If you’re new to crypto and trying to get the lie of the land, then you have probably been bombarded with confusing information. It is especially challenging for a novice user to choose a reliable trading platform. The truth is, there is no hard-and-fast rule for selecting the best crypto exchange – it will really boil down to your preferences and trading needs.
This article will give you a good general overview of what to look for and which exchanges are considered by many in the community as the best. If you’re looking to buy and sell bitcoin, you can get your head start here.
What is a Crypto Trading Platform?
Trading platforms allow users to buy, sell, and trade cryptocurrency. Before these platforms, people had to rely on buying and selling from one another in private transactions. As you might imagine, crypto trading was fraught with problems, and the level of fraud was very high.
Platforms facilitate transactions between users by organizing a secure way for buyers and sellers to trade without relying on blind trust that the other party will uphold their end of the bargain. Many exchanges like Coinbase also offer a range of other features such as staking, earning free crypto, getting yields on currencies held, and providing free insurance for your funds.
Fiat and Cryptocurrency
Fiat is the terminology for any non-crypto token. Fiat money is the currency you use in your local jurisdiction such as the GBP, EUR, or USD. Different platforms have different facilities for fiat currencies, and popular exchanges tend to accept only mainstream currencies. You may find your local (fiat) currency isn’t supported on a major exchange.
Cryptocurrency is the terminology for any digital currency that relies on blockchain technology. You may also come across the term ‘altcoin’, which is used to describe any token or coin that isn’t bitcoin.
Some exchanges and platforms will only let you transact with crypto, normally requiring you to use bitcoin or ether as your base currencies. Facilitating fiat-to-crypto transactions is costly and difficult, so some exchanges opt not to provide this service.
Types of Cryptocurrency Trading Platforms
Most platforms offer a simple peer-to-peer exchange system that matches a buyer and a seller, and then oversees the transaction, taking a small fee for the service. However, trading platforms can differ based on various factors.
Centralized and Decentralised
Centralized platforms are owned and operated by a company or organization. These platforms are designed to facilitate trade with a company profit in mind. As a result, centralized platforms often offer a host of different crypto services that go beyond simply buying and selling your cryptocurrency.
Decentralized platforms operate on blockchains and have fewer features. The advantage of these exchanges is that besides the fees for the transaction there are no additional overheads that a user pays for. An example of a decentralized exchange is Uniswap.
A downside to decentralized exchanges is that they don’t offer fiat currency transactions. To use one, you will first need to buy supported crypto with fiat elsewhere and then move it onto the decentralized exchange. Traders use services like Uniswap to conduct large trades anonymously without verification and checks, and at a lower cost, compared with a centralized exchange.
Spot and Derivative
These two types of crypto trading have been transferred from regular trading. Spot trading is purchasing cryptocurrency and holding on to it until its price rises.
Spot traders buy the undervalued coins they believe will grow in value, or they jump on the wagon during rapid price increases to get a profit.
Derivative crypto trading implies a deal to buy or sell crypto at a predetermined price on a certain date in the future. It is mainly done to avoid the risks associated with crypto market volatility.
While spot trading is available at any crypto platform, finding a place to execute derivative trades might be tricky. However, some platforms specialize in crypto derivatives — for example, Bybit.
With or Without AML/KYC Verification
Regulation is a growing trend in the crypto industry, and it likely won’t be long before all platforms offering crypto services have to comply with anti-money laundering (AML) and Know Your Customer (KYC) processes. At the same time, there is still a good portion of platforms that forgo these regulatory requirements.
It is worth noting that although these platforms save you time when it comes to signing up and trading, they also tend to be the ones that attract criminals. After all, a money launderer isn’t going to be signing up to platforms that can verify their identity.
Best Crypto Platforms
The truth is, every single trader you encounter in the crypto world will have their personal preference. It is a good idea to try out a few reputable platforms and find one that works for you. Here is a list of reputable crypto platforms you can start with.
EXMO is a crypto trading platform based in the UK. It operates as a peer-to-peer exchange, and pairs buyers and sellers automatically. It also has a premium version that offers cashback for traders.
Currency.com aims to bring all the benefits of traditional trading to the crypto industry with the help of tokenized assets. Here you can trade tokenized versions of stocks and commodities of famous global companies. It is a secure exchange, with AML and KYC verification and transparent fees.
Binance is one of the largest crypto exchanges in the world. As well as being a traditional crypto exchange, it offers a range of advanced services like margin and derivatives trading. It has a cryptocurrency trading app you can use on your smartphone.
An often-unsung hero of crypto platforms, OKEx has been a reliable exchange for many traders over the years. It also offers a range of services such as spot and margin trading, options, swaps, DeFi, and lending. It hasn’t had quite the same adoption as Binance and others, but that doesn’t detract from the advantages it offers.
Cryptocurrency platform selection criteria
Look around and try out crypto platforms before settling on one. Among the factors that play a role are:
- Trading fees
- Supported assets
- Available payment methods
- Your trading goals
For example, picking an exchange that offers derivatives might mean their fees are cheaper on basic buying and selling because they make their profits from other services. Pay attention to detail and choose the most suitable option for your circumstances.
Cryptocurrency trading platforms are an integral part of the crypto world, and many offer excellent services. Be wary of risks involved with crypto trading, and always do your own research before committing money to a crypto platform.