Crypto exchanges operate like stock exchanges. However, some of them are fake and unregulated. A study discovered that 70% of unregulated exchange transactions are fake trades meant to mislead potential investors regarding the marketplace’s activities. You should be careful when selecting a cryptocurrency exchange to ascertain that the one you settle for is regulated and reputable for your safety. Discussed below are five factors to consider when choosing a crypto exchange.
- Crypto exchange rates
Crypto exchange rates are digital coin prices converted to a fiat currency such as the USD. They enable you, the investor, to determine how much to budget for your cryptocurrency investment. Exchange rates also help traders or investors when it’s time to sell. For instance, if you’ve been holding Bitcoin in your crypto wallet for a long time and would like to cash out, keeping tabs on the rates for converting 1 BTC to USD can help you trade at the highest price. Converting your crypto coins to cash at the best rates is key to profiting from your investment.
- Crypto exchange security
Security is critical to an investor’s success on a crypto exchange. A secure crypto exchange applies robust encryption and other measures to ascertain users’ investments are inaccessible to cybercriminals and unauthorized persons. Ensuring your personal data is protected is vital when picking a crypto exchange. As such, you should go for an exchange that has implemented rigorous policies that safeguard personal information.
A reliable crypto exchange should prioritize user authentication by employing verification methods that are key to securing your data and assets. Pick an exchange that has applied biometric security and two-factor authentication measures, adding an extra protection layer.
- Supported tokens/ cryptos
While most crypto exchanges may support Ethereum and Bitcoin, there are many other cryptocurrencies to consider, particularly if you’re looking for exposure beyond ETH and BTC. This is why it’s essential to learn about the tokens and coins a crypto exchange supports before deciding to trade on them. Consider choosing an exchange that exposes you to several tokens.
- Crypto KYC (Know Your Customer)
KYC regulations significantly contribute to reducing fraud and identity theft. They’re a legal requisite for centralized crypto exchanges. A crypto KYC procedure verifies a user’s:
- Residential address
- Full name
- Date of birth, and
- An identity document to confirm the above
KYC in cryptocurrency results in:
- Reduced risk for money laundering/ scams: Robust ID verification significantly lowers fraudulent activities and improves market reputation
- Better crypto market stability: Considering how volatile the crypto market is, improved identity verification stabilizes the market while boosting its market value
A trustworthy crypto exchange should offer KYC software with features and tools like:
- Video and ID selfie verification
- Device fingerprinting
- Digital footprint analysis
- Blockchain identity verification
- User interface and experience
User interface and experience are key to any crypto trader/ investor’s success. A good crypto exchange should have an intuitive interface coupled with a good user experience to make it easier to trade the available cryptocurrencies. Check customer support and other customer-based functionalities a crypto exchange offers. Choose a platform that’s easy to access and use.
Endnote
Trading on the right crypto exchange is vital to investing success. Consider these factors when choosing a crypto exchange to make the best choice.