Finding The Right Cryptocurrency Exchange
Cryptocurrency and its underlying blockchain technology have been in the news for a while now, so you might be wondering whether you should look into acquiring some. If you decide to take the plunge, one of the first things you'll need to do is figure out which crypto exchange you want to use. An "exchange" is the company that you want to use to facilitate your crypto trades.
In general, a good exchange offers a beginner-friendly interface, transparent pricing, and deals with all of the coins you're interested in. Readily-available customer support and the option to hold your tokens in offline cold storage (where they can't possibly be hacked) are also considered pluses by most experts. The list below highlights six of the best cryptocurrency exchanges, each suited for a different type of investor.
CoinBase is often recommended to beginners because it supports bank and credit card transactions, offers an intuitive interface, and allows you to send withdrawals directly to your bank or PayPal account. It is also one of the few crypto exchanges to offer FDIC insurance, so you're protected in the unlikely event of a hack.
One of the knocks on CoinBase has traditionally been a paucity of investing options, but the platform now supports Bitcoin, Ethereum, Litecoin, Bitcoin Cash, USD Coin, and nine other tokens. If you're looking for even more options, the company offers a separate exchange called CoinBase Pro with a larger selection and the same level of insurance.
All of these conveniences come with a price, as CoinBase charges 1.49% on all bank transactions and a whopping 3.99% if you fund your account with a credit card. Strict spending caps are also in place, so you can't invest thousands of dollars at once the way you can on other platforms. Still, this is a great platform for beginners and conservative investors who want the added security of knowing that their digital assets are insured.
Gemini's claim to fame is cheap fees, as each trade only costs an average of a quarter of one percentage point. There are no fees to deposit or withdraw from your account, and you may link a bank account to fund your purchases. You can also start trading before your initial deposit clears if you really like a current price, though you can't cash out until it does. Assets are insured against loss by a global consortium of underwriters, providing security as well.
Like CoinBase, one of the biggest disadvantages of Gemini used to be the relatively low number of tokens you could choose from. This is no longer the case, as Bitcoin, Ethereum, Litecoin, Bitcoin Cash, Z-Cash, and a "Gemini Dollar" pegged to the U.S. dollar are all available on the platform.
That said, Gemini's selection is still lacking compared to many of the other options below. There is also a $500 weekly spending cap in place, limiting how much you can spend. Gemini offers web and app trades as well, though these incur a variable "convenience fee" in addition to what you would normally be charged. The price displayed is always the price you pay, so the fee structure remains transparent if complex.
Bittrex is designed for more advanced cryptocurrency traders. There is no option to convert fiat currency to digital assets, so you'll need to acquire assets on another exchange and then transfer them to Bittrex to do anything. It's also structured as a Forex exchange, which can be intimidating for investors who aren't accustomed to the stock market.
On the bright side, Bittrex uses a pricing structure that charges based on your specific trading pair that usually ends up being relatively cheap. The platform also supports over 190 different tokens, so anything you might want to invest in is probably here.
BitStamp is sometimes described as the European CoinBase, though it deals in USD and accepts American customers as well. There are no deposit fees if you fund your account with a European SEPA account, and it's reasonable even if you don't. All withdrawals are subject to a flat fee of 0.90 EUR, and all other fees are generally affordable. BitStamp also stores most digital assets in cold storage, protecting them from hackers.
BitStamp offers the following cryptocurrencies: Bitcoin, Ethereum, Ripple, Litecoin, and Bitcoin Cash. BitStamp also has a mobile app that allows you to trade on the go, though you may be subjected to a convenience fee if you choose to do so. You can also fund your account with a credit card, but doing so is not recommended because you incur a transaction fee of 5-8 percent.
Kraken is somewhere in between the accessibility of CoinBase and the complexity of Bittrex. You can link a bank account and fund your transactions using fiat currency, so you don't need to open a separate account elsewhere to get started. That said, most trades are conducted in Forex-style trading pairs, with advanced options such as stop limits, leverage trades, and conditional closes available to seasoned investors.
Kraken offers 20 different tokens, including Bitcoin, Ethereum, Dogecoin, Dash, and Ripple. However, the currency you plan to use (either fiat or crypto) can adversely impact your selection. Fees also vary according to your trading pair and your volume, though the average of about 0.36 percent isn't too steep.
Your initial deposit must clear before you can start trading, a process that takes anywhere from 1-5 days. There is currently no way to lock in current pricing while waiting for your funds to clear, limiting investors interested in making an immediate transaction.
Changelly is a somewhat different cryptocurrency exchange in that you specify your trading pair and then a bot automatically scours other exchanges to get the best possible price, executing it as soon as it finishes its virtual homework. Shopping around can help you get a good deal, but the crypto space is dynamic enough that the 5-30 minute transaction time could change your order substantially from what you thought you were getting. You are also responsible for any blockchain processing fees.
Changelly charges a flat 0.5% per trade, making it middle of the road in terms of price. You may exchange Bitcoin for a variety of other tokens, including Ethereum, Ripple, Z-Cash, Monero, and Dogecoin.
Changelly also caps new customers at $50 their first trade, allows $100 four days later, and $500 a week after their initial deposit. These spending caps are abolished once you've been on the site for a month, so they serve only to prevent novices from getting in over their heads.
Do you know which exchange above is the best fit for your needs? Crypto can be an exciting space, but only if you make the most of the tools available to you.