The 10 Best Cryptocurrency Exchanges
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Coinbase - №1 Cryptocurrency Exchanges
What Is a Cryptocurrency Exchange?
A cryptocurrency exchange is a website or platform that can be used to buy, sell and exchange cryptocurrency with traditional currencies, such as the US dollar, and with other digital currencies.
Essentially, they are trading platforms that connect buyers and sellers of cryptocurrency.
There are more than 4,000 digital currencies available, and exchanges exist to meet the need for infrastructure to allow for their trade.
Some exchanges act as middlemen connecting the buyers and sellers, whereas others allow for direct peer-to-peer buying and selling.
Some act as the seller and buyer. Therefore, users deal directly with the exchange to purchase.
Exchanges are used by beginner investors who are looking to create a digital currency portfolio, as well as professional traders.
The exchanges themselves differ in what they offer to their customers, as well as their level of support. Some make it quite simple to trade in cryptocurrency, while others are more suited to traders who know what they are doing.
Centralized and Decentralized Exchanges
Cryptocurrency, like bitcoin, is a decentralized currency.
Therefore, there is no central bank or location that holds the funds. It is created and stored on numerous computer networks.
The value of an altcoin (another term for digital currency) changes according to the market and is not tied to a commodity or a government, unlike most fiat (traditional) currency.
There are two types of exchanges available for trading in cryptocurrency:
- Centralized exchanges
- Decentralized exchanges
Centralized exchanges are managed by private companies and usually offer more active trading, with higher trading volume and better liquidities.
They are usually more regulated, and users must have their identities verified to trade thanks to Know Your Customer legislation.
Centralized servers are more vulnerable to hackers, leading to downtime and possible loss of personal information.
Coinbase, Gemini and Kraken are all examples of a centralized exchange.
Decentralized exchanges, however, do not allow for much regulation, making them arguably safer from hacking attempts.
Users do not have to identify themselves to make trades, and they often do not allow deposits of fiat currency.
Similar to the digital currency itself, decentralized exchanges operate through a network of computers. Therefore, it cannot be attacked directly despite the possession of a company headquarters.
Bisq and BitMEX are good examples of a decentralized exchange.
Why Should You Use a Cryptocurrency Exchange?
If you are interested in investing in cryptocurrency, then the appropriate exchange will allow you to expand your portfolio.
Cryptocurrency exchanges allow users to convert fiat currency into altcoins (for a percentage fee) and connect buyers and sellers to trade.
Once you have bought your chosen cryptocurrency, you can invest it in other trading instruments on some exchanges, use it as a savings pot to gather interest or sell it back on the exchange to make more money.
Some exchanges allow purchases of products online directly from a digital wallet too.
How to Choose a Good Exchange
Bitcoin and other digital currencies have grown tremendously over the last few years.
A lack of regulation for the industry and education for those interested in investing can make it difficult to judge whether an exchange is legitimate.
There are a few things to look out for to help you decide which one to choose, whether as a novice investor or a full-time trader:
The exchange needs to make money to provide the service, so there are fees involved for both buyers and sellers of cryptocurrency.
These are usually built into the buy/sell price of the trade and presented as a percentage of the final price.
Transaction fees might be the same for both the buyer (known as the taker) and the seller (known as the maker); however, it is often cheaper to be a maker than a taker.
Currency conversion fees might also be charged by the exchange.
If the base fiat currency of the exchange is different from the one you are depositing, it will require converting. That will incur a charge, usually a percentage of the deposit amount.
In some cases, there might be a deposit fee, especially if you are depositing from a credit card where there is a risk of a charge reversal.
You might also have to pay a withdrawal fee.
The amount and type of fees charged by the exchanges can vary substantially. That should be one of the first things that you consider when looking at different cryptocurrency exchanges.
Security and Safety
Although there is a distinct lack of coherent regulation in cryptocurrency as a whole, exchanges need to ensure that all users are safe to trade. That means that their security measures protect the currency and the private information of the user.
For the decentralized exchanges, that is usually helped by not having a specific point of control; therefore, it is less vulnerable.
Look out for Amazon Web Services (AWS), Two-Factor Authorization (2FA) and complex captchas for logging into accounts, as well as robust identity verification.
Assess to the overall security of the exchange can be granted by considering its track record.
For example, has it suffered an attack or lost sensitive data in the past?
Reputation and popular opinion is another good way to assess the care your chosen exchange takes with customer data.
Range of Currencies
With so many altcoins available, a good exchange will allow you to buy, sell and trade with more than just bitcoin.
It might also be important that it deals in fiat currency, particularly if you want to withdraw in US dollars or euros.
Generally, the more currencies that are available, the more flexible your investments can be.
Is it Legal in Your Location?
