5 Tips to Help You Choose a Trustworthy Crypto Exchange
Since the beginning of the year, many crypto enthusiasts have turned to cryptocurrency exchanges as a way to purchase their first digital coins. With so many options available online, the decision of which exchange to use can be difficult, but there are some steps you can take to help reduce your risk and choose a trustworthy crypto exchange. Here’s how to do it.
1) Research the team behind the exchange
It’s important to research the team behind the crypto exchange before you sign up. The team is essentially an extension of your own business and will shape how your experience as a customer goes. To find out more, head over to their website and check out the news articles about them on Google News. Do they have any social media accounts? Check for reviews on Facebook, Twitter, LinkedIn and YouTube for more insight into the people running the crypto exchange. If there are no social media accounts or reviews available, be wary because it may mean that the crypto exchange has something to hide. If possible, contact the company using their provided email address and request information about what the team does in person so you can get a better idea of who is involved with it.
2) Check the security features of the exchange
Be sure the crypto exchange you choose has good security features. You should always be able to see them on the homepage of the website, or in the About Us section of the company profile. If there are no security features listed, it could mean that they don’t have any. It’s also important to check how long they have been around and what the reviews say about their service. If an exchange doesn’t list information about its security features on its site, then this is not a good sign. The best way to find out if an exchange is secure is by reading third party reviews and checking out forums like Reddit. Most exchanges will have Two-Factor Authentication (2FA), Google Authentication and KYC verification. Know-your-customer (KYC) procedures identify and confirm that a customer is who they say they are. Exchanges are also starting to complete a SOC 1 Type 2 exam, SOC 2 Type 2 exam, and earn an ISO 27001 certification.
3) Consider the fees charged by the exchange
Crypto exchanges charge various fees for the services they provide. Some of these include: trading fees, withdrawal fees, deposit fees, coin listing and hosting fees. The crypto exchange you choose should be transparent about their fee structure so that you can factor this into your decision. If an exchange has more than one category of transaction, they should disclose what those categories are and what the associated fees are. It is also important to compare rates among different crypto exchanges to make sure you are getting the best deal.
4) Look at the liquidity of the exchange
Liquidity is the degree of how quickly an asset can be converted into cash. The higher the liquidity, the more easily an asset can be converted into cash. Liquidity is important for crypto exchanges because it determines the speed with which you will be able to withdraw your assets from the exchange and convert them into cash. For example, if the trustworthy crypto exchange has high liquidity then its very easy for people to sell their crypto coins at their true value and withdraw the fiat currency they need in order to pay their rent or make other payments that may require cash. On the other hand, crypto exchanges with low liquidity may have difficulty converting cryptocurrency back into cash due to a lack of buyers. In this case, the exchange would have to hold on to your money for some time before there is enough interest in buying crypto coins that match what you are selling.
5) Read user reviews of the exchange
When choosing a trustworthy crypto exchange, it’s important to find one with a good reputation. Ideally, you want an exchange that is popular and widely used so that there are plenty of reviews available for you to read. Other factors include:
* Fees – Does the exchange charge low fees for transactions?
* Security – Is the exchange safe and does it have measures in place like two-factor authentication and security checks? * Liquidity – How much trading volume does the trustworthy crypto exchange have, which indicates how many people use it? An active and liquid market will give you better prices than an inactive one.
* Country location – Where is the crypto exchange based in? You may be able to access different markets depending on where your chosen crypto exchange operates from.
For example, if it’s based in America then you can trade BTC or LTC against USD. However, if the crypto exchange operates out of South Korea then you can trade coins like ETH or IOTA against KRW (South Korean won).
It’s also important to remember that many crypto exchanges do not allow users to buy crypto using fiat currency, such as GBP or EUR. If this is what you need, then check out Coinbase or Kucoin instead.
Take a look at our Top 5 Crypto Exchanges for 2022!