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Crypto exchanges (What is, How to Identify the best one for you, Benefits and Top 5 exchanges)

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Crypto exchanges are platforms where you can buy or sell cryptocurrency, these platforms can be used to trade one cryptocurrency for other assets, including digital and fiat currencies, for example converting USDT to Bitcoin, or Solana to FEG, They also act as an intermediary between a buyer and a seller and make money through commissions and transaction fees, they reflect current market prices of the cryptocurrencies they offer. No exchange is perfect for every user, it is best to evaluate your own interests and find an exchange that aligns with your goals.

There are various things to consider when using an exchange, here are 5 things i believe you should look for:

  • Accessibility: Your location may prevent you from buying and selling crypto due to state or national regulations. Some countries like china have banned citizens from accessing crypto exchanges, while some like Nigeria, allow u to access exchanges but ban you from receiving crypto or buying from your bank account. In the United States, there’s a lot of regulatory uncertainty around cryptocurrency, and some states have instituted their own regulations. You can often find information about the geographic limitations of the exchange — as well as related accessibility factors, like national currencies accepted — on its website or within the terms of service.

  • Security: The harder it is to create an account at a particular exchange, the better. Holding coins on an exchange means trusting someone else with that money. In most cases, if the exchange gets hacked or an employee steals coins, investors end up empty-handed. Cryptocurrency isn’t backed by any central institution, and your cryptocurrency holdings aren’t protected the same way as money in the bank or traditional investments. To ascertain that your crypto is protected, some exchanges have insurance policies to protect the digital currencies users hold within the exchange from hacking or fraud. Coinbase, for example, has an insurance policy worth 255 million dollars. Majority of Crypto exchanges will offer information about their security practices on their websites, even though no exchange is 100% secure and it can be hard to know which one is most secure, it might benefit you to consider exchanges that have been around for the longest time, have the most customers and through research have had the least amount of problems.

  • Coins offered: With thousands of different types of cryptocurrencies in existence, no exchange can make trading pairs available for all of them.  If you’re interested in a popular coin like Bitcoin or Ethereum, you’ll probably find it on any given exchange you’re considering. But newer altcoins, coins with a very small market cap, or meme coins may require a bit more shopping around. 

    In general, the higher market cap coins have a higher likelihood of being traded on popular exchanges. Investors looking for more exotic, lesser-traded coins might have to search out smaller exchanges.

  • Liquidity: If you plan to buy, sell, or trade your crypto, the exchange you choose should have enough trade volume to ensure your holdings are relatively liquid, meaning you can sell them when you want. This means an exchange must have a high enough volume of orders flowing through its order books on any given day.

    In order to get that volume, an exchange must have either a lot of users, or users who hold a large amount of assets on the exchange and trade them frequently. Crypto prices move very quickly, so when you use an exchange that doesn’t have a lot of trade volume, you could end up paying a higher price than you would on more popular exchanges. For example, say you decide to buy Bitcoin once its price falls below $64,000. If you’re on an exchange with a low trade volume, you may end up actually paying a different price than you think, if your purchase doesn’t actually go through until the price has moved back up. 

  • Exchange fees: Fees may be a fixed price, but most times are a percentage of your trade. Some popular exchanges, like Cash App, charge fluctuating fees based on price volatility. Fees are most often times charged per transaction, and can depend on whether you’re the seller or the buyer. There may also be different fees depending on which currencies you trade. Make sure you understand exactly how and when an exchange plans to charge you for your crypto transactions before handing over your cash. 

  • Ease of use: People who are new to trading might feel overwhelmed or intimidated by exchanges that have a complicated-looking interface with lots of charts and other information, most especially those that display order books.

    If that’s the case, a newbie-friendly exchange might be the best option. Some cryptocurrency exchange sites have “basic” and “advanced” views, allowing users to choose their layout. Others are designed specifically for beginners to avoid any potential confusion.

Benefits of Crypto Exchange includes:

  • 24/7 Operations: Crypto exchanges servers are always available therby allowing people to trade 24/7. People can purchase and sell Bitcoin and other virtual crrencies on these platforms anytime, and this is a significant advantage of electronic money. The time barrier doesn’t have meaning because people can exchange virtual currencies anytime, anywhere.

