How do crypto exchanges work?

Crypto exchanges set the rate of the currencies — both coins and tokens. The cryptocurrency rate usually depends on the actions of sellers and buyers, although there are other factors that can affect the price.

Various crypto exchanges may have different options and functions. Some of them are made for traders, while others are made for prompt crypto-fiat exchange. Crypto exchanges that are designed for regular traders allow you to buy crypto and sell them with lower commission fees than on crypto-to-fiat exchanges. Also, trading platforms charge fees for withdrawing money from the account.

Basically, crypto exchanges work similarly to regular stock exchanges. The difference is that, on a stock exchange, traders buy and sell assets — shares or derivatives — in order to profit from their changing rates, while on crypto exchanges, traders use cryptocurrency pairs to profit from the highly volatile currency rates.

To learn how to trade and where start?

You need to buy some cryptocurrency first.

To start your own account on any crypto exchange, you need to transfer an initial amount of money into the account. It’s very common that crypto exchanges don’t accept USD or other fiat money as the domestic currency — i.e., the currency you put into the account in the first place.

So, you should buy some crypto on the cryptocurrency exchange — or in your crypto wallet app — and transfer them to the address that the crypto exchange provides you. Although, you may also find some platforms that accept USD — as well as PayPal and credit cards.

If you don’t have enough money to trade, you may borrow it from the crypto exchange. This is called margin trading. In this case, it's important to remember that there may be a leverage factor, which could either increase your profits or your losses.