Cryptocurrency can actually make a difference by helping people

What is a cryptocurrency exchange?

It is not possible to buy crypto directly from your bank or investment firm. Once you have decided to purchase Bitcoin, Ethereum or any other cryptocurrency, you will need to open an account on a crypto trading platform in order to exchange your currency for digital assets.

Here are the facts about choosing the right cryptocurrency exchange. Experts recommend that you do extensive research before making your decision.

What is a Crypto-Exchange?

A crypto exchange allows you to buy and sell crypto. Exchanges can be used to trade crypto, such as Bitcoin for Litecoin or can be used to trade crypto for regular currency like the U.S. Dollar. The market prices for the cryptocurrency they offer are reflected in exchanges. If you wish to trade cryptocurrencies in the future, you can convert them back into USD or another currency via an exchange. You can withdraw funds to your regular bank account or keep it as cash.

What to look for in an Exchange

Accessibility

Due to national or state regulations, your location might prevent you from selling and buying crypto on certain exchanges. China and other countries have made it impossible for citizens to access crypto exchanges.

On the website of the exchange or in the terms of service, you can often find information regarding the geographical limitations and related accessibility factors like the acceptance of national currencies.

Security

Your cryptocurrency holdings won’t be protected in the same way that traditional investments or money in banks. Cryptocurrency doesn’t have a central bank backing it. Coinbase and Gemini keep balances in the United States in FDIC insured bank accounts. However, FDIC insurance does not apply to cryptocurrency balances.

Some exchanges offer insurance policies that protect crypto currency users from fraud and hacking. Coinbase has an insurance policy that covers $255 million. Account holders would be protected if Coinbase’s crypto reserves were stolen and any amount up to $255million of crypto was taken. Kraken and others rely more on security measures than insurance policies to protect their clients.

The exchange’s security must be a top priority, regardless of whether you intend to store your crypto assets on the exchange or if you will only keep it there for a few minutes before moving it into your wallet. Check out how many assets are kept offline by the exchange.

Fees

You should also consider fees, but you shouldn’t let a high-fee structure discourage you from using an exchange. You can make a trade-off with higher fees for the additional protections and insurance offered by larger, more popular exchanges.

Although exchange fees can be fixed prices, they are usually a percentage of the trade. Cash App charges fluctuating fees due to price volatility. Fees can be charged per transaction and may vary depending on whether you are the buyer or seller. You may be charged different fees depending on the currency you trade. Before you hand over your cash, make sure you know exactly what an exchange will charge you for crypto transactions.

Liquidity

You can trade, buy, or sell your crypto on any exchange that has enough volume. This will ensure that your holdings are liquid and you can easily sell them whenever you wish. This is an example where size can matter. The most popular exchanges often have the highest trade volumes.

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