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Technology has invaded almost every aspect of our lives with the latest features and applications. The economy and finance system is not an exception. Digital assets and their management via decentralized platforms with the help of blockchain technology is the 21st-century trend. Advancement in the technology and its latest adaptive features are the responsible factors of widening the popularity of decentralized finance and digital economy. There is no doubt that the future will be highly dependent upon these decentralized financial methods and digital currency.
Cryptocurrency is one of the most common digital currencies in our contemporary world. It is a decentralized digital currency that can be used for shopping, sending money across borders, and transacting directly with peers. Crypto exchange is an important concept associated with cryptography. It is an online marketplace or platform where users are allowed to buy, exchange, sell, and trade cryptocurrencies and other digital currencies.
Crypto Exchange: Things Need to Know
A specially designed platform is an inevitable part of a transaction. To conduct a proper transaction, a medium would be required to facilitate that process. In the case of cryptography and digital assets, exchanges are the medium that facilitates the process. Crypto exchanges are a designated place for crypto enthusiasts to experience digital transactions.
These platforms work exactly like stock exchanges, but here the transactions are done with the native tokens of respective projects. The crypto coins can be sold to another user, purchase the coins as per your requirement, and exchange your existing coins for another coin. The exchanges can only be accessed if you have proper internet connectivity since it is an online service.
When it comes to the basics of cryptocurrency exchanges, there are mainly two different types of crypto exchanges. Centralized exchanges(CEXs) and decentralized exchanges(DEXs) are the two types.
Centralized exchanges(CEXs)
They are the most common exchange platforms which are operated by some third-party companies that act as intermediaries between the two persons involved in a particular transaction process. Coinbase, Binance, and Kraken are the most famous centralized exchanges. The main advantages of using CEX in crypto transactions are a user-friendly interface and design along with a customer support system. CEXs are more advanced ones, with margin trading, stop-loss orders, and futures contracts as part of it.
Decentralized exchanges(DEXs)
These are the transaction platforms where intermediaries are absent. This method usually works based on smart contracts. Using these smart contracts on blockchain networks like Ethereum is the basic principle behind decentralized exchanges. Pancakeswap and uniswap are two examples of decentralized exchanges.
Decentralized exchanges provide autonomy to the users. The data and private keys will not be stored by any external agency. Advanced safety and security are the main advantages of decentralized exchanges. Users do not want to be worried about regulatory confusion here. Blockchain technology is the main idea behind this system, this technology ensures transparency and eradicates the role of centralized third parties
Hybrid Exchanges
These are a combination of Centralized exchanges and Decentralized exchanges. It aims to provide the best experience of both worlds. Hybrid exchanges take some of the best elements from both centralized and decentralized exchanges. It offers the security and privacy features of decentralized exchanges and the liquidity features of the centralized exchange.
How does it work?
Facilitating the transaction between a crypto buyer and seller is the working principle of crypto exchange. When a user initiates buying or selling of their digital possession, the exchange finds the matching order for that particular activity from another user. After the successful transaction, the digital currency will then be transferred to the user accounts. The exchange will charge a certain amount of money as the transaction fee which users are obligated to pay.
Apart from the transaction activities, users will be able to get a lot of information from the crypto exchanges. The pieces of information are available in the form of price charts, and market analysis. After setting up an account in the preferred crypto exchange, the users can initiate the transactions using cryptocurrencies such as Bitcoin, Cardano, Ethereum, Litecoin, etc.
What are the things to note down before choosing a crypto exchange?
Choosing the crypto exchange is a personal decision and is always up to the users’ preferences. But it is a crucial decision when you are looking for active participation in the centralized finance and crypto world. The first thing to understand is that every crypto exchange works differently and has different features.
The common factors that need to be considered before choosing your crypto exchange are,
- Fee structure
- Privacy and security features
- Currency availability
- User interface
- Liquidity
- General review
The trading cost of an individual will be dependent on the fee structure of the market exchange. Opting for the most suitable fee structure will be beneficial along the journey. The main types of fees included in the crypto exchange system are, trading fees, deposit fees, withdrawal fees, and other fees.
Security features should be the number one priority when choosing a crypto exchange. The users’ sensitive data protection strictly depends upon the security features of the exchange. When considering the security of the exchange, prefer these things, two-factor authentication, better security audits, cold storage, bug bounty features, etc.
Currency availability is the basic feature that needs to be monitored before selecting your exchange. Ensure that the exchange has accessibility for the top-performing crypto coins like Bitcoin and Ethereum and also less popular crypto projects.
When it comes to user experience and optimal interface, the easiness of the exchange menu along with decent customer support should be the top-end priority. Updated features like their own mobile applications and availability of recourse materials can enhance the trading experience.
Liquidity is the easiness of the transaction activities inside the crypto exchange without affecting the price. This should be considered a big factor when selecting the exchange. Preferring exchanges with high liquidity would be ideal to improve your crypto exchange experience.
Research the customer reviews and general responses from the existing users before selecting the exchange. This can give an idea about the exchange and its working.
Best Crypto Exchanges for 2024
There are a lot of crypto exchanges available with unique features and services. This classification is based on basic features like coin availability, transaction fees, financial capability, and other features. This article only aims to show you a path to the best in business, the choice is yours and the selection should be based on your experience in the crypto arena and individual preferences.
