Success in working with digital assets directly depends on the crypto trading platform. It is important to find a reliable company with modern functionality. This will allow you to earn trading operations and receive passive income.
Importance Of Your Choice
Investing in cryptocurrency usually starts with choosing a trading platform. At this stage, it is important not to make a mistake – otherwise, you can lose all the funds allocated for working with digital assets.
Decide On Your Goals
What do you want to do on the exchange – trade or invest? Crypto exchanges are divided into centralized and decentralized.
CEXs
The centralized exchange operates as Internet service and controls the personal accounts of all users; there is often a requirement for identity verification.
Centralized exchanges have obligations to traders and investors to pay out profits on transactions with a trading deposit, but exchanges also charge a commission for transactions.
The most famous and largest centralized crypto exchanges you should pay attention to are Binance, Coinbase, FTX, and so on.
DEXs
Decentralized exchanges are technical platforms running on the blockchain, they only allow direct transactions between participants. At the same time, your personal data and assets are not stored anywhere and are not tied to anything. Some of the most popular in the crypto world are:
- Uniswap;
- PancakeSwap;
- Compound;
Here we have no controlling and auditing body in the form of an administration. Also, there is a higher risk of running into scammers: buy a fake smart contract – even Bitcoin is faked, or invest in a shitcoin, which may be behind the project – dummy. In both cases, the investor loses money and “drains” the trading deposit.
However, here you can also find a new interesting crypto asset, which can moon after a while and be recognized by centralized platforms.
Novice traders should pay attention to centralized platforms, while for investments, you can consider both a centralized and decentralized crypto trading platform.
Main Features Of A Reliable Exchange
The main criterion for choosing a trading platform is its reliability, but reliability alone is not enough for productive trading.
Now many exchanges provide advanced functionality, so it’s better to stay on a platform that will allow you to get the most out of your invested funds and earn on digital assets without even trading them.
Several factors affect the financial stability of the exchange:
- the number of users;
- the amount of money deposited by clients on the exchange;
- the total trading turnover;
- how long the exchange has been operating on the market
Below is a more detailed list of criteria to choose a suitable platform so as not to lose money.
Trading Volume
You can start searching for a crypto trading platform with services that aggregate data from the cryptocurrency market. For example, on coinmarketcap.com and coingecko.com, platforms can be sorted by trading volume.
As a rule, the higher this indicator, the more reliable the exchange. However, none of them can guarantee the complete safety of funds. Any site can be hacked by hackers or disappear with users’ money.
An exchange’s reliability directly depends on the size of the exchange: the larger the exchange in terms of trading volume, the more users trade on it, and the more stable it is. The financial stability of the exchange depends on its ability to fulfill its obligations.
Besides, it is important to check not only the presence of trading volume but also its reliability, since exchanges can overestimate this figure.
You can check the “cheat” if you go to the platform and open a trading pair with a little-known cryptocurrency. Unscrupulous exchanges can set up bots that will sell coins to themselves.
In this case, you can notice how, at intervals of several minutes, an order appears in the order book for a fraction of a second and immediately disappears. Or transactions appear in the history of trading that did not exist in reality.
Transparency And Regulation
It is important that the people behind the exchange are known and involved in communication with the community. If the trading platform is licensed by the country’s financial regulator, then this is definitely a “green light”.
Number Of Cryptocurrency Pairs
For beginners, the top ten cryptocurrencies are already enough – BTC, ETH, XRP, etc. They have high liquidity, which means there is less risk of sudden manipulations.
It is clear that the opportunity to earn 100% in one day on some little-known altcoin is very attractive, but it is better to gain experience on Bitcoin first.
However, seasoned investors should look for a more developed list of coins.
Working Conditions
It is also worth paying attention to the conditions for registering on the exchange, methods of depositing and withdrawing funds, and the list of payment partners in terms of their reliability and fame. Large payment services will not work with a site that has a dubious reputation.
Time Of Existence Of The Exchange
The longer the crypto trading platform exists, the lower the likelihood that its managers will disappear with users’ money. In addition, experience in the fight against fraud accumulated over the years will also play its role.
Platform’s Updates
The presence of fresh news, updates, and new products on the platform is a positive characteristic. This suggests that the exchange is set to develop business in the long term.
The Quality Of User Support
The work of technical support, the speed of responses, and the solution to problems can play a significant role in preventing fraud. Also, knowledgeable support staff will help rookie traders get used to the website/app faster.
What Instruments Should A Modern Crypto Exchange Provide?
Working with cryptocurrency is not only about trading. Indeed, the crypto industry isn’t as young as it was a few years ago. Today we have a wide variety of earning solutions.
Staking
You can earn on digital assets without making transactions with them. One option is to use staking-type products.
This feature is now offered by many crypto trading platforms. It allows you to passively increase the number of coins by simply storing them on the exchange. The annual yield of such an instrument can range from 1% to 15%, depending on the platform and cryptocurrency.
If an investor decides to invest in cryptocurrency with long-term goals, it will be more efficient to do this on an exchange that supports staking – in order to passively increase the number of coins and lock in more profits by the time of the sale.
Derivatives
In addition to cryptocurrencies themselves, professionals actively trade futures and options. These tools allow you to reduce the risks of spot trading but require mastery of rather complex strategies.
Thus, you can both earn and lose assets on crypto exchanges – it all depends on your trading experience and partly luck.
Therefore, you should carefully approach the choice of a platform for trading and investing: carefully study the conditions on the websites of crypto exchanges so that your assets are not blocked and the commission does not exceed the trading volume.
Of course, you should give preference to large, already proven crypto exchanges that have been on the market for several years, and trade under a thorough eye of experienced traders (if possible).
