Crypto can't be bought from any bank or investing company. Once you've made the decision to purchase Bitcoin or Ethereum, you'll need an account on a trading platform that allows you to convert your currency into digital assets.
Here's all you need to understand about choosing the best crypto exchange and what experts recommend before making your final decision.
What is Crypto Exchange?
A crypto exchange makes it possible to trade or buy cryptocurrency. Exchanges are used to trade one cryptocurrency for another. You can convert Bitcoin to Litecoin for example, or you can buy crypto using regular money like the U.S. Dollar. Exchanges reflect the current market prices for the cryptocurrencies that they offer. You can also exchange cryptocurrencies into U.S. Dollars or other currencies on an exchange. This allows you to either withdraw your regular bank accounts or leave your account as cash.What should you look for when looking at an exchange
Accessibility
Your geographic location could prevent you from selling or buying crypto on some exchanges. This is due to state and national regulations. China is one country that has made it difficult for citizens to use crypto exchanges.You can often find information on exchange limitations -- and associated accessibility factors such as acceptance of national currencies -- on the website or within the terms of service.
Security
There is no central institution that backs cryptocurrency. Your cryptocurrency holdings aren’t as protected as traditional investments or money at the bank. Coinbase and Gemini allow you to keep U.S. currency balances. Money that you deposit with them goes into FDIC insured bank accounts. FDIC insurance doesn’t apply to crypto balances.Some exchanges offer insurance policies for protecting your crypto against hacking and fraud. Coinbase, for example, has an insurance policy valued at $255million. It means that account holders will be protected even if Coinbase loses its reserves or if any amount of cryptocurrency exceeds $255 million. Kraken and other security experts rely on their security methods to protect clients instead of insurance policies.
It doesn't matter if your crypto holdings are to be kept on an exchange or for a limited time before you move it into your personal wallet. Security should be the top priority. Look at how many of its assets are stored offline.
Fees
Fees are another factor to consider. But don't let high fees turn you off of an exchange. A trade-off can be made for greater protections and insurance on larger, more well-known exchanges.Exchange fees are sometimes a fixed amount, but they are often a percentage. Cash App, an exchange, charges fluctuating fees depending on the price volatility. Fees are typically charged per transaction. This can vary depending on whether or not you're the seller, buyer, or both. You might also have to pay different fees depending upon which currencies you trade. Before you give your money, you should understand how and when the exchange plans to charge you crypto transactions.