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Choosing The Right Cryptocurrency Exchange

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Jun 24, 2021

The crypto-mania has taken over the global population and almost everyone has been actively investing in the asset. In the earlier days of cryptocurrencies, it was widely believed that the concept of cryptocurrencies will fail tremendously. However, almost a decade later, cryptocurrencies have become some of the most powerful assets.

If you are interested in cryptocurrency investments, then you should make sure that you sign up with a good cryptocurrency exchange. Now, if you are new to the field, then you may not be able to identify a good option from a bad one. In this article, I will share some of the ways in which you can find out whether a cryptocurrency exchange is good for you or not. So, carry on reading this article to learn how you can make a smart choice at the start of your cryptocurrency investment career.

Features Of A Good Crypto Exchange

Security & Authenticity

Always make sure that the exchange that you are about to sign up with has a high level of security. When you decide to sign up with an exchange, you provide a lot of information to its system as a part of the KYC procedures. This information is highly sensitive so the trading firm should guarantee that it will be safe from the reach of hackers. Moreover, you will be trusting the platform with your money as well as with the storage of your assets which further emphasizes the need for high levels of security.

Find a firm that has implemented strong security protocols to make sure that you are never at the risk of exposure to third parties. A good exchange firm will provide multi-layered security.

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Regulations & Restrictions

You should always look at the regulatory status of the firm before providing your information to it. The regulatory status of the firm can confirm whether it is a trustworthy platform or not. A valid regulatory license is the main difference between a legitimate crypto exchange and a scam. Regulations include the rules of trade and business that may differ across different countries. So, make sure that the exchange that you are signing up with can be used properly in your country.

Asset Liquidity and Diversity

It would be a waste of your time and money if you sign up with an exchange that only offers three to four major assets. As an investor, you need to remember the importance of diversity. In order to achieve a diverse portfolio, you need access to multiple assets. Signing up with a platform that doesn’t offer asset liquidity and variety will force you to make risky and limited investments. This is because investing a huge chunk of money in a single asset is a high-risk move which is very dangerous especially when you are investing in the crypto market. So, make sure to check the range and availability of the assets that the exchange is offering.

Transparent Fee Structure

There is a fee for investing and trading assets when you use any online trading platform. Moreover, transaction fees for depositing and withdrawing money from your trader’s account are also charged. You may lose a lot of money if you choose an exchange that is not clear about its fee structure. You may find an exchange that checks all the marks but it may be hiding behind a false fee structure. So, make sure to choose an exchange that offers transparency and low trading rates.

Reputation

Thoroughly examine the reputation of the exchange that you are thinking of signing up with. Your quality of experience will be better with a platform that is popular among traders. Search for any information that may link the exchange to a past blunder such as cases of hacking, security loopholes, scams, etc. This is especially important to do if you have chosen a platform that is not that well-known.

Before trying to become a pioneer, always make sure that the exchange that you will use for trading the digital asset is trustworthy.

Concluding Thoughts

Now that you have all the main features down, you can safely start looking for an exchange that you will use for trading cryptos. As someone interested in cryptocurrency trading and investments, you want to make sure that the platform that you select is the best one. The features mentioned in this article are extremely important so make sure that the firm that you choose checks all the boxes in the list.

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