Digital currency is designed to be borderless; however, the lack of regulation does mean that it might not be legal to buy, sell or trade cryptocurrency in your location.
It is a volatile market and without proper licensing and certifications, not all states, territories and countries have exchanges available.
For example, New York has strict laws around blockchain and cryptocurrency. Therefore, there are very few exchanges available to residents there.
Ease of Use
The interface between you as the user and the exchange is important to look at when making your decision, especially if you are new to cryptocurrency.
In most cases, centralized exchanges tend to be the most user-friendly and offer the best customer support.
However, if you are a more seasoned crypto trader, you might not need an overly simple interface to get the most out of your investments.
Exchanges need you to deposit funds to begin trading, and there are various methods available for this.
Bank transfers and wire transfers are often the cheapest way to deposit, attracting fewer fees than the riskier credit card deposits.
However, you can also find exchanges that are willing to allow a deposit from PayPal and Apple Pay.
Some exchanges allow direct deposits of bitcoin (BTC) to open an account and will only allow withdrawals in BTC too.
The deposit methods will also have different hold periods and time frames for the funds to be available. A free deposit from a wire transfer might take five days to clear.
However, a credit card deposit will be immediate.
Best 10 Cryptocurrency Exchanges
Coinbase was founded in 2012 in San Francisco and is one of the most well-known cryptocurrency exchanges.
It is fully licensed in the US and offers high liquidity and a fast buying process.
Coinbase also offers insured custodial wallets; therefore, you can store your chosen cryptocurrency safely.
Coinbase offers $5 of free BTC when you sign up.
- Countries – Available in all US states and territories, and Europe and Asia
- Fees – Depends on the amount purchased, between $0.99–$2.99, 0.50% spread; debit card deposits have a 3.99% fee.
- Number of currencies – 30+ and fiat currency
- Security – 2FA (SMS and Google Authenticator) and identity verification; never been hacked.
- Ease of use – Simple to use, suitable for beginners
eToro was founded in New Jersey in 2007. It is a multi-function trading platform that offers many trading instruments, like forex, as well as cryptocurrency.
However, for users in the US, only digital currency is available to trade.
eToro offers comprehensive social trading options, allowing users to copy the moves made by expert traders.
There is a seven-day hold on deposits and a one-day hold on withdrawals that makes this exchange less responsive. However, the customer support and user interface are great for beginners.
- Countries – Global, cryptocurrency only in the US
- Fees – 0.75%–2.90% based on each coin bid-ask spread; no withdrawal fees in USD; currency conversion fee if non-USD deposits
- Number of currencies – 14
- Security – 2FA
- Ease of use – Simple interface, mobile trading via app, good customer support.
Cryptoasset investing is unregulated in most EU countries and the UK. No consumer protection. Your capital is at risk. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Binance is a cryptocurrency exchange for more experienced users that want to trade mostly cryptocurrency pairs.
It operates an exchange based around its native currency (BNB) and offers high liquidity, supporting 1.4 million transactions per second.
There is limited availability of the platform in the US, and the interface is not as straightforward as other offerings.
It does have a good education section; more confident beginners can start here.
- Countries – Widely available in Europe and Asia, but has limited availability in the US
- Fees – Maker/Taker: 0.05%–0.1% depending on volume
- Number of currencies – 100+
- Security – 2FA (SMS and Google Authenticator), YubiKey (Universal 2nd Factor)
- Ease of use – Savvy beginners will be ok, but it is more for the experienced trader
Kraken was founded in 2011 in San Francisco. It is one of the largest centralized exchanges and a partner in the first cryptocurrency bank.
Kraken deals with a large array of altcoins, as well as offering deposits in fiat currency, such as US dollars, euros, pounds and Canadian dollars.
Kraken is beginner-friendly, with a great selection of educational resources available.
- Countries – US/Japan/Canada/Europe
- Fees – Maker/Taker fees:** 0%–2.6% depending on volume; $0 withdrawal fee; 3.75% + $0.25 card deposit fee
- Number of currencies – 50+ as well as fiat currency
- Security – 2FA (SMS and Google Authenticator, Masterkey and Global Settings Lock; never been hacked
- Ease of use – Interface is simple and user-friendly, but there isn’t much real-time customer support. Guides and education offers are great
CoinMama was founded in 2013 and supports 2.4 million customers in 188 countries.
It is good for beginners who want to trade fiat currency for cryptocurrency (or the other way round) and also trade between crypto types without the need for other users.
The flexible payment options even include Apple Pay.
- Countries – Not available in New York or Hawaii, but other states are allowed; available globally (may need third party access depending on local regulations)
- Fees – Taker up to 3.9%, Maker up to 0.90%; 5% charge for deposits made by credit or debit card
- Number of currencies – 10
- Security – Website and transactions are fully encrypted, and although CoinMama was the victim of a hack in 2019, little was lost; CoinMama does not offer any custody or storage service for cryptocurrency
- Ease of use – Straightforward and easy to use; great for beginners or those who are looking for simple currency exchange.
