POSTED ON JANUARY 7, 2018
What is a cryptocurrency exchange?
Cryptocurrency exchanges are websites where you can buy, sell or exchange cryptocurrencies for other digital currency or traditional currency like US dollars or Euro. For those that want to trade professionally and have access to fancy trading tools, you will likely need to use an exchange that requires you to verify your ID and open an account. If you just want to make the occasional, straightforward trade, there are also platforms that you can use that do not require an account.
Types of exchanges
- Trading Platforms — These are websites that connect buyers and sellers and take a fee from each transaction.
- Direct Trading — These platforms offer direct person to person trading where individuals from different countries can exchange currency. Direct trading exchanges don’t have a fixed market price, instead, each seller sets their own exchange rate.
- Brokers — These are websites that anyone can visit to buy cryptocurrencies at a price set by the broker. Cryptocurrency brokers are similar to foreign exchange dealers.
What to look out for before joining an exchange
It’s important to do a little homework before you start trading. Here are a few things you should check before making your first trade.
- Reputation — The best way to find out about an exchange is to search through reviews from individual users and well-known industry websites. You can ask any questions you might have on forums like BitcoinTalk or Reddit.
- Fees — Most exchanges should have fee-related information on their websites. Before joining, make sure you understand deposit, transaction and withdrawal fees. Fees can differ substantially depending on the exchange you use.
- Payment Methods — What payment methods are available on the exchange? Credit & debit card? wire transfer? PayPal? If an exchange has limited payment options then it may not be convenient for you to use it. Remember that purchasing cryptocurrencies with a credit card will always require identity verification and come with a premium price as there is a higher risk of fraud and higher transaction and processing fees. Purchasing cryptocurrency via wire transfer will take significantly longer as it takes time for banks to process.
- Verification Requirements — The vast majority of the Bitcoin trading platforms both in the US and the UK require some sort of ID verification in order to make deposits & withdrawals. Some exchanges will allow you to remain anonymous. Although verification, which can take up to a few days, might seem like a pain, it protects the exchange against all kinds of scams and money laundering.
- Geographical Restrictions — Some specific user functions offered by exchanges are only accessible from certain countries. Make sure the exchange you want to join allows full access to all platform tools and functions in the country you currently live in.
- Exchange Rate — Different exchanges have different rates. You will be surprised how much you can save if you shop around. It’s not uncommon for rates to fluctuate up to 10% and even higher in some instances.
Additional Things To Consider Before Investing Any Considerable Amount In One Exchange:
- How safe is the website and server? Secure exchanges are better.
- High liquidity.
- Transaction fee structure of the exchange like fixed fees, percentagefees and spread.
- Whether exchange provides transparent data of coins transactions, prices,and volumes?
- How many and which currency pairs are available to trade Bitcoin, forexample USD, Euros, and other fiat /government issued currencies, orAltcoins?
- Multiple options to buy Bitcoin like PayPal, credit card, etc.
- Are customers happy?
- Good user ratings. (Check Reddit for Customer Experiences)
“Shut Up Already, I Came Here For The Top Exchanges!” …
The Best Cryptocurrency Exchanges
Today there are a host of platforms to choose from, but not all exchanges are created equal. This list is based on user reviews as well as a host of other criteria such as user-friendliness, accessibility, fees, and security. Here are ten of the best crypto exchanges in no specific order.
Backed by trusted investors and used by millions of customers globally, Coinbase is one of the most popular and well-known brokers and trading platforms in the world. The Coinbase platform makes it easy to securely buy, use, store and trade digital currency. Users can purchase bitcoins, Ether and now Litecoin from Coinbase through a digital wallet (Download the Coinbase App) Available on Android & iPhone or through trading with other users on the company’s Global Digital Asset Exchange (GDAX) subsidiary.
- Pros: Good reputation, security, reasonable fees, beginner friendly, stored currency is covered by Coinbase insurance.
- Cons: Customer support, limited payment methods, limited countries supported, non-uniform rollout of services worldwide, GDAX suitable for technical traders only. Very Basic Options (Bitcoin, Ethereum, Litecoin), Lack of Anonymity.
Coinbase has stated that they will be adding several new currencies in 2018.
This is the best option for beginners, it’s simple and you can buy from your phone. However, for experienced traders or those who would like to own/trade more cryptocurrencies than the basic 3
Verdict: Coinbase is limited. The reason we listed it as #1 is ease of use for new investors and it’s one of the few that’s regulated/insured and allows you to sell into fiat currency (selling your cryptocurrency for dollars etc.)
Anonymity is also a concern after Coinbase was mandated to hand over all account owner information to the IRS after only a few people reported capital gains taxes last year.
Binance is both a cryptocurrency and an exchange (which concluded its ICO in July 2017). Binance means “Binary Finance” (for anyone who gives a shit) and as an exchange, it aims to power the future of crypto finance.
It is a centralized exchange like Bittrex and Poloniex, and they’re based out of China. It seems to be a better alternative to most other centralized exchanges because they have identified the most major pain points of centralized exchanges and are working rapidly to provide solutions.
The only consistent complaint we’ve found from the community is the inability to log in after enabling 2FA (2 Factor Authentification) Many members have for gotten to save their key, upgraded/lost phones and aren’t able to log in. Customer service emails (like most cryptocurrency exchanges) don’t help much.
Pro Tip- Two Things To Make Life Easier:
- When you enable 2FA through Google Authenticator/another service- Print or save your backup key somewhere safe, where no one can find it and you won’t get locked out.
- A. If you do lose/get a new phone/get locked out submit a Request
B. Once you’ve Submitted Your Request- Take your Request # (they’ll send it in email) Download the Telegram App and join the “Binance English” group. Using your Request # one of the Binance Angels can expedite your request.
Verdict: Binance is at the top of our list of favorite exchanges, has a broad selection of cryptocurrencies but not as many as some of the other exchanges. (Bad news for shitcoin traders, but hey we’re guilty of that too.. no judgement here.) Bad news for new customers.. they are currently not accepting new members although we do expect this to change. You can join below.
KuCoin is a newer cryptocurrency exchange based in Hong Kong. It operates on a crypto-to-crypto basis, so no fiat currencies are supported. Nonetheless, its digital assets portfolio is pretty extensive and KuCoin offers its own token KCS (KuCoin Shares) and uses it in a similar way to Binance.
Fess of KuCoin are really competitive. It charges a flat fee of 0.1% per trade, while the average in the secctor is around 0.20% — 0.25%. Besides, for those who hold KuCoin Shares, there are attractive discounts.
Promotions are Awesome!
KuCoin offers a bunch of promotions: a referral program, top traders bonus promotion, and discount options for those holding its KCS token.
Kukon offers by far the most attractive referral program for those of you looking to earn passive income.