  • Instant Settling and Transaction Irreversibility: cCypto exchange allows you to purchase or sell Coins instantly. And you can’t undo a Cryptotransaction, and this differentiates it from bank transfers. Essentially, the exchange occurs immediately, and the network formalizes the change faster. Traditional platforms require days to settle a transaction. That’s why more people are opting for crypto exchanges.

  • Fractional Purchasing: Exchanges allow people to purchase any fraction of this digital asset. For instance, if you want to trade or invest $523 in Bitcoin, you can do that on a crypto exchange without having to purchase an entire Bitcoin. Instead, you can buy a fraction of it, enabling even a small investor to start trading without spending all their fortunes. And this differentiates crypto exchanges from traditional exchanges that require investors to purchase a minimum of one stock or whole numbers.

  • Secure Interfaces: Developers designed crypto exchanges with mobile and web users in mind. As such, they are easy to use and secure. Most exchanges are suitable for light clients in smartphones or browsers. And you can access them using any device, though they use safe, modern technology. The best crypto exchanges are intuitive, fast, and easy to use. The overall customer experience of the best platforms is excellent.

Top 4 Exchanges:

According to my research, here are 4 exchanges that are relatively secure, good news is I have texted them all and found them easy to operate.

  • Coinbase: With a 4.5 play store rating, Coinbase has been dubbed the best exchange for beginners by a lot of individuals. The benefits include, beginner-friendly interface and easy purchase process, Strong user reviews and security ratings and its educational Learn platform rewards users with cryptocurrency when they learn about crypto. It has over 100 coins available for trade. Fee amount often varies based on purchase amount and method of purchase. Usually it is 1.99%, with 0.5% spread fee + 1.49% Coinbase fee.

  • Binance: Standing at a 4.4 rating on playstore, the next on my list is Binance. It is a very well-known crypto exchange platform, if not the most popular. It has more than 100 different cryptocurrencies available to trade with a two-factor authentication. Binance has a Blockchain technology incubator called Binance Labs, which focuses on nurturing promising pre-ICO stage projects. It helps deserving cryptocurrency project teams by providing necessary funding for development, advisory resources. Binance also offers a site called a Launchpadfor hosting new and emerging blockchain projects and API interfaces. As of March 2021, 42 projects have been launched. It launched its own Binance Coin (BNB) cryptocurrency through an ICO in July 2017. BNB has a market cap of around $36.4 billion, as of March 2021. It is set to become the native currency of the decentralized Binance exchange.

  • Kraken: It has a rating of 4.8 on playstore. It also has sophisticated trading features, like margin, may appeal to advanced users with high cybersecurity ratings. Kraken offers more than 80 crypto assets and it supporst traders in roughly 190 countries. Account minimum and fees varies depending on the cryptocurrency but fees usually range from 0% to 0.26% e.g., Bitcoin's deposit minimum is 0.0001. Margin trading lets you take on additional buying power with variety of educational resources and tutorials on cryptocurrencies, Over-the-counter (OTC) trading and account management support available and you can earn rewards for staking different assets.

  • Kucoin: It has over 400 cryptocurrencies available for exchange and a rating of 4.1. It has very low fees (0.1%), you can also decrease trading fees by 20% by paying with KuCoin’s proprietary KCS stablecoin. It also Automated and margin-based trading available. It marketed itself as the people's exchange and serves one in four crypto holders worldwide. YOu can buy Crypto directly with fiat currencies, only partial KYC verification is required. You can also buy and sell Crypto on the P2P marketplace with zero fees. It also has futures and margin trading, you can earn KCS daily and also lend and borrow crypto. It has a Kucoin trading bot also.

Other Crypto exchanges include: Square, Gemini, BlockFi,  Bitfinex, Coinbase Pro, Bitstamp, FTX, Uniswap (V2), Tokenlon, 0x Protocol, Venus, Sushiswap, Compound, BurgerSwap, Curve Finance and 1inch Exchange

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