Blockchain Basics

How to choose the best cryptocurrency exchange

Choosing an exchange is one of the hardest tasks for a beginner. This article helps you to pick the right one for you.

Allways be cautious

You should always be cautious when you entrust someone with your money. There are scams and frauds out there, ready and waiting for people who are carelessly investing their funds. Don’t forget that one of the earliest digital currency exchanges and one of the most popular, Mt. Gox, collapsed while others were hacked or comprised in other ways.

Features of exchanges

Security features

Even if the crypto world has existed for quite a while, for many it is still the Wild West. Part of the appeal is that while you are not completely anonymous you can still trade pseudonymically.

Key storage

Like wallets, storing your keys on a cold client-side device is the safest way to secure funds. The problem is for exchanges storing all funds is not practical. It takes significantly longer to process transactions.


Since cryptocurrencies are still relatively new, in most cases you are your own insurance. Nevertheless, with the industry expanding, some service providers now offer various forms of insurance. Some government regulated exchanges even store customer funds with registered banks. This enables them to extend government backed deposit insurance to their user’s fiat accounts.

Functionality features

Regardless of your trading experience, the first thing you need to consider is that you cannot trade every cryptocurrency on every exchange. The best known cryptocurrencies like Bitcoin, Litcoin or Ethereum are traded nearly everywhere. If you are looking for a more exotic currency, you will first need to check which exchange you will need to use.
Also, keep in mind that not every service will accept your fiat currency or geographical area. For example, some US customers cannot trade on most of the large exchanges if they are from certain states.
There are nearly as many fee structures as platforms. Which fee model is used, depends on the particular type of user the service is made for. As a daily trader, you do not want high individual transaction fees. On the other hand, if you just want to invest a small sum as a one off, fees will be less relevant to you.

Types of exchanges

On your search, you will encounter different kinds of exchanges. In general, there are 3 different types. Each of them fits different demands, so you should think about how you are planning to use it.


Beginners most often choose brokerage platforms. These allow users to buy and sell directly from the provider of the service. So completing a transaction is easy and fast. With these you will most likely be expected to verify your account by providing personal information like a photo of your passport.

Peer to Peer

Peer to Peer platforms, also known as P2P platforms, are preferred by those who value privacy above all else. With these services, you can trade one-on-one whereby the two traders decide upon the price and payment method autonomously. Some of them are location based and just help you find a place to meet other traders in the real world.
Most P2P platforms will go further offering to secure the trade. They act as an escrow and arbitrator in the case of disputes.

Full trading platform

These platforms are comparable to real stock markets. They put a large number of users together and allow them to exchange among themselves. In order to do that full trading exchanges utilize an order book to match buy and sell orders.

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