Choosing a trustworthy and reliable platform to invest in cryptocurrencies is one of the most critical measures to ensure you get the benefits you expect.
Before you can trade crypto, you must find a platform that covers your needs:
Crypto availability: Not all platforms or exchanges allow to trade of all crypto coins.
Ease of use: There are different trading operations: long/short trades, derivatives, margin management, etc. Each of them requires special tools, and the layouts may vary a lot between them.
Security: Trustworthy is an essential characteristic of any exchange: for traditional venues (stocks) and, of course, for crypto trading.
Some frauds and scam schemes have occurred in the past. Fraud protection is paramount to operate with a well-known exchange with a proven track of security and reliability. At this point, it's never been easier to invest or trade crypto as the market is getting more mature over time. Thanks to advancements in blockchain technology (DeFi, Smart Contracts, etc.) and the use of technology borrowed from traditional exchanges (See how AAX is using tech from the London Stock Exchange), investing in cryptocurrencies is becoming safer and more comfortable.
Whether you intend to buy and hold or you are a day trader, the following exchanges are the most well-known, safest, and trustworthy of them. When you deposit crypto on an exchange, you must consider that you don't own the private keys that unlock your crypto. You delegate this function to the selected platform. If you want to own your private keys and keep your crypto safe, you must manage a crypto wallet. Using a wallet is the recommended option if you wish to hold crypto for the long run.
What is a Crypto Exchange?
At the start of the crypto era, people buying and selling Bitcoins needed to find other people willing to trade with them. You required the specific crypto software installed (requiring a full copy of the blockchain) and understand how to manage wallet addresses. As crypto demand started to rise, it became evident that this process needed to be simplified to achieve a broader user base. A Crypto exchange allows users to sell, buy, and trade cryptocurrencies for traditional money (fiat money) like EUR or USD.
Since governments are aware that some people are using crypto to avoid taxes, some regulations have been imposed on exchanges, although this is a quickly changing environment. Authorities demand the verification of accounts under rules known as Anti-money laundering (AML) and "Know your customer" (KYC) measures. Not all exchanges implement the same level of user verification.
Types of cryptocurrency platforms
Centralized crypto exchanges (CEX): CEXes resemble traditional trading platforms. They are managed by a company or organization, using its infrastructure (being cloud or on-premises) and offering bid/ask prices to users to trade crypto and fiat money. They usually charge a fee for every transaction. A CEX can suffer outages affecting the whole platform because hackers have a single point of attack. A CEX permits crypto-to-crypto and crypto-to-fiat trades and provides high liquidity.
Decentralized exchanges (DEX): This type of platform does not require a central organization or authority. Traders operate under a Peer-to-Peer (P2P) scheme. Under the hood, DEXes use Smart Contracts. They use Ethereum (with a reliable Smart Contracts infrastructure). A DEX does not offer traders a single (a bid/ask pair). Instead, users must agree on the price when transacting a crypto asset. Decentralized exchanges provide less liquidity than their CEX counterparts but are less prone to outages or hacking attacks because of their decentralized nature. They only allow crypto-to-crypto trades.
Things to consider when choosing a Crypto Exchange
When choosing the right Exchange is essential to keep an eye on some crucial factors. Some of them are evident before trading, but others can show their importance over the long run.
Crypto assets have economic value, just like the money in your bank. You look for a bank with a high reputation. In the crypto world, you must look for the same high confidence in your trading venue. Exchanges have a history of reliability, user reviews, security characteristics. Look for the best.
Just like traditional brokerage houses, a CEX charges a commission for every transaction. Before depositing your crypto (or fiat) in an Exchange, you must read and understand their fee structure. Pay special attention to:
Trading fees. Exchanges split fees into two parts: variable fee (depending on the trade size) and a fixed fee (a fixed amount for every transaction).
Deposit and withdrawal fees. They charge a fee when depositing or withdrawing money. Things can get a little tricky where exchanging fiat money (as when you trade USD for EUR). Check and review the spot and the markup rates for every deposit/withdrawal, especially when using credit/debit cards.
Maker/Taker fees. Some exchanges have different costs when building or removing liquidity (buying or selling) from the Exchange.