Gemini was established in 2014 by Cameron and Tyler Winklevoss. It is based in New York, and Gemini is one of the very few exchanges allowed to operate in that state.
Security is the first consideration of this exchange, and any $dollars held are FDIC insured, while cryptocurrency is held in secure offsite cold storage, rather than on the servers.
Gemini also allows account holders to purchase products online from participating retailers directly from their digital wallets.
- Countries – All US states except Hawaii; Canada/Hong Kong/Singapore/South Korea/UK
- Fees – $0.99–$2.99 depending on value, 0.50% convenience fee
- Number of currencies – 20+
- Security – 2FA, Hardware security keys, ISO 27001 certified
- Ease of use – User-friendly interface, straightforward system
7. Bitcoin IRA
Founded in 2015 by Alternative IRA Services, a Bitcoin IRA is an all-in-one platform for trading BTC from your IRA.
You can move your Roth, SEP or Traditional IRA into the Bitcoin IRA, as well as your current 401k (as long as you are 59.5+ years old or no longer with the employer that funds it).
The minimum deposit for a standard account is $3,000; however, you can open a Saver IRA with $100.
- Countries – 50+ supported
- Fees – 1.50%–12.50% platform fees, 1% maker, 5% taker; annual custodial fee $240, withdrawal fee $75
- Number of currencies – Six
- Security – BitGo Trust (the largest processor of chain bitcoin transactions); all assets insured up to $100 million; crypto stored offline in 100% cold storage
- Ease of use – Full-service product, everything is taken care of including trades, etc; simple and effective alternative retirement fund
The Bitcoin Mercantile Exchange was launched in 2014 by HDR Global Trading and is based in Seychelles.
The exchange is a cryptocurrency trading platform that allows trades of contracts rather than the coins themselves, making this a volatile market, and it is not well-regulated.
Questions have been raised about the legality of BitMEX operations which is why they are not authorized for users in the US or the UK.
BitMEX is more suited to the experienced trader.
- Countries – Claims to be global; however regulations and licensing issues mean it is not available in the US or the UK
- Fees – 0.25% maker/0.75% taker; 0.50% settlement
- Number of currencies – 10 cryptocurrencies; can trade against fiat currency too
- Security – AWS/2FA and no suggestion of past hacks
- Ease of use – Interface is customizable; however, the platform is not beginner-friendly
Bisq is the largest decentralized exchange by volume and popularity and is accessible through a downloadable software application.
Launched in 2014, Bisq uses its blockchain rather than dedicated servers and has a native currency (BSQ) that attracts fewer fees when trading.
For a decentralized exchange, Bisq is user-friendly, with a simple interface and open-source education.
- Countries – Global; no user details needed
- Fees – All fees are payable in either BTC or BSQ; 0.10% maker, 0.70% taker in BTC, 0.05% maker and 0.35% taker on BSQ
- Number of currencies – 120+ as well as many fiat currencies
- Security – Decentralized, no servers; therefore, less risk of an attack, and users maintain complete control and privacy
- Ease of use – Relatively simple interface in comparison with other decentralized exchanges, suitable for beginners
10. Prime XBT
Prime XBT was launched in 2018 from Seychelles, and while it might be the ‘new kid on the block’ in comparison to other exchanges, there are many facilities on offer from Prime XBT that you will not find elsewhere.
Prime XBT is a trading platform that uses cryptocurrency to trade in almost all markets, from commodities to forex.
The base currency is BTC and both deposits and withdrawals are made in BTC.
- Countries – Mostly unregulated, not available in the US or Canada
- Fees – 0.05% Maker/Taker – other trading fees depend on assets
- Number of currencies – Five cryptocurrencies, plus fiat currency and other trading instruments
- Security – AWS, offline cold storage, 2FA (Google Authenticator only)
- Ease of use – Simple interface, easy to use and good customer support
Cryptocurrency is a developing market, and you can choose the way you want to diversify your portfolio through investment in digital currencies.
Choosing the appropriate cryptocurrency exchange for you is a decision that should be made with consideration for the level you want to invest. Consider how much it will cost, what you can get from it and the simplicity of use.
For beginners, it is worth considering a platform that offers good customer service, secure access and a simple user interface when you are starting.
You can always scale up and graduate to the more in-depth and advanced exchanges as you develop and gain experience.
Any investment into cryptocurrency is a financial risk, like an investment into other trading instruments. Therefore, ensure you are choosing the appropriate exchange.
WikiJob does not provide tax, investment or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.