Cryptocurrency is an increasingly popular trading option, with a wide variety of forms to choose from. Besides household names like Bitcoin and Ethereum, there are hundreds of other altcoin currencies that have their pros and cons. But once you’ve decided which crypto format(s) you want to trade in, you also need to pick an exchange to facilitate your transactions and manage your investments.
Just as Bitcoin is the leading cryptocurrency, so Coinbase is the leading crypto exchange, with over 35 million users worldwide. However, just because something is popular doesn’t mean that it’s the best choice for you. There are many excellent Coinbase alternatives that may be more in line with what you require from a crypto exchange. So before joining, consider the following factors.
Currencies and countries
The first way to narrow down your choice is to only consider exchanges that deal in the cryptocurrency you want to buy or sell, and that are available in your country or state. This may seem obvious, and if you use Bitcoin, you won’t have any trouble finding an exchange to suit your needs. Less well-known altcoins may not be universally traded, however.
Although many exchanges can be accessed in the US, some can’t, and if you’re based elsewhere, you may find that some countries have less choice than others. This is of particular concern if you travel a lot and want to be able to trade on the move. In this case, look for exchanges that are available in many locations. Be aware that some exchanges that can be accessed in the US may not be available in some states.
Does the crypto exchange you’re considering have a good reputation among other users? Has it been hacked or otherwise compromised recently? Here’s where you should do some independent research, looking at news, reviews and user comments relating to the site in question. No news generally isn’t good news: exchanges that have only recently appeared may disappear just as quickly, and exchanges with few customers may suffer from a lack of liquidity.
Always be on the lookout for scams and frauds, and check how an exchange is regulated, and from which territory. If the site isn’t transparent about how it works and its accreditation, this should be a red flag that all isn’t as it should be. Steer clear of exchanges that aren’t clear or straightforward.
The safety and security of your money and your sensitive information should be your prime concern. Look for factors like two-step authentication. If it’s too easy to open an account, then this should set alarm bells ringing. Find out where your assets are stored when not required for trading. They should be kept in an offline cold wallet to deter hackers.
Once you’ve created a shortlist of exchanges that meet your requirements, going for the one with the highest security levels may be the best way to make your final choice. Remember that however secure an exchange, it’s still up to you to exercise best practice, such as keeping your passwords safe.
Fees and features
Naturally, you’ll look for an exchange with low fees, but this isn’t always the best indicator of which site to go for. If an exchange doesn’t charge fees upfront, look for hidden charges or commissions. Remember, all exchanges exist to make a profit, and it’s usually better to pay for what you need than to be hit by unexpected charges.
Instead, look for fees relating to the services you’ll be using, and analyze how an exchange’s fee structure will impact you. If there are tools that you’ll need often that aren’t part of a site’s core function, you may be charged more for these than you would if you used an exchange that specialized in the area that you’re interested in.
Most people will want a certain amount of flexibility in the exchange they use. A good example would be deposit size. Is there a minimum and a maximum deposit level, and is this likely to be an issue for you? Does the exchange have a mobile app? Does it accept a wide range of credit and debit cards, and or other payment options? All these factors should be considered, especially in terms of your own requirements.
As all traders and investors have different needs, there is no one-size-fits-all ideal cryptocurrency exchange model. Think about how you are likely to use the exchange and draw up a checklist of your requirements. Security should always be a top priority for everyone, but beyond this, you need to make sure that you can get what you require from a crypto exchange before signing up.