How to Choose the Best Cryptocurrency Exchange Platform?
Cryptocurrency trading rules are in sharp contrast to traditional trading. Unlike stock exchanges, there are no brokers or middlemen. All you need is to get registered on a cryptocurrency exchange platform. Off late a good number of cryptocurrency exchanges have mushroomed and this makes selecting the best from the rest a little confusing. This blog will discuss all nitty-gritty details of a great cryptocurrency exchange so that you can Choose the Best Cryptocurrency Exchange Platform.
What is a CryptoCurrency Exchange?
A cryptocurrency exchange is a digital currency exchange where participants can exchange cryptocurrencies or digital currencies for other assets. These assets could be FIAT or any other permitted digital currency like Bitcoin, ETH, LTC etc. Platform owners or service providers may charge a small amount as trading fees. Trading fees may depend on the bid-ask spreads.
Cryptocurrency Exchanges can be classified into two categories i.e FIAT Based and Altcoin Based.Fiat Based Cryptocurrency exchanges permit participants to buy cryptocurrencies with fiat money or credit cards. Altcoin Based Exchange permit trading only when the participant deposits cryptocurrency first. Hence, an ideal way is to buy cryptocurrencies at any credible FIAT exchange and then deposit the cryptocurrency in an altcoin or pure cryptocurrency exchange.
However, finding the right cryptocurrency exchange depends on more than a few parameters. These have been discussed in detail below.
Choose a cryptocurrency exchange with a registered physical presence in your country or state. This is advisable for security and convenience as well as for seamless transactions free of geographical restrictions. Also in case of friction owing to misleading claims or promises, it is easier to file a case against fraud or hacks, if the exchange is domestically operated which makes it immediately answerable to the court of the land. Moreover, using a foreign exchange may restrict you from using certain features of the exchange in your geography.
Trading Pair Options
Most cryptocurrency exchange in the market today accept popular cryptocurrencies like Bitcoin and Ethereum as trading pairs. However, these are extremely high valued, so it is important that a good cryptocurrency offers multiple trading pair options by listing a large pool of alt-coins. This also conversely helps to offer viable alternatives when a particular cryptocurrency experiences a free fall in value.
Liquidity remains the most sought-after important factor for all cryptocurrency exchanges across the globe. Trade volume report or the KPI rating is a good indicator of the exchange’s health.
For high liquidity, the exchange must have a high number of active buyers and sellers on its platform. High trade volumes keep currency prices stable and ensure hassle-free transactions.
Cryptocurrency Exchanges are decentralized by nature. This necessitates the platform to have strong security checkpoints to thwart off any hacking attempts as well as easily raise alarm against questionable transactions. A few security parameters that one must look out for before starting trading on any cryptocurrency exchange include:
- An Offline Escrow account for moving coins.
- DDoS attacks protection
- Two-factor id authentication and transaction verification via email.
- Encryption and Backup
- Exchange Audit
A good example of an exchange with all the above features would be that of Coinolix Cryptocurrency Exchange. This exchange promises great liquidity with encrypted security.
As they say, “Good customer service transforms into happy clients”, a good customer service is a valuable asset across all verticals of the cryptocurrency exchange ecosystem. From reverting to common queries to immediate resolution of red flag issues, an efficient customer support plays a key role in customer acquisition too. A good litmus test would be to call the customer support and seek answers to your queries and doubts. The answers you receive and the treatment by the Customer Support would play a critical contributor when you are making your choice. Also, remember that cryptocurrency exchanges are still in their teething stage. Hence, a good customer support is paramount to immediately resolve trading issues or day-to-day queries.
Put on your detective hat and do a background check on the exchange you feel is good for your likings. There are a whole host of scams and fishy practices that lure ignorant individuals with false promises of compounded returns and earnings.
Visit online forums and join popular communities to get a public consensus on the platform. These forums and communities better highlight the technology, policies and track record of a particular exchange.
To maximize your gains, it is important that you chose an exchange with minimum transaction fees. Different cryptocurrency exchange has different nomenclature for it. A good thing to do would be to read the whitepaper before taking the final call. Remember, there is more to the surface than what meets the eye.
While the above are the most important factors to consider while registering on any cryptocurrency exchange, features like the User Interface (both desktop and mobile) of the Exchange Platform are also equally important. Looks matter too and a simple UI will cause no confusion and trading will be hassle-free.
This brings us to the end of this blog. To wrap up we must add that your choice for cryptocurrency exchange depends solely upon your trading preferences. While some exchange may offer a great easy to use UI, it may lack in trading features. An exception to this will be the Coinolix cryptocurrency exchange that is powered by a robust trading engine backed by 24*7 customer support. The UI is dynamic yet simple. Last but not the least Exchange services include Spot market trading, Margin trading, Futures market trades.