Cryptocurrency – Where to buy and exchange cryptocurrencies

In recent years there has been a growing interest in the world of cryptocurrencies. This interest is easily explained by the astronomical rise in the value of cryptocurrencies that makes them one of the highest yielding instruments on average, well above the stock market.

To enter this market they first need to exchange so-called fiat currencies, or FIAT, such as the Euro(EUR) or the British Pound(GBP) for cryptocurrencies. And to do this they need to use an exchange entity, better known as an exchange.

What is an Exchange?

This term can be attributed to the exchange entities, but also to the process. An exchange is an entity that allows us to exchange FIAT currency for cryptocurrencies, very similar to exchanges that allow us to exchange, for example, euros for dollars.

The said process simply consists of adding funds to your account and exchanging them for cryptocurrency, for example, Bitcoin. Or again, once you have exchanged to Bitcoin you can exchange Bitcoin for Ethereum or any other available cryptocurrency.

In this article, we are only referring to centralized exchanges, i.e. exchanges run by a central company, where the decision on how to operate that exchange is entirely up to the company.

Considerations

Thanks to the novelty that cryptocurrency markets represent, regulation for them has not yet been properly implemented or even considered. Consequently, the cases of scams or “disappearance” of capital are phenomena of some probability, although low.

So before you commit and deposit your capital in an exchange you should first take a few points into consideration:

  • Reputation/Reliability – Probably the most important factor, is the trust an exchange offers. You should do your own research to find out if they are in fact regulated entities or what kind of security they offer, such as two-factor authentication or where they keep private keys.
  • Fees – Whenever you purchase or even sell any cryptocurrency you are going to have to pay some sort of fee or spread, but that doesn’t stop you from looking for the best terms to do so. These fees may be percentages of your capital, so those who intend to invest large amounts have to keep these types of fees in mind.
  • Choice – There are numerous currencies other than Bitcoin, so if you are looking to buy other currencies it would be relatively important to investigate the different currencies the exchange allows you to buy.

Exchanges

In this section, we will give a short list of some exchanges that we consider to be trustworthy. It is worth remembering the importance of doing your own research, especially since we are only going to talk very superficially about these exchanges.

  • Coinbase – Probably the best known. It has, over the years, shown a high level of trust. It has millions of customers, it has great liquidity, and it is listed on the exchange. It has a very user-friendly interface, lowering the barrier to entry into the world. Its biggest drawback is the fact that it has high fees and does not control its own private keys.
  • Binance – Another well-known exchange, on par with Coinbase. It also offers great liquidity, a wide variety of cryptocurrencies, and fairly low transaction fees, which is especially beneficial for those who plan to trade cryptocurrencies. The downside of this platform is its greater complexity, as it is aimed at more advanced users. Of note, Binance was recently banned by UK regulators.
  • Kraken – Slightly less known in Europe, but demonstrates reliability. Like Coinbase, it has never suffered a hack and offers plenty of security, keeping 95% of its cryptocurrencies offline. In terms of ease of use, it lies between Binance and Coinbase and can be somewhat challenging for beginners. But unlike Coinbase, its fees are quite inexpensive.

Conclusion

The biggest difficulty for any beginner in the cryptocurrency markets is choosing an exchange something we hope to make easier with this article. We recommend that before you start investing you do some robust research, a frank weighing of the pros and cons listed here because the real stakeholders in the protection of our capital are ourselves.

It is also worth remembering that it is not a good idea to keep your cryptocurrencies in an exchange because the fact that they keep their users’ money centralized tends to be a bigger target than a single specific user. The ideal place to keep your cryptocurrencies is undoubtedly in a wallet where you have exclusive access to your seed phrase.

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