Whether you are a speculative buyer or seller, the sale and purchase of cryptocurrency is a profitable endeavour. In addition, having your wealth stored in crypto has its fair share of advantages. Have you ever wondered why the government provides strict regulations on banks and bureaus that allow the exchange of fiat currencies? Well, fiat currency is similar to crypto in several ways. Governments realized for centuries that any currency exchange needs strict rules, or else it could breed exploitative habits and losses for innocent citizens. Today, the cryptocurrency exchange has minimal governmental control, and the exchanges are only as reliable as their providers. This article guides you through the criteria for choosing a cryptocurrency exchange.
Your fiat currency has several insurance covers while it is at the bank. Therefore, the bank always has your money whenever you need to make a withdrawal. Cryptocurrency has no support from central institutions. This feature is risky for you as a trader. Ensure that you choose a cryptocurrency exchange that keeps balances in fiat currencies held in insured financial institutions. You may also enquire if your cryptocurrency exchange has insurance policies protecting users against fraud and hacking. The use of security practices to safeguard traders is also reassuring. Whether you plan on keeping your crypto with the exchange or returning it to your wallet after a short time, the security of the cryptocurrency exchange should be your top priority.
Sometimes, your location is a hindrance. Certain states and nations ban citizens from cryptocurrency trading. If you operate in such a jurisdiction, there is no legal way around such a hindrance. On the other hand, some regulations may favour you in specific ways. For example, state regulations may require a cryptocurrency exchange operating in the area to obtain a license. If a cryptocurrency exchange has such a license, you can only trade the approved coins. The main benefit of such a license is the security of your transaction and your cryptocurrency. Online cryptocurrency exchanges enable traders to exchange crypto from anywhere in the world. If you find a cryptocurrency exchange that has a license in a particular state, this license is a sign of governmental and public confidence and approval.
The high fee you pay for services rendered by your cryptocurrency exchange could signify one of two things. Your cryptocurrency exchange compensated for the layers of security, fast services, and methods to indemnify themselves in case of security threats. Alternatively, the cryptocurrency exchange is merely expensive as a monopoly or through any other market domination strategy. The cryptocurrency exchange fixes its fees, but the cost depends on the amount you trade. Prices also change depending on whether you are a buyer or seller. Therefore, ensure you know how much the cryptocurrency exchange charges before handing over your crypto.
The ideal exchange for you has enough trading volume so that your holdings are liquid. This liquidity allows you to sell your crypto when you want. The most famous exchanges are the ones with the largest trade volumes. Therefore, ensure you choose from a popular list of cryptocurrency exchanges or enquire from the company about their ability to guarantee your liquidity.
Always consider the security, regulations, fees, and liquidity when selecting a cryptocurrency exchange.