Cryptocurrency exchanges are the gateways to the digital asset economy, offering a marketplace where users can buy, sell, and trade tokens and coins freely. With hundreds of exchanges to choose from, finding the right one can be overwhelming, especially for novice traders. In this article, we will guide you through key attributes to weight when selecting the right exchange platform.
*Please note that we only mention factors for centralised exchanges, which are exchanges oversight by a business firm.
1. Supported assets
If you are looking to buy cryptocurrencies other than the “digital gold” Bitcoin, you need to consider the list of supported assets before deciding on an exchange. While major exchanges like CoinSpot, Binance, or Coinbase offer a wide range of tokens and coins, some exchanges may specialise in altcoins or focus heavily on BRC-20 or ERC-20 standard tokens.
Moreover, make sure your platform allows for fiat deposits and withdrawals in your local currency if you plan to fund your account or cash out in fiat currency. For example, the Aussies might find CoinSpot a better choice compared to Binance Australia when it comes to AUD deposits and withdrawals.
2. Payment methods
The range of payment methods an exchange supports can impact how quickly and easily you can fund your account or buy digital assets directly.
Look for exchanges that provide a handful of ways to fund your account, such as bank transfers or credit and debit cards.
You can find these payment methods on the exchanges’ websites or try searching for exchanges’ reviews, such as “CoinSpot review Australia”, or “CoinSpot and Binance Australia comparison”. Please refer to trusted publishers.
- Fees
Fees can be a determining factor in assessing which exchange platform is the best for you. Different exchanges implement different fee structures to make sure that they meet their target customers. Typically, traders pay attention to two types of fees:
- Deposit and Withdrawal Fees: These fees are incurred when you fund your account and withdraw assets. They can vary depending on the payment method you opt for.
- Trading Fees: These are usually charged as a percentage of each transaction and are either “maker” or “taker” fees based on whether you provide liquidity to the market. Some exchanges employ the same fee policy for both sorts of traders.
Practically, fees can eat into your profits, so it’s essential to understand the cost structure of each exchange. For example, Coinbase’s fee structure is very complicated. There is no specific rate for any trading activity, except for the staking option (which takes 25% commission based on your rewards if you go with ETH).
The “spread and Coinbase fees” make the exchange not as transparent as it states. Fees can vary dramatically depending on how much you trade, market conditions, jurisdictional location, asset, payment method, and other costs. When you place simple buy and sell orders, Coinbase includes a spread in the quoted price. The spread is also included in the exchange rate when converting from one cryptocurrency to another.
3. Security
Security should be your priority when choosing a cryptocurrency exchange. A robust security infrastructure protects your assets from being stolen from cyber breaches and other malicious activities.
A simple thought is to seriously evaluate security measures that ever-exploited exchanges employ or just avoid these exchanges completely. This is true but not enough. Pay attention to attributes such as regulation (whether the exchange complies with local or international laws), multi-layer measures (for instance, two-factor authentication), and cold storage & insurance.
4. Liquidity
Liquidity is the efficiency or ease with which an asset or security can be converted into ready cash without affecting its market price. High liquidity reduces price slippage and ensures that your trades are executed at or near your expected rate. You can weight some key elements such as:
- Market Depth: Evaluate the exchange’s order books to see if there is sufficient liquidity for your preferred trading pairs.
- Trading Volume: Usually, a platform with high trading volumes will offer better liquidity and narrow bid-ask spreads.
5. User Experience – Customer service
If you browse through review sites like productreview.com or trustpilot.com, you’ll see a lot of the complaints are about customer support and experience navigating on exchanges.
When things go wrong, efficient and responsive customer support is crucial. Luckily, you can test this feature by prompting a mock issue and reaching out to the exchange’s support team to evaluate how well they handle user queries.
Some exchanges offer multiple support channels, including live chat, email, and a help centre, like CoinSpot (You can refer to the CoinSpot review for better understanding). Others, such as CoinJar, do not support live chat, and users need to reach out to the team through email.
6. Advanced trading tools
For experienced traders, additional features such as advanced charting tools, margin trading, futures, or staking can make a big difference in your trading strategy. Conversely, those who first foray into the crypto sphere would want to opt for a platform that focuses on fundamental trading options, with some mid-level tools so that they can practise and learn the most. Beginners and intermediate traders can select an exchange that strikes a balance by offering basic and mid-level tools such as CoinSpot.
