5 factors to consider when comparing crypto exchanges
Of CNBCTV18.com IST (published)
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Here are five factors that can help one decide which exchange is right for them:
Today, trading and investing in digital assets is quite easy, thanks to the many crypto exchanges at your disposal. Just choose the right exchange, create an account and buy/sell/trade cryptocurrencies with ease. But with so many different options to choose from, putting your money behind a particular exchange is easier said than done.
But don’t worry; here are five factors that can help you decide which exchange is right for you:
1. Security:
The first thing you should look at is the security of the exchange. Choose a platform that is always looking to secure its systems. The best exchanges will host regular bug bounty programs, where they reward white-hat hackers for pointing out vulnerabilities in their network. Good crypto exchanges will also offer two-factor authentication and other robust security measures to keep your holdings safe. And just as an added security measure, they will also insure customer inventory against hacks and attacks.
2. Investment and trading options: A good cryptocurrency exchange will offer you a variety of investment and trading avenues. For example, some platforms in India offer more than 300 cryptocurrencies for investors and traders to choose from. In addition to these coins and tokens, a few exchanges also offer alternative crypto products, such as futures, ETFs, etc.
3. Liquidity: Liquidity determines how easy it will be for you to convert your crypto to fiat and vice versa. Therefore, you need to look for a crypto exchange with good liquidity. The easiest way to get an idea of the exchange’s liquidity is to look at 24-hour trading volume; the higher it is, the better. There are several platforms that provide real-time data, including trading volume, from the various crypto exchanges in India and the world.
4. Fees: All crypto exchanges will have a set of fees. However, the number of charges and the extent to which they eat into your earnings will vary from one exchange to the next. Generally, the best platforms will have a transaction fee of 0.2 percent or less. You should also compare costs for trading, deposits, withdrawals and balance transfers before choosing a crypto exchange.
5. Functions: Look for things like quick onboarding, 24*7 customer support, a mobile phone application, a wide variety of payment methods, etc. These small features can make a big difference in your trading/investing experience. When it comes to mobile applications, you should also look into customer reviews and ratings. This will give you a good idea of the quality of service offered.
6. Rewards: Free crypto/money never hurts. Therefore, as an added value, you should look for cryptocurrency exchanges that reward good customers. Some exchanges will offer a referral bonus where you can earn up to 50 percent of the trading fee paid by the friends and family you refer. Some exchanges also provide crypto rewards for learning about projects and taking quizzes.
A good cryptocurrency exchange will have a large customer base. This is an indicator that other investors put their trust in the aforementioned platform. Also remember not to choose an exchange just because it has the lowest fees; it should also tick all the other boxes. Finally, crypto markets are highly volatile – remember to back all trades and investments with thorough market research and understanding.
