How to choose the right crypto exchange
The cryptocurrency market has exploded into unchartered territory. Major financial institutions are jumping onboard and mainstream adoption is occurring right before our eyes.
If you’re looking to invest in cryptocurrency, you’re not alone. First, you’ll need to sign up to a cryptocurrency exchange, but there’s an abundance of choices and only a few will suit your individual trading needs.
Online crypto exchanges come with a significant variation in asset prices, fees, coins offered and overall user-friendliness, so choosing the right exchange is crucial to starting your crypto journey off right!
Doing some research and getting clear on what kind of trading you will be doing before committing to an exchange is well worth the time. Unnecessarily high fees can hurt in the long run and a good user-interface will make the whole experience a lot more enjoyable and easy-to-understand.
What is a cryptocurrency exchange?
It’s the most common method of buying, selling and storing cryptocurrency. An online exchange essentially connects buyers and sellers of cryptocurrencies, allowing you to trade and store your crypto all in one place.
How to choose the right exchange for you
First things first – ask yourself: What is most important to me?
- Simplicity and user-friendliness
- A wide selection of cryptocurrencies
- Low fees and good asset prices
- Platform authenticity and security
- Reliable customer support
- Advanced trading features
- Or all of the above!
To begin answering this question, knowing roughly the kind of trading you will be doing is key. Check out our simple article on which crypto investing strategy is for you.
New to the game? Simplicity & user-interface is probably at the top of the list!
Looking to trade long-term and don’t want to pay more than you have to? Find the exchange with the lowest fees!
Want to do margin/leverage trading? Select an exchange that offers all the bells and whistles!
So, here are the main things to consider when choosing a cryptocurrency exchange:
- 2-factor verification (2FA) – a great first step to avoiding any password hacking!
- A KYC (know your customer) policy. This helps maintain the integrity of the platform, and is now a legal requirement for most exchanges in Australia
- A storage system that puts the majority of assets in cold, offline storage
- A web address that starts with https (NOT http)
- Sophisticated multi-layered security that is regularly updated to deal with the latest threats and hacks
- Regular security reviews and criminal background checks of employees
- Full transparency of their location and the people who run the company
Note: Most exchanges also provide you with an online wallet where you can store your cryptocurrency. However, if you are dealing with large sums of money, we recommend considering moving at least a portion of your assets off the exchange and into cold, offline storage. Click to learn more about crypto wallets.
For a long time, buying and selling crypto was complicated and confusing, but not anymore. One of the major benefits of using a crypto exchange is that the process of trading is made super easy… depending on which exchange you choose of course!
While more experienced traders want all the advanced trading features, the vast majority of people are just after a simple way to buy and sell crypto that is safe and stress-free.
So, for a trading experience that won’t leave you feeling lost and confused, make sure the exchange offers:
- A clean, easy-to-read display of the market and your assets
- A design that emphasises simplicity over offering every chart, metric and feature out there (often making trading crypto way harder than it needs to be)
- Easy-to-digest educational content that will help you understand what you’re doing and how to make the best trades possible
- A free, personal wallet (kept on the exchange) upon sign up
- A few useful trading features such as recurring buys/dollar-cost-averaging, price alerts or the ability to pay your bills with Bitcoin (which is becoming very popular in Australia!)
- A desktop and mobile app that makes trading easy and enjoyable
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Fees & charges (IMPORTANT!)
In the world of crypto, never gloss over the fees!
Most people invest in cryptocurrency to turn a profit so, naturally, paying the lowest fees is of high importance. Exchanges make their money off their fees and while you might not expect it, they can vary immensely!
Unfortunately, many exchanges aren’t so upfront about their fee structure (despite claiming to be), so you may have to do a bit of digging as the hidden fee is all too common in the world of crypto. Here’s some important things to know about fees & charges:
- Certain exchanges advertise that they charge no fees only to take their cut from hidden currency conversion fees, spreads, or by listing coins at comparatively high prices!
- Prioritise exchanges that have ‘instant orders’ and that ‘lock-in’ your trades (also called guaranteed pricing or quotes). This means that the price you see is the price you get.
- Beware! Some exchanges don’t allow you to trade directly with AUD. That means that whenever you deposit money or buy an asset, you will be required to convert your AUD to BTC or USD. This usually means they’ll charge a (potentially hidden) currency conversion fee (when converting AUD to USD or BTC) and then another fee when you use that USD or BTC to purchase any altcoin you might be after. That’s double the fees of an exchange that lets you buy direct with AUD!
- Trading fees vary across different exchanges and can make a significant difference in the long run. Here’s a handy, no-nonsense fee comparison table we put together, lining up some of the most popular exchanges against each other.
Customer-support & Company Authenticity
No one thinks about customer support until they need it. Then it becomes a nightmare. Given that crypto is a whole new ball game for most people, it’s likely you’ll want to contact someone at the exchange at some point.
