Top 15 Factors to Consider When Choosing Crypto Exchange Platforms

One in 10 people have invested in cryptocurrencies, mostly because of their high return on investment.

Cryptocurrency exchanges also make it easier to transact online currencies by offering low fees. You can also discover the latest prices and crypto investment profit rates on an exchange site. Also, most cryptocurrency exchange platforms have strong security measures to prevent theft.

Choosing crypto exchange platforms can be hard since there are hundreds of them in the US. Here is how you can choose the one that works for you.

1. Select a Type of Cryptocurrency Exchange

The first thing is to understand the three basic types of cryptocurrency exchange platforms. The types are broker, P2P exchange, and trading platform.

A cryptocurrency broker is an individual or company that acts as an intermediary in the blockchain market. Their unique feature is that they are the ones who set the prices instead of the market.

A peer-to-peer (P2P) exchange has no intermediary, and traders can transact privately. The main distinguishing feature of P2P exchanges is that market forces determine the prices.

A cryptocurrency trading platform combines the features of P2P exchanges and brokers. The platform acts as an intermediary, but the market forces will dictate the prices.

Many people choose a trading platform because it makes it easier to set up an account. At the same time, a trading platform allows users to transact on their own terms.

2. Do Your Research

You should also try to get a lot of information about the cryptocurrency industry before investing. You can do most of the research on the internet and by yourself. The research can also extend to how cryptocurrency exchanges work.

The first place to do the research is on the cryptocurrencies’ websites. You can also visit online cryptocurrency forums and post questions there. Reaching out to a crypto-currency expert is another way to get first-hand information.

Your research will reveal the main risks and issues associated with cryptocurrency exchanges. You’ll also learn how to strategize and get the biggest crypto investment profits.

3. Has Favorable Trade limits

You should know the trade limits, especially if you’re planning to trade cryptocurrencies in huge amounts. Most cryptocurrency exchanges have certain limits that apply to specific transactions.

When you first join a crypto exchange platform, you’ll enter the lowest level. The limit for the number of transactions and amount per single transaction at this level will be low. However, this varies from one exchange to another.

For instance, assume you want to do transactions of $50,000 per day. In this case, a crypto exchange platform that limits transactions to $1,000 will not be ideal.

4. Offers Multiple Coin Assortments

Bitcoin is the most popular cryptocurrency, but there are several others in the marketplace. For example, Ripple, Litecoin, and Ethereum have grown rapidly in the past few years. Besides, hundreds of other cryptocurrencies have entered circulation around the world.

As a cryptocurrency investor, you should choose a platform that offers multiple options. But before you do this, you should identify your preferred cryptocurrencies.

When you know your preferred cryptocurrencies, you will pick an exchange that supports all of them.

5. Has Low Trading Fees

You can conduct a wide range of transactions on a cryptocurrency exchange. Every transaction has its unique cost structure depending on the involved amounts.

Generally, there are two types of cryptocurrency fees: exchange fees and network fees.

Exchange fees usually apply to transactions within the exchange platform. A crypto exchange platform will charge money for the cryptocurrencies flowing through it. For instance, it can charge for withdrawals and liquidations, deposits, trading, and loans.

On the other hand, network fees are payments for institutions that host blockchain computers and networks. This means that you are paying for the tools that record and verify your transactions.

The average cryptocurrency exchange fees range from 0% to 1.5% per trade.

6. Provides Robust Security

Criminals can get access to your digital wallet and clean your account. The worst part is that the blockchain won’t be able to track them. Thus, you should only register on an exchange that has strong security measures.

A cryptocurrency exchange should regularly update its security tools to confuse hackers. So, before you sign up on an exchange platform, evaluate its security features.

For instance, there should be multiple verification processes for any withdrawals. This is made possible by activating two-factor authentication. In that light, you can prevent hackers from accessing your account even if they steal your wallet’s private key.

Data hosting is another important aspect of exchange platform security. The ideal platform should host customers’ assets on a secure server. Alternatively, critical customer information should always be offline to prevent unauthorized remote access.

7. Uses an Integrated Wallet

An integrated wallet has standard processes such as transaction history and payment processing. The idea is to reduce the number of steps during cryptocurrency transactions.

Many exchange sites have introduced integrated wallets that are available as mobile apps. These apps make it easier to manage your cryptocurrencies and transfer payments quickly.

One of the main benefits of integrated wallets is the use of biometric verification on the app. For instance, you have to use your fingerprint or facial recognition to do a transaction.

Another benefit is the hassle-free and smooth checkout process. This is possible because the app stores your information for quick checkout. You don’t have to input your password, username, and private keys every time you log in.

When choosing exchanges, look at the number of services in the integrated wallet. A cryptocurrency exchange that offers many trading options on a mobile app is perfect.

8. Operates in Your Jurisdiction

The selected exchange should serve customers in the state or country that you live in. This simplifies the taxation process and also protects you from legal troubles.