When you move your money into the Exchange, not all of them offer the same options. Different methods have different costs. The most common ways to top-up your crypto account are
Credit/debit cards (can be costly because of commissions and exchange rates between fiat currencies)
Bank transfers (SEPA transfers in Europe are quick and secure), or wire transfers in the US.
Payment platforms like Paypal, Xoom, or Payoneer (less common)
As we mentioned before, Exchanges require (in some countries imposed by law) the verification of users to avoid fraud, tax evasion, or money laundering. Many exchanges implement verification processes (KYC). You must provide your name and national IDs and prove that they are real (National ID pictures and a selfie picture of you). Account verification is a secure way to avoid fraud and scams. Still, you must consider that you are not trading anonymously, and your account balances and trading track can be required at any moment by the authorities. If you want to buy/sell crypto anonymously, a Decentralized Exchange is a better option.
Some exchanges provide access to a trading API (Application Programming Interface), so you can trade programmatically from your trading software. You can automate trading based on programmed technical criteria. This way, you (your trading code) can work 24/7. The drawback of APIs is that computer programs are much quicker and cold-minded than humans. Computer bots are trading simultaneously as you and, perhaps, taking some of your profits because they are much faster.
Best platforms to invest in cryptocurrencies.
According to the characteristics exposed earlier, we've selected some of the best Crypto Exchanges available.
Crypto is a more recent exchange. They have grown exponentially on its user base, making their platform one of the most accessible and with more options in the market. They have different credit cards that give buybacks to their users in CRO, their proprietary crypto-coin. They also offer some DeFi options and the staking of some altcoins, making deposit your money with them more profitable. If you want a personal wallet, an available mobile app allows you to manage your crypto.
Ease of use with multiple options. DeFi and Staking.
High security (PCI/DSS compliant)
More recent than its competitors.
Smaller trading volume size, but growing.
Binance is the biggest Crypto Exchange by trading volume. It is ranked as one of the top most popular cryptocurrency platforms globally because they have special offers and low trading fees. Binance offers a vast selection of crypto assets: Bitcoin, Ethereum, to less well-known altcoins. Like Crypto.com, they have a proprietary currency, called BNB, to get discounts and offers on its platform.
Biggest Crypto Exchange in the world.
No fiat trading (Use of stablecoins instead).
Limited top-up options.
Kraken is one of the first Crypto Exchanges to get a US banking license to become a global bank. They offer many crypto-pairs to trade, with the list growing every month. It is relatively easy to use, making Kraken one of the best options for beginners, but they have a more advanced trading platform for more experienced users. Kraken is known to be very secure with enforced auth options (2FA, anti-phishing, etc.). You can trade futures as well.
Two mobile app flavors: Kraken & Kraken Pro
Limited payment methods.
The Pro version can be challenging to understand for beginners.
Coinbase is the most popular and well-known Exchange, although it is not the biggest (by trading volume). You can buy crypto quickly with a credit card and start trading with an easy interface. They also have a more sophisticated version of the platform named "Coinbase Pro" (formerly GDAX). The Pro version has cheaper fees since they assume that you'll trade more frequently. The Pro interface is more complex, offering market depth graphics and the order book of the desired crypto asset. Coinbase is backed by some of the most well-known investors, with millions of users worldwide.
The offer of crypto assets offered to trade is constantly growing. In some cases, just the announcement of a new asset listing makes the asset skyrocket in price. They have a mobile app for every mobile platform.
Most well-known Exchange.
Very high liquidity.
Easy for beginners. Easy account top-ups with the PayPal option.
Not available in every country.
Past problems with infrastructure reliability.
Which is the best platform to use? It depends on your trading and risk profile and financial needs. Margin trading, derivatives, or access to DeFi are characteristics you must consider before opening an account (or some of them covering different trading aspects). Research your options.
Crypto trading is riskier than traditional stock trading. Crypto assets are highly volatile; although this is an excellent characteristic for trading (especially when you trade options), not everybody is prepared to trade crypto and its derivatives.
To sum up:
Understand what you are doing. Read about crypto in our blog and resolve your doubts. You must never invest in something that you don't understand.
Assess your risk profile. If you have a strategy, never get apart from it.
Fund your account with no more than 5% of your total financial assets.
Check every fee. Commissions may look like a small amount, but they can get an important part of your profits if you trade a lot.