars. However, that’s about it, and if there is a fork and your currencies are lost, there is no compensation for this kind of loss.
BitPanda – based in Austria, it is the most popular exchange in Europe offering several payment methods.
Cryptopia – is not only an exchange but also a kind of an item marketplace. It specializes in less known currencies and anybody is able to trade there. Based in New Zeeland, the only fiat currency that it accepts is the New Zeeland dollar.
Before buying and selling any currencies, you will need to get accustomed to different incurring payment methods and fees. Usually, it’s so that the easier is the payment process and less amount should be traded, then more fees will incur. If you will buy with a credit or debit card, it is common that you would pay more for the ease of use. There are different fees incurring in different regions and based on your payment method, but here some of the most common ones:
These vary from about 0.25% to 5% and are calculated based on your payment method. A percentage of your total amount is calculated and withdrawn as a fee. The trading method, either through cryptocurrencies, debit cards, bank accounts or other alternatives influences the percentage of the conversion fee.
Maker and Taker Fees:
These fees are calculated based on the percentage of buy and sell in the last 30 days and it varies from 0.0% to 0.5%. Larger fees are extracted from takers, whose orders are immediately associated with other users. This process sinks the liquidity of the market, and this is when the higher fees incur. However, the makers are those whose orders aren’t associated immediately, which adds up to the market’s liquidity ensuring that they pay lower fees.
The miner fees are extracted for your convenience, as it ensures that the transaction is sped up. The exchanges set up the process automatically and it usually costs about 0.00001 BTC.
Now, you can do your own research and narrow down the alternatives for the exchange that fits you best. It is better to invest more time and be well prepared than advance with an inaccurate plan. Even in the volatile world of cryptocurrencies, you can do just fine if you’ve made your homework.