As of last year, there were approximately 106 million people actively using, trading, or just holding, cryptocurrency on the planet. Of all the thousands of different cryptocurrencies, bitcoin is by far the best known, and the most used.
Over 20% of Americans hold some share of bitcoin. Of course, many of these people will have opened up accounts and wallets, and will only hold minimal amounts that were initially deposited for security tests. However, many more will be far more serious investors and traders.
The volatility of crypto, and bitcoin, in particular, can unnerve some potential investors, but for others, it makes this particular asset that much more intriguing, and exciting.
As CNBC reported, bitcoin reached $48,000 in March this year, which was the highest at the point for the first quarter of 2022. Of course, bitcoin has reached much higher levels before, and there is still much optimism that one day it will reach the forecasted goal of $100,000 per coin.
Before you can think about making that sort of return though, you need a cryptocurrency exchange. If you want to get involved in any sort of crypto trading, you will need to know what to look for in one of these exchanges, and what they can do for you.
How do you find a good cryptocurrency exchange?
Word of mouth is always a good option when looking for any service. Knowing someone who has used a crypto exchange over a period of months, or preferably years, without any incident would be desirable.
These days though, Yellow Pages and word-of-mouth exist far less than online reviews and comparison websites. Searching for cryptocurrency exchange reviews on different sites is one way to compare a variety of platforms for their pros and cons.
There are also a number of crypto forums, and websites run by experts or enthusiasts in this field. Searching for websites that have impartial advice is usually the best option, and forums can open up a wealth of knowledge.
Social media pages abound for the topic of crypto too. You will just need to know how to separate the wheat from the chaff.
What should a good cryptocurrency exchange have?
Reviews and comparisons can only take you so far though. Perhaps they will help you make a shortlist of platforms and exchanges you would like to explore. But, the bottom line is that a good crypto exchange should have certain features and attributes.
You will have noticed that this article is about cryptocurrency exchanges, not specifically ones aimed at bitcoin. So, one of the things to look for in a good exchange is what cryptocurrencies they handle.
Many crypto exchanges are limited to which currencies they allow their members to trade in.
Another aspect worth considering is the fees that you will incur. What are the trading fees that you incur on the platform, and are there any withdrawal fees, and if so, how much are they? Are there fees for dormant accounts, or monthly membership fees? With so many exchanges to choose from, you will find that they all handle their fees differently.
Something else that is critical when making your list of qualifying criteria, is security. Is your money going to be safe, or in this case, your crypto?
Is it safe to use a crypto exchange?
Recently, Netflix gained a new hit with its documentary based on cryptocurrency fraud and mystery. Trust No One: The Hunt for the Crypto King showed how even the biggest, and seemingly reputable exchanges could go wrong. Fortunately, this was an extreme example.
However, just recently in March of this year, Ronin announced that hackers had made off with $500 million in cryptocurrency from their networks. This is one of the largest crypto heists ever and was done by stealing the private keys needed for access. While Ronin is not an exchange, it does show that while keys may not be able to be cracked easily, they can always be stolen.
All crypto exchanges, though, use high-grade encryption and other methods of authentication to stop unauthorized access. When looking for a new crypto exchange look for one that offers insurance, 2-factor authentication, and cold storage. Ideally, you could find one like Coinbase that uses FDIC-insured bank accounts to hold balances.
What are the risks with crypto exchanges?
If you choose a weak exchange then you may be more susceptible to losing your money in a hack. When you store your fiat currency in an FDIC-insured bank account, your cash is safe against the bank’s potential failure or theft.
Bitcoin and other crypto exchanges cannot use this type of insurance to protect members’ assets. However, some smart exchanges are now holding their client’s USD balances in FDIC-insured banks to protect them against possible breaches.
The risk with holding your crypto in hot wallets, or hot storage, is that if there was a hack, you could lose everything to a cybercriminal. Cold storage protects your crypto as it is offline.
Another risk is that potentially if a crypto exchange went under and failed, you could again lose all your investments.
Can you still make money with crypto?
Of course, if you’re looking into how to choose a cryptocurrency exchange, then you surely want to make a profit. Right now, everyone wants to know how to make money with cryptocurrency, and millions wish they started years ago.
The boat does seem to have sailed in some ways on bitcoin, but perhaps not. The volatility of the coin means that there are still good opportunities to jump in when it drops, and then sit back for a long-term goal – hopefully, that $100,000 target.
Then there are the other options. Ethereum has become very popular recently, especially through its links with NFTs.
The popularity of investing in crypto has definitely not waned, and with many people speculating on small amounts, and others looking for large, long-term investments, there is plenty of growth potential still. As bitcoin becomes more limited, the value can only be expected to be pushed up, but time will tell.
Will a crypto exchange offer advice on trading or just facilitate trades?
Something else to consider for a newbie to crypto is gaining trading advice. Typically you can’t expect to receive that much help on your trades from an exchange. But, there are some that pride themselves in offering assistance.
There is something known as social trading or social investment. One well-known platform, eToro, has this feature. This allows users to gain advice from their peers, and even indulge in copy trading.
When asking, what is the best website for cryptocurrency for beginners? It may be one that allows social trading so that a newcomer can get help and tips from those more experienced.
Summary
First and foremost, the thing to look for in a crypto exchange is security. Without this, you cannot possibly trade comfortably or feel happy about leaving your assets in an exchange. Cold storage is the perfect way to hold the majority of your crypto safely, but you will also want to keep some hot for quick trades and sales.
Look for good customer service, and check out the customer satisfaction levels too. Then look at the fees that you will incur, and importantly, do they handle the crypto that you want to trade in.
Trading in crypto can be fun, and it can be profitable, but trade carefully and don’t chase losses. Perhaps, you will find your portfolio growing with some shrewd moves and the right exchange.