Selecting a local exchange site is also the best way to meet local traders. This is because these are people you can trade with within the same fiat currency. You can also easily verify their identity before you transact with them.

To know the jurisdiction of an exchange platform, check its website addresses. Websites of most US-based exchanges end with .com or .us. Therefore, if an exchange’s website has a different country’s specific web address, you should avoid it.

You can also check the crypto exchange’s terms and conditions. Here, the company will list the jurisdictions where it operates.

It’s important to note that some exchange platforms are able to support crypto trading activities in all locations.

9. Has Great Customer Support

You’ll definitely require the help of customer support to buy and sell cryptocurrencies. Consequently, you should choose an exchange platform that has reliable and full-time customer support.

You can reach out to each of your shortlisted exchange platform options. How they respond will give you an idea of their level of customer service.

The ideal customer support service should respond quickly and use your name in the response. They should also be patient and knowledgeable about the blockchain industry.

Check out if they have an automated bot or a human sales representative. Generally, human representatives are better at handling customer requests. Therefore, you should stay away from platforms that use chatbots to provide customer service.

10. Leverages an Intuitive User Interface

The user interface determines how quickly you can access your wallet. It’s also a key part of conducting effective and accurate cryptocurrency transactions.

Visit each exchange website to get a feel of their user interface. An intuitive user interface should have a clear and highly conspicuous menu. This reduces the time you take to navigate from one function to another.

Consistency is also a critical part of a great user experience. The fonts, icons, and colors should be consistent throughout the website. Similarly, buttons and menus should remain in the same placement from page to page.

Cryptocurrency prices can fall and rise within a matter of minutes. Thus, you need to be on a cryptocurrency exchange that loads quickly. The page should also indicate the loading progress to inform you about what’s happening.

11. Complies With Existing Laws

Trading on illegal cryptocurrency exchanges can lead to a loss of money. In the United States, the Bank Secrecy Act provides the legal background for cryptocurrency exchange operations.

An exchange must register with the government and keep accurate records. They should also regularly share these reports with the relevant government agencies.

Before you sign up on an exchange platform, you should check their registration certificates. In some cases, you may have to seek legal counsel from an attorney.

12. Supports Multiple Payment Options

Every cryptocurrency trader has their favorite payment options. You need to choose an exchange that accepts all the major payment methods.

The major payment options include PayPal, Amazon pay Google Pay, and Apple Pay. Others include credit card and debit card payments as well as Visa checkout. It will also help if you can transfer money from your bank to your crypto wallet.

The website should disclose upfront all the payment options that they support. It should also provide a quick way to add your chosen payment method. Furthermore, it should store your information in a secure format to support recurring payments.

Having the opportunity to use multiple options can also allow you to save money. This can happen if one of the payment options slashes or removes fees.

13. Know Their Reputation

A cryptocurrency exchange platform’s reputation has a big impact on its services. If the reputation is good, more people are likely to sign up on that platform. This translates to higher trade volume and greater market activity.

On the other hand, there will be fewer crypto traders on an exchange with a poor reputation. Therefore, it will be harder for you to find a buyer for your digital assets. This can be challenging for a person who wants to take advantage of sudden price changes in the industry.

It may help to identify the causes of the exchange’s poor reputation. Was the cryptocurrency engaging in fraud? Were the fees and commissions above the market rates?

14. Check Online Reviews

Most cryptocurrency exchange platforms allow their customers and users to leave reviews. In the reviews, the customers will explain their experiences on the site.

Customer reviews provide the best insights into how a cryptocurrency operates. If the majority of the reviews are negative, you should stay away from that exchange platform. On the other hand, a site with glowing reviews should be your first point of call.

However, it’s possible for some exchange platforms to post fake customer reviews on their website. To avoid this, you should also check out other review sites. There are multiple websites where people can review exchange platforms.

You should also check the major social media sites. Start with the cryptocurrency’s Facebook and Twitter pages.

If the exchange site also has a mobile app, you can explore the app’s reviews. For example, you can visit the Google Play store or the Apple app store and check the ratings. Mostly, good cryptocurrency exchange companies have a rating of more than four.

15. Asks for Proof of Identity

Platforms that are legally operating will require proof of identity before registration. This is meant to prevent identity theft and keep hackers away.

When you join a cryptocurrency platform, they may ask to see your driver’s license and other documents. This will tell you that everybody operating on the platform is genuine. As a result, you won’t be afraid of losing your money to faceless characters.

However, your crypto trading strategy may be to hide your identity. This may force you to look for exchange platforms that don’t ask for proof of identity. These platforms do exist, but they have a high-risk margin.

Ultimately, most traders will choose platforms that ask for proof of identity because of the increased security.

Use the Right Strategies When Choosing Crypto Exchange Platforms

Cryptocurrencies have become popular because of their high rate of return. The fact that there is no central authority also makes them an attractive investment option. Besides, you can trade cryptocurrencies from anywhere in the world. If you still have problems choosing crypto exchange platforms, read our other blogs for more information.