Before You Start Trading Cryptocurrencies, Pay Attention to These 4 Things About Exchanges

2017 was an incredibly bullish year for cryptocurrency investors – if you bought Bitcoin in January 2017 and forgot all about it, you’ll still have made about 1400% gains at the end of the year— all without lifting a finger. 2018 is shaping out to be controlled by market bears as the price of cryptocurrencies continue to decline from their year-high. Bitcoin is already down more than 50% and some other coins have recorded wider losses. Nonetheless, cryptocurrency traders who are actively involved in markets can still find opportunities to make money in both bull and bear markets.

If you want to try your hands at cryptocurrency trading, you’ll need to start by conducting due diligence to find a reliable exchange. Cryptocurrency exchanges are important stakeholders in the global cryptocurrency industry. Trading happens on exchanges which might be centralized, peer-to-peer, or completely centralized. If you are just starting out your cryptocurrency trading experience, below are 4 useful insights that could help you choose the best cryptocurrency exchange.

1. User interface and user experience

There are about 213 cryptocurrency exchanges featured on CoinMarketCap’s list of cryptocurrency exchanges by adjusted trade volumes and there are hundreds of other cryptocurrencies that didn’t make the list. The top five exchanges on the list, Binance, OKEx, Huobi, Bitfinex, and ZB.COM obtained their market lead with a mix first-mover advantage, superior marketing, and simpler user experience. Many new cryptocurrency traders tend to gravitate towards the first exchange on the list because it is fairly easy to understand how to operate Binance’s trading features. New cryptocurrency investors would be more concerned about how soon they are able to leverage the the user interface and functionality to quickly get into the market than improved security that decentralized exchanges offer.

2. Security protocols and fraud prevention

Hacks, data breaches, and heists are some of the banes of cryptocurrency exchanges. Mt Gox, DAO Attack, Bitfinex, Nicehash, and Bitgrail are some of the biggest cryptocurrency exchanges hacks that the industry has suffered over the last 7 years. Cryptocurrency transactions are irreversible and when your coins are stolen in a hack; it is practically impossible to get back your coins. More so, the pseudo-anonymity of cryptocurrencies suggests that it might be difficult to know who stoke your coins and serve them justice through the instruments of the law.

The provable level of security that an exchange provides can help you make an informed decision on where to conduct your cryptocurrency trading and investment activities. You also need to pay attention to the authenticity of the trade volumes on the exchange. Exchanges can be proactive gatekeepers for minimizing crypto pump and dump schemes; hence, you need to be sure that they are committed to consistently preventing fraud.

3. Ease of purchasing cryptocurrencies

To become fully enmeshed in the world of cryptocurrency trading, you’ll most likely need to first buy BTC or ETH before you can buy other coins. However, traders tend to base their choice of a cryptocurrency exchange on how easy it will be for them to buy BTC of ETH. Some exchanges will allow you to buy cryptocurrencies using credit cards, debit cards, or PayPal. Some other exchanges might require deposits by bank transfer.

You’ll also need to see how long it will take you to get the cryptocurrency deposited in your wallet after you make your payment. On some exchanges, you can expect to get your cryptocurrency instantly whereas other instances you might need to wait for some days or weeks before they send you the cryptocurrencies.

4. Number of supported cryptocurrencies

Bitcoin, Ethereum, Ripple, Bitcoin Cash, and EOS are currently the fifth biggest coins by market cap in the cryptocurrency market today. Unfortunately, none of them are in the list of the biggest gainers in today’s trading session. Lesser known coins such as Tigereum, TaTaTu, and Aston have delivered 77.25%, 59.17%, and 50.13% gains respectively.

Hence, beyond the simplicity of user interface and user experience, traders are particularly interested in the number of cryptocurrencies that are available for trading on the platform. Cryptocurrency traders typically like to conduct all their trading activities on a single exchange or two exchanges at the most so that they can easily keep an eye on their portfolio. There are more than 1,880 coins, altcoins, and tokens in the general cryptocurrency markets. These coins serve different purposes, their fundamentals differ, and they offer different levels of risk and reward to investors

Image Source: Quora.