Cryptocurrency exchanges play a central role in the conversion of funds to and from cryptocurrencies, along with the trading of different cryptocurrencies. There are countless exchanges online today, addressing various niches and claiming unique features. To a new Bitcoin investor, the number of potential choices can be overwhelming.
Why Picking the Right Exchange is Important
Cryptocurrencies are held in digital wallets, secured by private keys. With the private key, you can access your wallet and send funds to other wallets. Sending cryptocurrency is only half a transaction, so how do you know the other party is sending anything in return? This is the problem that cryptocurrency exchanges address.
The cryptocurrency exchange coordinates the transaction, and that means you’re putting your trust in them. Some exchanges work as intermediaries between two wallet holders, but others only allow users to store cryptocurrencies with the exchange itself. This opens you up to any security problems the exchange might have.
The most notorious example of this happening is the collapse of Mt. Gox in 2014. It was the largest cryptocurrency exchange at the time and shut down following the theft of over $450 million in cryptocurrency. The exchange went bankrupt, and users haven’t been able to recover their funds to this day.
There hasn’t been an incident near this scale since, but it still shows the need to proceed with caution. When choosing a crypto exchange, you should consider its reputation, features, and available cryptocurrencies. Here are the top 5 crypto exchanges out there today.
Coinbase is the largest crypto exchange today, operating out of the USA and founded in 2012. It’s generally considered the easiest exchange to get started with. They’re easy to use, and you’ll have access to dozens of different cryptocurrencies.
Coinbase does have a few downsides, though. You don’t control the private keys to your wallet with the exchange, limiting your direct control over your cryptocurrency. Coinbase also has limited support of new and obscure coins and tokens, with only dozens out of the thousands out there available.
Voyager is another US-based exchange. It was founded more recently in 2018, but it was also one of the first exchanges to become a publicly listed company. Users trade through an intuitive mobile app that helps simplify crypto trading.
This crypto exchange doesn’t have commissions on trades and has a decent selection of over 50 different currencies. Unfortunately, you don’t have the private keys for your wallet here either. Voyager seems to be reliable, but many investors stick to the old adage “not your keys, not your coin.”
BlockFi is an American exchange that focuses on one central selling point, the ability to gain interest on their held cryptocurrency. Users can receive up to 8% annual interest on their holdings, significantly higher than what any bank is offering.
You can even take out a cash loan against your crypto holdings, but there are numerous terms, conditions, and contingencies. While this exchange offers many traditional banking services, they only provide access to six different cryptocurrencies.
Uphold is based in the USA and gives users the ability to exchange and hold nearly 60 cryptocurrencies, along with dozens of conventional currencies and even stocks. Users can easily withdraw cryptocurrencies to their own private wallets, giving them absolute control over their assets.
This option isn’t really for beginners. With more features, things are starting to get a bit more complicated. There’s a bit of a learning curve, but if you’re looking to do anything beyond simply buying, holding, and selling Bitcoin, Uphold is a great place to start.
Kraken is among the oldest exchanges still operating, having been founded in 2011 in the USA. It isn’t very user-friendly but has plenty of advanced features. Users will have access to over 50 currencies with low transaction fees.
With Kraken, users can also get rewards for staking certain cryptocurrencies. This means putting them up into the “staking pool” for a set period of time. This is an important part of how specific blockchains work and can be used to generate income from cryptocurrency that’s not being used.
Choosing the Right Cryptocurrency Exchange for You
These choices are all reputable and secure and offer many unique features among them. However, so much of what determines which is right for you is going to come down to your individual crypto trading plans. Its worth pointing out that there are services such as the Immediate Edge trading app which claims to be an exchange, but that is far from the truth. We always recommend taking some time to do some proper research and making an informed decision before risking money and investing.
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