Picking the best crypto exchange can be a complicated process.
First and foremost, an investor should want a secure exchange. As crypto has grown more popular and desirable, it’s become an increasingly large target for hackers, and many leading exchanges, including Binance’s international operation and KuCoin, have been hacked recently to the tune of tens of millions.
While exchanges often reimburse those whose coins are stolen through their insurance, an investor probably doesn’t want to be in that position to begin with. That’s why it’s important, to potentially minimise the risk, and only invest money on reputable exchanges.
An investor may be able to further minimise their risk by spreading their crypto purchases across multiple exchanges or moving their crypto off of an exchange’s default wallet to their own secure “cold” wallet that is not connected to the internet (and therefore much harder to hack), though they’ll need to keep up with their passcode or they could lose access to their crypto forever. But it’s also wise to look out for withdrawal fees when moving crypto off of an exchange. These often vary by coin type.
Also consider the cryptocurrencies available on a given exchange. An investor might be perfectly OK using a crypto exchange with only one coin if it’s the only coin they want. Conversely, if they’re a crypto-phile, they may want access to all of the more than 600 available on Gate.io.
But sheer availability of coins does not tend to be sufficient if there are no trades happening. An investor might ideally want to see hundreds of millions of pounds of daily crypto trading happening to ensure they’ll have enough liquidity, so they can easily trade their coins and sterling when they want or need to.
If an investor is an advanced crypto trader, they may want to make sure their preferred exchange offers the trading types—like limit orders, which can potentially prevent slippage by setting a hard price—and margin they want. Remember trade types involving the latter are still evolving, so different exchanges’ offerings may vary over time.
For those just getting started with buying cryptocurrency, it might be wise to look for an easy-to-use platform with thorough educational resources to help them understand this complex, rapidly developing commodity.
And don’t forget about fees. An investor may be fine with paying a premium for a simple interface when they’re still learning the ropes, but higher fees eat into their eventual returns. Many high-frequency traders especially want to lower costs.
Finally, don’t assume that an exchange is available in the UK just because its website is accessible.
And remember picking the best crypto exchange can be complicated, and the factors above are some of the key considerations.
