Cryptocurrency Exchanges: A Beginner’s Guide

Cryptocurrency Exchanges: A Complete Beginner's Guide - Mycryptopedia

Cryptocurrency Exchanges: Beginner’s Guide 

So you’ve learned about cryptocurrency, perhaps due to news coverage on the incredible market growth that has occurred in the space, or you are fascinated by the underlying technology underpinning cryptocurrencies such as Bitcoin. Whatever it is, the first thing that most people want to do after hearing, and understanding a little about cryptocurrency, is how to buy it. This can be done by using what are known as cryptocurrency exchanges. A cryptocurrency exchange is simply an online platform that allows users to buy and sell cryptocurrency. There are quite a lot of exchanges out there, so before you choose an exchange to trade cryptocurrencies, you should consider a few things first.

Factors to Consider when Choosing an Exchange

  • Reputation – Cryptocurrency is a very new and exciting area to be apart of, however, this can also bring some problems. There are bad actors within the space that will try and take advantage of you. That is why reputation in this nascent industry is very important. Only trade on cryptocurrency exchanges that are well known and have a good track record in the industry. You can utilize user reviews and public forums such as Reddit to get a sense of how trustworthy an exchange is.
  • Trading Fees – If you are going to be buying and selling various cryptocurrencies actively, then it is vital that you look at a cryptocurrency exchange’s fee structure. The lower the trading fees, the more profitable your trades can be. Exchanges may also charge a deposit fee and withdrawal fee, so make sure that you are aware of what those fees may be before committing to any exchange.
  • Verification Requirement – Some cryptocurrency exchanges will also require that you verify your personal identity in order to make deposits and withdrawals. A passport or drivers licence is normally required as part of the verification process.
  • Fiat Trading Pairs – Make sure to also check the fiat currency pairs that are supported on a cryptocurrency exchange. Some exchanges may support currency pairs such as USD, EUR, and GBP.
  • Cryptocurrency Pairs – For some exchanges, it is not possible to use fiat currencies to purchase cryptocurrencies, instead, users will have to use liquid cryptocurrencies such as Bitcoin. For example, a cryptocurrency pairing of BTC/ETH indicates that Ether can be purchased using Bitcoin.
  • Liquidity – It is important to make sure that an exchange has sufficient liquidity before you attempt any trades. If you place a buy or sell order for example, you may find yourself waiting hours or even days before an order can be filled. Popular exchanges will tend to have high liquidity, whereas the less popular exchanges may suffer from liquidity issues.

Now that we have covered some of the things you should be taking into consideration before using an exchange, here are some of the more popular cryptocurrency exchanges that are currently operating in the space.

Coinbase

Coinbase is one of the more popular cryptocurrency exchanges currently. It is usually the exchange of choice for individuals that first get into the space. The Coinbase interface makes it extremely easy to buy and sell cryptocurrencies, and as of the time of writing, Coinbase currently supports just three cryptocurrencies: Bitcoin, Ethereum, and Litecoin. Coinbase also possesses an alternative platform, known as GDAX, which is designed for those with a bit more trading expertise, and who want more functionality when it comes to trading cryptocurrency.

CEX.IO

CEX.IO is also a popular, and reputable cryptocurrency exchange in the industry. This exchange allows users to purchase cryptocurrencies using fiat currency such as USD and EUR. CEX.IO also benefits from high liquidity, which means that users can get in and out of as many positions relatively quickly and easily.

Binance

Binance is one of the fastest growing cryptocurrency exchanges in the space today. Binance does not allow users to purchase cryptocurrency using fiat currency, and instead, users must use one of its following trading pairs: BTC, ETH, BNB, USDT. Users are not limited to trading just the top cryptocurrencies by market capitalization, with Binance offering considerable variety in cryptocurrencies that can be traded on their exchange.

Bittrex

Bittrex is also similar in nature to Binance in that it too does not allow cryptocurrencies to be purchased using fiat currency. Bittrex, like Binance, supports a tremendous number of cryptocurrencies, well over 200 coins can be traded on its exchange.

Here are some more cryptocurrency exchanges for you to choose from:

  • Kraken.
  • Gemini.
  • Shapeshift.
  • Bitstamp.
  • CoinMama.
  • Local Bitcoin.
  • Bitsquare.

Conclusion

Choosing the correct cryptocurrency exchange can be a difficult task, given the sheer amount of options to choose from. However, it is important to properly all exchanges before you decide to commit your funds. Make sure that you are 100% confident with any exchanges that you do decide to trade on. Good luck!



 

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Bisade is the co-founder of Mycryptopedia. He believes that cryptocurrency and blockchain are revolutionary, and can't wait to see how it will disrupt our lives. He also can't wait to buy his first Lambo and go to the moon!Connect with Bisade on Linkedin and Twitter by clicking the icons below!