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How to Choose Best Crypto Exchanges- Basics and Examples

Published by CryptoNinjas.net
06/07/2021
How to Choose Best Crypto Exchanges- Basics and Examples

As there are many scams and misconceptions related to cryptocurrencies such as Dogecoin, Bitcoin, and others, the security factor plays a vital role in terms of purchasing cryptocurrencies. This is why trading or investing in cryptos may seem a bit overwhelming for novice traders and investors at first. Crypto exchanges can serve different types of traders and investors with a multitude of purposes from purchasing and holding different cryptocurrencies for a certain period of time to engaging in frequent trading practices. 

These platforms typically profit through commissions and fees related to each transaction and act as a medium between the buyer and the seller. Some of the best ways to determine the best crypto exchanges are to consider exchange offerings and going through current data. It is necessary to be familiar with the basic types of crypto exchanges to get a clear idea.

Centralized Exchange

With top crypto exchanges like GDAX, Gemini, Kraken and Coinbase belonging to this particular type of exchange, these platforms are more common among traders or investors and require certain identification processes like KYC to utilise. Centralized exchange platforms differ from the way Bitcoin works and rather function on their very own private servers that can often lead to some issues. Exchanges such as Coinbase, Gemini and others mentioned above are known for active trading, liquidity and greater volumes. These exchanges being run on private servers can face security issues or even come across a server crash that may lead to several hindrances.

Due to these common issues that come with this type of platform, major exchanges often provide a certain level of insurance if the systems fail in any case. But this is only applicable if the exchange platform is at fault. In the case of centralized exchanges, the purchased cryptocurrencies are usually stored in the custodial wallet rather than the user’s own. For this reason, investors should practice safe storage to avoid such scenarios and withdraw higher amounts as soon as possible.

Decentralized Exchange

Contrary to a centralized exchange, this type of exchange acts in the same way Bitcoin works and requires no particular point of administration. While centralized exchanges may lead to various issues due to server breakdown, decentralized exchanges work with numerous computers within the servers around the world. 

This ensures to prevent any sort of compromise regarding security or network as shutting down any computer within the server will not affect the network. As this type of exchange does not come under a single authorized server, here individuals can act freely and require no identification, unlike centralized exchanges. 

Thanks to this decentralized manner, data security is also improved here as attacking a system that is spread worldwide is quite difficult to be at risk.

A quick glimpse of 3 top crypto exchanges

Coinbase 

Launched in 2012, Coinbase is one of the most popular cryptocurrency exchanges and has always managed to hold its reputation and authority in the market while being a widely regulated crypto exchange. Coinbase provides tons of features and offerings including custodial wallets that come with insurance that safeguards your funds in any case of hacking and data breach as well as a user-friendly exchange platform. 

Bisq 

Users can pay through BTC or BISQ which is the network’s own cryptocurrency, it opens up to numerous possibilities and access to a certain unit of the account. While there is a chance of security issues with this factor, using Bisq can also act beneficial to individuals whose country does not own an advanced financial infrastructure. 

Cash App

While Cash App can be used as a bank account where users are allowed to have their own debit cards, it also provides users to invest in stocks, cryptos and ETFs. With a beginner-friendly interface, Cash App also lets users withdraw investments into their own wallet which is highly convenient for beginners.

With the increasing demand for crypto trading, it is crucial to opt for only the best crypto exchange that suits your requirements, minimises risk and provides better offerings. Both of the crypto exchanges come with certain advantages and disadvantages, which is why as an investor you need to conduct proper research before finalizing one.

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