Kraken
Kraken is one of the best crypto exchanges that has a persuasive experience in the business. In the crypto world, Kraken is considered one of the most secure and safest exchanges that has accessibility over 200 cryptocurrencies. It is a highly recommended platform for experienced traders.
Features of Kraken
- A large number of cryptocurrencies are supported(more than 200)
- High liquidity
- Low fee structure (0.00% to 0.40%)
- Attractive user interface
Even though Kraken is one of the best in business, there are some disadvantages in its functioning. The unavailability of its service in U.S. states and restricted account funding options are the factors that hinder it from much more engagement.
Crypto.com
The individuals who are actively indulged in mobile trading, this is the best option for you. Crypto.com is a popular trading application that provides unmatched decentralized financial services for mobile trading. The platform has access to over 350 cryptocurrencies.
Features of Crypto.com
- Provision for a wide range of cryptocurrency products.
- Accepts more than 20 kinds of fiat money.
- Opportunities for high rewards.
- Crypto tracking features
Crypto.com offers a better user experience with its unique features. The transaction fees charged by Crypto.com are in between the range of 0.00% – 0.075%. But there are disadvantages too to be mentioned, the unavailability of advanced trading features for U.S. investors is the main issue regarding Crypto.com. Poor customer support is also an issue of this exchange.
Coinbase
Coinbase is the best option for you if you are a beginner in the cryptocurrency ecosystem. This is one of the most secure and trustable crypto exchange platforms that is available right now. Adopting beginner beginner-friendly trading platform method is a unique feature of Coinbase.
Features of Coinbase
- Highly liquid exchange
- Beginner-friendly trading along with advanced trading options
- Availability of 200+ cryptocurrencies
Coinbase is one of the largest U.S.-based cryptocurrency exchanges. Apart from the above-mentioned pros, it has some cons too, they are, among it, the low-quality customer service is the important one. The default wallet of Coinbase will not give you control over your private keys since it is a custodial account. The transaction fee is comparatively higher than the other exchanges.
Gemini
Gemini is a crypto exchange that is well known for its security services. Undoubtedly, it is one of the most secure crypto exchanges available right now. The enhanced security features are not causing any complications in the user experience. Gemini offers the best user experience along with the increased security features.
Features of Gemini
- High liquidity
- Insurance is available for the funds held in the hot wallet
- Strong security features
- Available to all 50 U.S. States.
Gemini with its advanced security options can offer you an immense trading experience. The availability across all the states in the US makes it one of the most widely used exchanges in the world. The main cons of Gemini are, that they have comparatively high trading fees. They support a smaller amount of cryptocurrency when compared to their arch-rivals. Only 80+ coins are available on this platform, this is one of the main cons in the scenario of Gemini.
Bitmart
Bitmart is a widespread crypto exchange that was founded in 2017 and has service availability in more than 160+ countries. This number itself shows how popular Bitmart is. Apart from the wider popularity, over 1500 cryptocurrencies are available on Bitmart.
Features of Bitmart
- Provision for crypto earning opportunities
- Simplicity in the selling and purchasing of cryptocurrency
- Both popular and unpopular cryptocurrencies are available
- Low transaction fee(0.04% to 0.10%)
In 2021, Bitmart had to go through a large-scale hacking, which resulted in the loss of 196 million user funds. Even though they announced the reimbursement, after that, its performance has seen a little decline, yet still, it is considered one of the best out there.
Bisq
Bisq is a crypto exchange that has worldwide access. Users from anywhere in the world can use the services provided by Bisq. Through this platform, digital assets can be bought and sold securely.
Features of Bisq
- Worldwide availability
- More than 50 different payment options are available
- Prioritised privacy
Bisq has been one of the most promising crypto exchanges since its introduction in 2014. However, there are problems faced by people who use this exchange such as slow transaction speed and trading volume. It is not a recommended option for active trading.
These are the top-performing crypto exchanges that are available right now, choosing one from this list is up to the users. Know your trading strategy and plans then choosing the ideal platform for your requirements would be recommended. Consider this article as a roadmap to your crypto journey.
Final Thoughts
The concept of cryptocurrency exchange emerged right after the introduction of crypto. It eases the user experience and acts as an intermediate between users’ transaction strategy and their profitable outcome. Crypto exchanges are an integral part of the ecosystem, so making wise decisions about exchanges will be crucial in the totality of the crypto world experience.
It is always up to the individual who has the autonomy to select the crypto exchanges, but the decision should be based on your activity there. If you are looking for a secure transaction and predominantly consider security as the top priority, opt for the exchanges that provide the best privacy and security features, exchanges like Gemini are the best for that. Trying to maintain the harmony between individual preferences and exchange offerings is the best strategy to be applied when selecting the appropriate exchanges.
In the 21st century, almost every crypto exchanges provide the best possible outcomes to its users. However, being cautious about the fraudulent activities associated with crypto exchanges is very important. The scams related to web3 applications also emerge as the popularity of crypto projects increases. Checking the legitimacy and genuineness of exchanges is also up to the individual like making the personalized choice. Select authentic platforms for trading, and stay away from scams possible data breaches, and identity theft. Eradicating these possibilities of errors and scams will give you an immense experience in the crypto world.
