From banks to ordinary investors, more and more people are becoming interested in cryptocurrency today. To participate in the action, you’ll need an account on a crypto exchange that allows you to buy and sell digital currencies such as Bitcoin, Ethereum and Dogecoin.
To assist you in choosing the best account to meet your requirements, Forbes Advisor combed through the most popular platforms to find the top crypto exchanges that are available currently.
Methodology
Forbes Advisor reviewed the top 10 central cryptocurrency exchanges at CoinMarketCap.com based on their website traffic and liquidity, trading volume and accessibility to U.S.-based customers.
We have gathered over 20 points of data for each exchange to evaluate the most important aspects, such as the kinds of crypto currencies available, charges, cybersecurity features, per the crypto Exchange Security Rating Agency CER.live–user reviews and educational resources, in addition to.
To establish the rankings of the exchanges listed, Forbes Advisor weighted each data point according to their significance to various types of crypto investors. All analysis, data and ranking were conducted by Forbes Advisor on their own in May 2021.
What is a Crypto Exchange and How Does It Function?
A cryptocurrency exchange is a place which allows you to purchase and sell cryptocurrency like Bitcoin, Ether or Dogecoin. The cryptocurrency exchanges function as other trading platforms you might be familiar with. They offer accounts through which you can make various order types that allow you to buy and sell, as well as speculate on the cryptocurrency market.
Some exchanges have advanced trading options like Margin accounts or futures-based trading however, they are not as widely accessible for U.S.-based users. Some have features like crypto staking and crypto loans, which allow the user to gain interest for your crypto assets. The top exchanges provide education programs to keep you up-to the latest on everything cryptocurrency.
Different types of crypto exchanges
In general, there are two kinds of cryptocurrency exchanges: centralized exchanges and decentralized exchanges. Each kind has its own pros and pros and.
Centralized Exchanges
Centralized cryptocurrency exchanges (CEX) are run by one company. Centralized exchanges help to begin trading because they allow users to exchange their fiat currency like dollars, straight into cryptocurrency. The majority of cryptocurrency transactions are conducted through central exchanges.
Certain crypto enthusiasts are against centralized exchanges as they are incompatible with the decentralization ethos of cryptocurrency. And, in the view of certain crypto enthusiasts the organization or business may require that users adhere to “Know Your Customer” (KYC) rules. The rules require that each user reveal their identity, just like when applying for an account at a bank to stop the fraud and laundering of money.
There’s a second issue in central exchanges which is hacking. When you use the CEX exchange, the exchange is able to hold the cryptocurrency traded on its platform, at least in the short-term, but transactions are processed, increasing the chance of hackers taking assets.
To mitigate this risk central crypto exchanges have stepped up their security in the last few years. In addition to other measures that they have adopted, they are now storing the majority of customers’ assets in a secure location and also take insurance policies to compensate any losses incurred by crypto in the event of hackers.
If you are a fan of the convenience of a central exchange, you can lower the risk of transferring your crypto into a separate cold or hot wallet.
Decentralized Exchanges
The decentralized cryptocurrency exchanges (DEX) assign the responsibility of facilitating and confirming cryptocurrency trades. Anyone who wants to join an DEX network is able to certify transactions in the same method that crypto blockchains operate. This can help improve transparency and accountability and also ensure that the exchange will continue to function regardless of the status of the company that started it.
The problem lies in the fact that decentralized exchanges tend to be less user-friendly not just in terms of interface but also when it comes to exchange rates. Decentralized exchanges, for example, aren’t always able to allow customers to deposit dollars and then exchange them in crypto. This means you’ll need to already have crypto in your wallet or utilize a centralized exchange to obtain crypto you can then use to access the DEX.
It is also possible to engage directly with peers in trades. It could take longer to find someone willing to purchase what you’re selling and when liquidity isn’t high it could be necessary to compromise on the price of buying or selling the cryptocurrency in a short time.
Crypto Exchange Fees
You are charged two types of charges when buying or selling cryptocurrency charges for trading and withdrawal fees.
Trading Fees
The fees for trading can be billed in a fixed percentage of the amount you purchase or sell or exchanges may differ between orders that are made and those which are takers, and charge different percentages in accordance with.
At the simplest basis, makers are orders that increase liquidity on an exchange. This means they are not able to complete standing orders. Takers remove liquidity from exchanges by fulfilling orders waiting for trades. Based on the exchange, the maker’s fees are typically lower than taker fees but this isn’t always the scenario.
If you’re looking to select an exchange that offers the lowest cost, focusing too much on the particulars of taker and maker charges can prove counterproductive. This is because you don’t have the option of choosing the order to be processed as a taker or a taker. It’s better taking a look at the overall costs and discounts that are available when trading a specific amount every month or using an account with the native currency of an exchange.
Important note: Certain crypto investment platforms claim that they don’t charge any charges, however this isn’t 100% correct. Instead of charging an all-inclusive fee, they charge spreads, which is the difference between the rates they charge when they purchase or sell crypto. Spreads can, and usually end becoming much more costly than if you pay the percentage fee for trading.
Charges for withdrawing
A lot of exchanges charge fees to withdraw money from their platforms. This could be a problem when you want to transfer your crypto into a secure third-party wallet , or to an alternative exchange. The fees for withdrawals are typically different according to the cryptocurrency.
If you plan to transfer your cryptocurrency from an exchange, select a platform that permits the use of a certain number of withdrawals that are fee-free, such as Gemini.
Other Fees
If you use more sophisticated trading strategies such as margin trading there are additional charges for borrowing money. Exchanges that are beginner-friendly such as Coinbase and Gemini have features for quick purchases which charge more fees. They can be avoided by learning how to purchase and sell through a trade platform.
If you purchase items using the credit or debit card, you might be charged a higher rate by both the exchange as well as the card’s issuer. It is a reason to purchase crypto using wire transfers or cash.
