Tips for Selecting a Safe and Liquid Cryptocurrency Exchange

If you are new to trading cryptocurrencies, it's very important to find the right exchange for you. You need a good and secure exchange that minimalizes the risk of a breach and data leakage, all while having the lowest fees possible. 

It's not uncommon to get scammed on crypto-exchanging services, especially if you are new to this and don't know much. There are a lot of shady exchanges whose only goal is to get your money. On the Internet, there are 2,200 reported cyber attacks every day.  

But you don't have to worry. We are here to explain what trading apps are, how they work, and help you find the one that's right for you.

How do Exchanges Work

You are probably wondering how this all works. It's relatively simple they act like brokerage accounts. They are a connection between the seller and you (the buyer), and vice versa. 

It's really simple to set up when you make your account, you connect it with your card and use your currency (for example, US Dollars), and buy some cryptocurrency that you can trade later on.

These apps are usually suited for smartphones, making them even simpler. They are making sure everything goes smoothly and is as simple as possible so you, as a user, can make trades without thinking about anything. 

Those exchanges are making money by charging you some fee. There are even some platforms that charge a 0% fee but have an ever so slightly higher price of a coin.

Look at the Number of Coins You Can Trade

With cryptocurrencies on the big rise, there is a number of different cryptocurrencies to choose from. There are an estimated 21,000 cryptocurrencies such as Ethereum that you can choose from. 

Although most of those coins aren't on big exchanges because of regulations and because of their popularity, big exchanges won't implement them if they are rarely both/sold and traded.

All the big exchanges like Coinbase have between 200 and 500 cryptocurrencies you can use for trading. If you want to use some rare cryptocurrencies, you have overseas exchanges. These offer more choices but are not regulated like the US-based ones. 

Great start for someone who is new to cryptocurrencies and only wants to trade popular, and well-established coins like Bitcoin, Ether, and dogecoin are previously mentioned in Coinbase and Kraken.

Sufficient Liquidity

There is a very important thing that is called liquidity. Liquidity ensures that you can exchange your coins for cash and vice versa without having to pay some enormous fee.

That is incredibly important because it ensures that you can buy and sell very close to the price that is on your screen, whereas if the exchange has low liquidity when you want to sell, it can sell for a much lower price, same goes for buying when you lets say for example want to buy something at $1, and it goes to $1.20 which is 20% markup.

Are you wondering what are best Bitcoin apps? If you want to use only the best apps, look for ones that have the highest liquidity are usually ones that have been in this job for more than five years, and you need to look for someone like that. 

Compare the Fees

These are not brokerage accounts that you can use for free. Almost all platforms and apps have some type of fee. This fee usually ranges from 0%-5%, fees are usually billed on deposits, withdrawals, and single trades. There is also a tier system of fees, where you pay according to what tier you fall in. 

For example, let's say in one month you trade 15 times for about $500, and there is someone putting more than $50,000 on one trade. The second person is going to pay less than you because of a fixed tier fee rate.

There are some fees at the biggest US-based crypto exchanges:

• Bitstamp - 0% to 0.5%

• Kraken - 0.9% to 2%

• Crypto.com - 0% to 2.99% 

• Binance.US - 0.1% to 5%

• Coinbase -0.5% to 4.5%

These are all based on what type of transaction and payment method you are using.

Ensure Security 

Its become common knowledge that crypto exchanges are prone to cyber-attacks and hacks. Hacking and scandals are happening in the world of crypto every few months. Just last year, cybercriminals stole over $3.7 billion in crypto assets. 

For you to not participate in them, you need to look for great and frequently updated security on exchanges. Also, you should probably avoid exchanges that already had hacks or data leakage and if they participated in some scandals.

Don't be scared if a big platform requires some form of ID, like a picture of a passport. It’s just one of the security measures so nobody can steal your money without leaving a trace. 

Some apps require authenticators just in case someone stole your phone. They can't transfer any funds without verifying your identity. There’s also the biometric login, where the apps scan your fingerprint and face to verify it's really you trying to access the platform.

Closing Thoughts 

Cryptocurrencies are going to be even more popular, and with that comes stronger and more updated security systems. So, when that happens, it's going to be way harder for someone to scam you. However, until that actually occurs, it's maybe for the best that you use only well-established and big exchanges. 

It's also important to remember that the cryptocurrency market is very volatile, and frequent dips and ups are common in this industry. Before starting to trade crypto, do your research and be careful what you put your money into. And remember, never share the credentials and codes you were given when opening a wallet on an exchange.