There was a time when cryptocurrency was just a niche, but today it has a whole investment market. If we look at the statistics, the number of global crypto investors has almost doubled in 2021, and the total market cap of the crypto sector grew by 187.5%. With this sky-rocketing growth of the crypto market, many crypto exchange platforms have also soared. As per Forbes, nearly 600 cryptocurrency exchanges are available worldwide that are inviting investors to trade in digital assets.
Because of hundreds of crypto exchange platforms present in the crypto market, one can easily get confused and choose the wrong crypto trading platform. Furthermore, the internet is also full of sponsored and promotional content, so you can not rely on it unless you know what to look for in the crypto exchange.
This blog will tell you about the five most important criteria to consider in a crypto exchange before giving it your time, money, and trust.
Let’s start with understanding what a crypto exchange exactly stands for.
What is a Crypto Exchange?
A crypto exchange is an entity where you can trade, invest, buy, sell, and HODL cryptocurrencies. The features of a crypto exchange also include changing your fiat currency to a cryptocurrency or other digital assets and vice versa. Crypto exchange serves as a matchmaker to connect buyers and sellers of the crypto space. There are two main categories of crypto exchanges- Centralized and Decentralized crypto exchanges. As centralized exchanges are more popular and better structured than decentralized ones, we’ll talk only about them in this blog.
How to choose the right Crypto Exchange?
It may look hard to choose a suitable platform for crypto trading from a beginner’s point of view. But with the right approach and selection criteria, it becomes a child’s play. While we could easily rank them and present them to you, it would not be the right thing to do. Since every investor has different requirements and preferences, the definition of the best crypto exchange also varies. That’s why we have provided some subjective factors to consider while comparing the features of the crypto exchange to find the best one for yourself.
Security
Even though the decentralized structure of cryptocurrencies makes their transactions immutable and secure, sometimes exceptions may arise. Due to this reason, crypto exchanges use different methods to provide extra layers of protection to the user’s investments. For example, some top Indian crypto exchanges like Flitpay and CoinDCX store more than 90% of their funds in cold wallets (offline), the safest storage mode for crypto assets. So, before you select a crypto exchange for trading or investing in digital assets, check how much data it stores offline in the cold wallet. Every cryptocurrency platform needs to keep some of its crypto-assets active for trading, but you can look for a platform that holds a minimum of 90% of its funds in a cold wallet. Two-factor authentication that requires extra verification steps other than the login information is also the right measure to check the security level of a crypto exchange. Avoid those crypto exchanges that don’t publish their security measures online.
Trading Fee
One of the most popular features of a crypto exchange is trading in cryptocurrencies. Every centralized crypto exchange takes a small percent of your transaction as its trading fee. While the trading fee of most crypto exchanges is barely a percent of your whole transaction amount, it can still turn you off if you are following short-term trading strategies. For example, the cryptocurrency exchanges like Flitpay and WazirX charge a flat 0.2% trading fee on the buying and selling any crypto assets on their platform. While some other Indian crypto exchanges like CoinDCX follow a complex maker-taker business model where it charges a 0.1% trading fee to both the makers and takers each. You can select whichever matches your requirements better. Just make sure that you understand the trading plan of your chosen crypto exchange before initiating the trading.
Listed cryptocurrencies
Every crypto exchange has a different set of cryptocurrency pairs available for trading. While popular coins like Bitcoin and Ethereum are available in almost every Indian crypto exchange, newer and less popular coins are available on limited platforms. Most crypto analysts prefer to develop crypto portfolios with a few coins, but it entirely depends on you to choose cryptocurrencies that you are comfortable investing in. Hence, select a cryptocurrency platform that includes all your required currency pairs for trading.
Customer service
Out of all the features of a crypto exchange, Customer support is an important one indeed. All cryptocurrencies are digital assets, and it’s common to face technical outbreaks or payment failures while trading in them. Hence, choose a cryptocurrency exchange that offers remarkable customer service to its users. If you are technically challenged or want a simplified customer service experience, look for crypto exchanges that offer a convenient way to reach out to them.
Flitpay is an excellent example of what good customer support should look like. Through WhatsApp and telegram, it provides customer support to offer its users a very simplified and still effective experience. Such initiatives by crypto exchanges also help you check their actual will to help you out.
Learning
Motive matters more than the consequence. That’s why you should look for crypto exchanges that are willing to educate their users about the crypto world and not just to make a profit. As a beginner, it would be very advantageous to know about new coins, strategies, predictions, and trendy terminologies. Crypto exchanges like CoinDCX, Crypto.com, and WazirX regularly post educational content on their website to keep their readers updated about the latest events in the crypto world.
The Endnote
You can consider many other factors like user interface, uptime, and market performance of the crypto exchanges to decide the best one for you. While comparing the crypto exchanges, one thing to remember is that no crypto exchange can be the best for everyone. Considering the features of a crypto exchange is crucial before putting your money at risk. After all, research and comparison are better than the trial and error method for finding a perfect crypto exchange.