How to choose a crypto exchange for trading and investing?

Even if you are not a professional trader, it is good to understand the basics of the crypto market, including choosing sites and the risks involved.

On cryptocurrency exchanges you can earn much more than on the stock or currency market. However, the risk of losing the invested money is also greater. It is not difficult to find a list of crypto exchanges; just follow the link.

Decide on your goals

What do you want to do in the stock market? Trade or investment? Crypto exchanges are divided into centralized and decentralized.

The centralized exchange operates as an Internet service and controls all users’ personal accounts; identity verification is often required. Centralized exchanges have an obligation to traders and investors to pay out profits on trades with a trading deposit (a trading deposit is a certain amount of money that a trader deposits into his own trading account), but exchanges also charge a commission on trades.

Decentralized exchanges are technical platforms that run on blockchain. They only allow direct transactions between participants. At the same time, your personal data and assets are not stored anywhere and are not linked to anything – some of the most popular in the crypto world: Uniswap, PancakeSwap and Compound.

On decentralized crypto exchanges, there is no control and verification body in the form of an administration. And here the risk of running into fraudsters is higher: buy a fake smart contract – even bitcoin is fake (a smart contract is a computer protocol that allows you to carry out transactions and controls their execution using ‘mathematical algorithms’), or invest in a questionable piece that could be the origin of the -dummy project. In both cases, the investor loses money and “empties” the trading deposit.

However, here you can also find an interesting new crypto-asset, which after a while can take off and be recognized by centralized platforms, buy it in the first place and make a lot of money.

Important criteria for choosing a crypto exchange:

When choosing an exchange for cryptocurrency trading, the following factors should be considered:

Replacement size

Its reliability depends directly on the size of the exchange: the larger the exchange in terms of trading volume, the more users trade on it and the more stable it is. Its ability to meet its obligations to you in the payment of deposits depends on the financial stability of the exchange. Several factors affect the financial stability of the exchange: the number of registered users, the amount of funds that customers deposit on the exchange, the total turnover of transactions and the duration of the exchange’s operation on the market.

If the exchange pays deposits for a long time (for example, more than a day), this may indicate the financial instability of the exchange. Large stable exchanges usually withdraw funds almost instantly.

Change jurisdiction

The jurisdiction of a crypto exchange is formally determined by the country where the servers of the exchange website are located. Although the crypto markets are not directly regulated by governments and financial organizations in some countries, various restrictions are now imposed on certain websites (up to refusal of registration).

Which coins are traded on this exchange

Find out about the exchange site if it allows you to trade the coins you are interested in (coins, cryptocurrencies). The first, most important and most expensive cryptocurrency today is bitcoin. The rest of the coins are called altcoins. Ethereum is second only to bitcoin in terms of liquidity. Stablecoins are cryptocurrencies whose value is tied to either fiat currency (ie the usual currency – dollars or euros) and other crypto assets. And also for goods traded on the stock exchange, for example precious metals and gas: one such stablecoin is Tiberius, backed by the prices of seven precious metals.