That being said, prioritise exchanges that offer:
- Personalised & responsive customer support from the country you are in!
- An emphasis on crypto education and getting you crypto-savvy before you dive in
- Transparency of staff, company location and the members of its team
- Team members who are active in crypto forums, Facebook groups and local crypto events
If you’re ever in doubt, don’t be afraid to contact an exchanges’ customer-support, look for user testimonials, or sign up and try out a few exchanges before committing to one. An exchange with good customer support will answer your questions and get back to you in no time! Test them out before you sign up if it gives you some peace of mind!
Number of coins on offer
You may have realised, but it’s not all about Bitcoin anymore. Coins like Ethereum, Cardano, Chainlink, Litecoin, Polkadot, Ripple and many more are getting some serious attention from institutions and retail investors alike.
If you’re after crypto’s infamous 10-1000X gains, then you’ll want a good selection of small, mid and large cap altcoins to choose from. Bitcoin, after all, is just a form of digital money – there are plenty of altcoins with far more innovative and exciting functions, and it’s becoming hard to imagine a future where at least some of these up and comers do not play some role in everyday life.
It is no secret that many altcoins can be risky and volatile investments, but with the amount of innovation that is occurring within this sector, buying into some of the bold new projects can be an extremely lucrative strategy.
If you’re after more coins that just Bitcoin and Ethereum, you’ll want to find an exchange that offers at least a few hundred coins!
Location of the exchange
Regardless of where you’re from, choosing an exchange based in the country you live in has its advantages. Some of the things having a local exchange can make easier include:
- Staying up to date with legal and regulatory changes
- Doing your crypto taxes at the end of the year
- Having access to high-quality and reliable customer support
- Buying crypto direct with your country’s currency
Despite the benefits of choosing a local exchange, some traders do still use international exchanges – there are some coins and features your country’s exchanges won’t provide, and it’s not uncommon to have accounts on both local and international exchanges. While this isn’t a major problem, just keep in mind there can be some extra legwork/drawbacks if you’re living in Australia.
Spreads & Liquidity
Spreads and liquidity might not mean much to you if you’re a beginner, but if you plan on being a serious/semi-serious crypto trader you should pay them some attention.
Spreads are another way you can be charged fees that are not stated upfront. It refers to the difference between the quoted buy and sell price on any given exchange.
Having tighter or better spreads (a smaller difference between the buy/sell price) is advantageous in several ways and will help you keep your profits and minimise your fees/losses when trading. Spreads are important as they affect every trade you make and, unfortunately, they are often not stated upfront. You can find a simple breakdown of spreads on our fee comparison table.
Don’t fret this if you’re a beginner, but the liquidity on an exchange is another thing to keep it mind.
Basically, liquidity makes it easier to complete transactions faster and without so much price volatility.
- The higher the trading volume is, the more ‘liquid’ an exchange (or an asset) is, making it easier to buy/sell when you want to
- Look for exchanges that offer ‘locked-in trades’, ‘guaranteed quotes’ or ‘guaranteed pricing’ – this means the price you see is the price you get!
- Liquidity can be an important factor, especially if you’re a serious trader – if you’re just starting out don’t worry about it too much right now – just focus on getting an exchange with low fees and a simple user-experience
Verification, wait times & method of purchase
There’s nothing more frustrating than clunky, drawn out verification processes. While verification (KYC) and biometric facial recognition are important to maintaining the security of the exchange and your funds, most people want as fast a verification process as possible.
While initial deposits of AUD/USD can often take up to 24 hours, the actual verification process should be thorough while not taking up too much time.
Additionally, instant withdrawals and deposits are something most traders are after. Look for exchanges that offer ‘instant trading’ and free, instant AUD deposits.
Many companies have transitioned to PayID/Osko payments as their preferred deposit method, and it has proven to be a secure, easy and free way to deposit money into your trading account. Some exchanges also offer deposits by bank transfer, POLi, or credit and debit cards.
We hope this guide on how to choose the right cryptocurrency exchange has given you a bit of clarity as you begin your crypto journey. Exchanges vary quite a bit so it’s worth the time choosing the one that’s going to suit your trading needs.
If you weren’t already aware, we run a cryptocurrency exchange of our own. And we’re pretty damn proud of it.
At Digital Surge, we believe crypto is the finance of the future. Which is why we’ve created Crypto Simple, a Crypto Education Hub that demystifies cryptocurrency, giving everyday people like yourself the knowledge they need to make the most of this exciting new resource.
Join us for some easy-to-digest crypto lessons that will have you making the most profitable trades from Day 1. Feel free to shop around and see what some other exchanges have to offer – we’ll be here when you see who’s offering the best overall value! (Spoiler alert: it’s us.)
We hope to see you around!
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