Cryptocurrency Exchanges Overview, Advantages, Top 10

So, it’s important to know that while most exchanges don’t have a minimum deposit requirement, exchanges may put limits on how much money a user can withdraw or deposit in a given timeframe. Derivatives exchanges sometimes allow traders to make use of leverage, which allows them to make bets with more money than they have in the exchange. For example, 10x leverage would allow a trader with $1,000 in their account to trade with $10,000. This can amplify both gains and losses, and for many traders, can be extremely risky. For example, if a Binance user holds Binance Coin in their Binance wallet, for example, then they would likely pay lower fees.

choosing a crypto exchange

You can only trade cryptocurrencies on these exchanges, which means you need to already have your own cryptocurrency ready to trade. Some charge a percentage of each transaction as a « markup. » Others simply make their money on the spreads between a bid and ask price. Either way, the cost of trading is one of the main points to compare between the different brokers and exchanges. The difference is that they deploy a decentralized framework to match and settle transactions. They use smart contracts to match and settle orders between a user’s wallet and a smart contract.

How Decentralized Crypto Exchanges Work

On the other hand, a derivatives exchange facilitates the trading of derivative products such as futures and options. When you buy a derivatives contract, you do not own the underlying cryptocurrency. Instead, you own a contract with an agreement to buy or sell a particular cryptocurrency at a predetermined price and a specified time in the future. Cryptocurrency is a volatile asset, and trading on a high-volume exchange may offer the opportunity to buy or sell it at a slightly better price. If an exchange has little trade volume, it could mean that you pay a higher price than if you were to use a more popular one.

choosing a crypto exchange

Additionally, you can also develop trading strategies around the maker-taker fee model to take advantage of rebates or discounted commissions provided by exchanges. To open a crypto exchange account, you will need to choose a platform that is available in your geographical location. After providing all required documents, such as ID and proof of address, you may use deposit funds into your account and start using it to purchase or trade crypto. Other fees you may have to pay are deposit and withdrawal fees, which may be significant. Before you hand over your cash, ensure you know what the exchange will charge you for crypto transactions. Fees are something to be aware of when using a cryptocurrency exchange.

User Experience (UX)

The additional regulatory burdens and threat of lawsuits from the SEC have prompted several crypto exchanges to pull out of US markets. For real-time crypto transactions (referred to as “spot trades”), Coinbase charges between $0.99 and $2.99 for trades up to $200; for transactions above $200, it’s a flat 1.49% fee. This simple fact makes providing security for a crypto exchange more difficult than for other types of exchanges. And because of this unique threat, even completely legitimate exchanges sometimes get hacked. For example, Binance, Bitfinex, Kucoin, and are all reputable exchanges that have suffered hacks in the past. With the recent rise in cryptocurrency popularity, many investors are becoming interested in crypto for the first time.

  • If you want to invest in cryptocurrencies in Australia, you have multiple options.
  • Crypto markets move quickly, and waiting days for a response from customer support could have real financial consequences.
  • All else equal, an exchange with more volume will be able to execute your trades at better prices.
  • Figuring out how much crypto an exchange should keep online requires some balancing of tradeoffs.
  • Once you have deposited fiat currency onto the exchange or input your credit card details , you are ready to execute your first trade.
  • While some exchanges charge next to nothing for their services, others ask for a hefty sum per transaction, which can be very frustrating.
  • Cryptocurrency brokers enable indirect trading by moderating between customers and the market.

As The Ascent’s Compliance Lead, he makes sure that all the site’s information is accurate and up to date, which ensures we always steer readers right and keeps various financial partners happy. Compare the top exchanges for cryptocurrency, view our expert reviews, and find the right platform for your needs. Investing in cryptocurrencies may not be right for everyone, as they’re still a somewhat speculative investment. Whether or not they make money in the long term, investors can expect a roller coaster ride. Most exchanges also allow you to do auto-buys so that you can have an automated purchase each week or month. This allows you to dollar-cost average given how volatile cryptocurrencies can be and not buy a large sum all at one.


If it’s too easy to generate an account, that suggests that an exchange is not particularly trustworthy. You may have a much more difficult time tracking down and retrieving your money in those cases. Leading crypto exchanges typically hold user funds in cold storage to ensure the safety of assets.

choosing a crypto exchange

Mt. Gox, one of the earliest digital currency exchanges and once one of the most popular, collapsed. Once you purchase crypto through an exchange, the exchange typically holds it in a custodial wallet. Most exchanges store assets in offline “cold storage” for safekeeping.


If you enable 2FA, you’ll be required to enter a code from your phone anytime you log in or make a withdrawal. This should help to prevent a hacker from resetting your exchange password if they get access to your email account. So users need to have a way to protect themselves from total loss if their email account gets hacked. If an exchange has most of its crypto in “hot wallets” on devices connected to the internet, this can allow an attacker to more easily steal the exchange’s crypto . In still other cases, the exchange may simply have to pay back users out of its own profits over time.

choosing a crypto exchange

Another heavy hitter when it comes to the sheer amount of coins available, KuCoinprovides access to a wide library of altcoins at low fees. Here are some important points to keep in mind while choosing the right crypto exchange. Still, insurance varies widely across exchanges, so it’s important to check what they cover. You can do so in the user agreement you are given when you sign up, and also frequently in the FAQ sections on exchange websites. But if you can’t find evidence of these reports online, it’s worth calling the customer service department. Until the dust settles in Washington, it’s best to look for an exchange that already has security controls and financial audits in place.

How To Choose A Cryptocurrency Exchange

Binance itself washacked in 2019, with thieves getting away with 7,000 bitcoin worth about $40 million, thoughthe exchange refunded userswho lost money using itsSecure Asset Fund for Users. Several investors who were locked out of trading in 2021 and suffered major losses are planning aclass-action lawsuit against Binance. The platform’s advancedPro version, which runs on a separate app and website, charges lower fees but features a less user-friendly interface that’s not suited for beginners. And purchasing crypto with a debit card adds a significant 3.99% fee.

Learn more about the best crypto exchanges

Doing your own homework (“DYOR”) first before trading on a crypto exchange is important. As crypto-related stories continue to make headlines, questions regarding the underlying technology also arise, including cryptography. This practice involves analyzing and deciphering codes, ciphers and cryptograms, how to choose a crypto exchange and has enabled the anonymous and secure technology that powers cryptocurrencies. Crypto exchanges charge several fees, and it’s not always clear what exactly you’ll be charged for. The main issue with this type of exchange is that users are inherently more vulnerable to hacking attacks.