Security, Reputation of the Crypto Exchange – How to Choose a Crypto Exchange?
Whether you are a trader, miner, or just a crypto enthusiast, at some point you might want to try your hand with another cryptocurrency. It might be the curiosity that drives you to do that or the need to expand your trading or mining portfolio. A great way to do that would be to use a cryptocurrency exchange. Why, would you ask? Well, it is fast, easy, and doesn’t require you to start your own mining operation to get some crypto.
How to choose the service that you would like the best? All cryptocurrency operations are final, so you need to be extra careful with your assets. That’s where the Changelly team comes in! We’ve compiled a list of characteristics that you can use to find a cryptocurrency exchange that will offer the best possible benefits to you. Let’s take a look, shall we?
While the crypto world is all about transactions and systems that work without trust, reputation is what makes or breaks the platform. As any sensible crypto owner does research before trusting a platform with their assets, they should look into what other people think about the exchange in question. Since the crypto world is rather novel, at least in comparison to other financial markets, it is important to know who is who on the scene.
While the research doesn’t eliminate the possibility of being scammed, it helps to minimize it. A good idea would be to search the name of the cryptocurrency exchange with a ‘scam’ addition. Reddit crypto-related communities are usually a golden trove of information, as long as you can filter it. And, of course, crypto-related blogs often talk about the best exchanges. In fact, we at Changelly did a piece on the biggest cryptocurrency exchanges of 2019, so you can start here.
Now, that you are sure that the exchange wouldn’t disappear with your hard-earned crypto, it is time to make sure that others wouldn’t do it either. That’s where the security of the platform comes in. There are a few ways to judge if the platform has needed security. First off, check whether or not it has two-factor authentication (2FA). Nowadays, it is basically a security standard to have one. It would also be a good idea to check what type of 2FA they have: Google authenticator, SMS codes, email verification, and so on.
Secondly, check if they offer security-related services and different storage options. Maybe cold storage reserves, or custodial storage services. While storing assets is in no way bad, it makes cryptocurrency exchange look more favorable for a hacker attack. Some exchanges (like Changelly, for example) don’t store your transactions, only relaying them to be exchanged.
#3. Available Assets
We can’t talk about cryptocurrency exchanges and their criteria without mentioning probably the most important of all: what you can actually swap there. While almost every one of them (and most definitely the big players) has Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC), smaller coins and tokens rarely have that much of a representation. So, you need to keep in mind what kinds of assets you want to exchange and look up whether your chosen platform has them available.
However, even if you didn’t find your desired coin or token, it doesn’t mean that it wouldn’t appear there soon. Most exchanges keep listing more and more coins and tokens, as they keep gaining popularity and volume. So just keep an eye out, and you will be able to find it sooner or later.
#4. Trading Volume
Another criterion that you could use to judge a cryptocurrency exchange is its trading volume. While it might seem strange for a miner or a person who just wants to buy some crypto out of interest, it is a rather important part of any platform that deals in swaps and trading.
After all, you can’t expect to quickly swap 20 BTC on a low-volume exchange, as there would be little demand for that. This means that your transaction will take longer to process, and if you need to swap your crypto quickly, this just won’t do.
Basically, the higher is the trading volume of the exchange in question, the faster you will be able to get the crypto of your choosing. This also minimizes the chance of you losing a lot of assets due to the volatility, as the price wouldn’t be able to change that quickly. So choose a platform with a high trading volume for faster swaps.
While there is no trust in the crypto world, there are ways to make sure that your users can at least be assured that you are not going to just disappear with their money. Reputation and security are good ways to go, but the one thing how cryptocurrency exchange can reassure its users is making their transactions transparent.
Basically, transparency allows you to see what is happening to your money once you’ve started using the platform. On a transparent exchange, there are no hidden fees or small print, you see every price for every service and transaction right there and now.
By using such a cryptocurrency exchange, you will not lose money on an arbitrary charge, and you will be able to calculate your fees and losses adequately and on the fly. As you can see, it is something that would be useful for anyone using the platform, and not just traders.
While it might seem not that big in comparison to other criteria listed here, fees definitely play a big role in the day-to-day life of a cryptocurrency exchange user. Even the smaller fees have a tendency to add up. So seeking a platform is an obvious choice for anyone. Especially so if you are using it often, as traders often do.
There are different types of fees as well. Some platforms (Changelly, for example) have ‘flat fees’, meaning that you pay the same percent from the sum no matter how big or small it is. Other exchange platforms change fees depending on the sum of coins you are trying to swap, with bigger swaps requiring bigger fees. So pick a platform that will let you have the best profit and lose the least amount of money.
#7. Know Your Client/Anti-Money Laundering
Cryptocurrencies offer a great deal of anonymity and flexibility of where and how you can store, send, and receive your money. That, sadly, means that people with criminal inclinations are often found themselves attracted to use crypto in order to hide and/or under their money. Especially money that was received illegally.
That’s why a lot of companies that operate cryptocurrency exchanges set up programs that are called Know Your Client (KYC) and Anti-Money Laundering (AML). Those are measures that allow the platform to identify you so that you could use its full functionality.
Usually, in order to complete KYC/AML users have to upload the scan or photo of their identifying papers (driver’s license, passport, and so on) and a selfie with a certain hand gesture. Some platforms may ask you to provide a scan of recent utility bills, in addition to that. After you’ve uploaded the requested information and it has been reviewed, you are free to use the platform to its maximum potential.
Not every exchange requires KYC to be completed in order to use them. Some provide limited access, some only require it for transactions, and others don’t require any KYC at all. So, choose the platform with the right KYC policy for you.
#8. Fiat Options and Exchange
While it is important to have a wide variety of crypto assets available, it is also great to have options when fiat money is concerned. After all, if the cryptocurrency exchange doesn’t accept your currency and you can’t swap it there, you will need to go somewhere else first. Or you might need to have a separate bank account just in that currency. It adds unnecessary steps to the process and takes up time.
Most platforms allow usage of USD, EUR, and GBP to purchase crypto, and there are exchanges that let you swap fiat money, as well as crypto. Choose the currency that you are going to use, and look for a cryptocurrency exchange that supports it. Or at least allows you to swap your fiat for a currency you need.
And, of course, we can’t leave out that on Changelly you can not only instantly swap your cryptocurrency, but buy them for fiat money. You can do that quickly and easily by using our widget.
We’ve covered the main criteria that you may use to judge cryptocurrency exchange. While it might seem like a lot of work and research to do at first glance, most of this information was already collected, analyzed, and presented in a more or less comprehensive form.
There are countless blogs, communities, videos, and articles that describe the pros and cons of every major cryptocurrency exchange out there. You just need to look it up, and you will find what you need. So, keep your money safe, and stay tuned for more guides and tips on the crypto scene!
Changelly gives you an opportunity to exchange cryptocurrencies fast and easy. Check out the cross-rates in the widget below: