Finance

What to consider when choosing a cryptocurrency exchange

The first decision a crypto trader must make is choosing where to start trading. Here are the four key factors you should remember before you start.

Traded volume

Large volume of trading shows the reliability and ability of the crypto exchange to conduct customer orders at any time, no matter how big or small they may be. Therefore liquidity is an extremely important consideration for both the purchasing and the selling of cryptocurrencies.

Compare the top 100 crypto-currency exchanges at CoinMarketCap according to measured or published amount. Filtering the quest by modified volume offers more accurate statistics than the volume given by an API, and removes unfit or questionable exchanges.

Supported currencies

Some platforms support Bitcoin and Ethereum but when it comes to supported currencies, this is just the tip of the iceberg. Here’s what to look for:

  • Total number of coins.

It dictates how many pairs you can trad. HitBTC, for example, is traded at 801 on the most number of markets. According to its modified number, Bitbank is in top 50 but only supports BTC and LTC.

  • Coins as quote currency.

This will determine the currency in which you can buy or sell coins. Most exchanges have only a few distribution currencies (Bitfinex has BTC, ETH and EOS). Other crypto exchanges, such as Binance, include a long list of quotation currencies, including BTC, ETH, USDT, TUSD, USDC, BNB and PAX.

  • Whether fiat is supported. 

As a trading coin Fiat is not widely supported.

It includes Bitstamp, Bittrex and Coinbase exchanges that do support it. Bitfinex is also the largest exchange in cryptocurrencies for four fiat currencies: USD, EUR, GBP, and JPY. BitMEX supports only Cryptocurrencies.

Security level

Last but not least, the reliability of cryptocurrency exchanges is not ignored. Here’s what to look for

  • In terms of security measures.

All exchanges will cover the basics, including user authentication. Check also whether the following protocols are in place: DDoS security, Content Security Policy protection, X-Frame options, cold storage, and multi-signature or manual withdrawal tests. This latter is used in BitMex where at least two BitMEX employees manually test each withdrawal. Unlike many other exchanges of cryptography, that was not hacked. It’s also wise to check how often security checks are done by the company, and whether they have a security team in place.

  • How the exchange handles hacks? 

It’s critical that the crypto exchange is willing to collaborate, reimburse and enhance security measures with the targeted customers. For example, after Mt. Gox was hacked, it stopped trading, shut down its operation and went bankrupt. In comparison, 12 months after it was hacked, Coincheck was approved by the Financial Services Authority, and now returns a total of $400.

To sum up

When choosing a cryptocurrency exchange, it’s important to consider all of the above but your decision should also be based on personal strategy and favorite pairs. Whatever you choose, note that your number one goal should be to study all of your options before you start trading.

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