Everyone is talking about cryptocurrency. When it comes to buying or selling them, there are a number of options (brokers, exchanges, wallets…) that can be confusing.
You need to understand what an exchange is before you can buy cryptocurrency. Below we explain everything:
What is a crypto exchange?
Exchanges are online platforms where you can trade, i.e. You can exchange cryptocurrencies for traditional currencies or other cryptocurrencies (EUR, USD GBP, AUD CAD JPY ,…).
Why should you know this information? You should consider the various options available to you if you’re thinking of buying cryptocurrency.
Which type of exchange is best for me?
Broker exchange
This exchange is similar to an airport bureau de change or an online shop. The company purchases the cryptocurrency and then sells it to users at the market price plus a small commission.
It is usually the cheapest option, but it’s also the easiest if you don’t know anything about trading. Coinbase, one of the most popular platforms using this model, is a good example.
Exchange houses “Traditional”
Investors prefer “traditional” exchanges. These are exchanges that provide a trading platform for traders to freely trade cryptocurrencies at the market price. In general, there is a commission charged on deposits, payment methods and balance disposal.
These platforms allow cryptocurrency to be traded with margin, and depending on the exchange can also be done on the basis other currencies like USD, EUR, etc. Kraken, Bitfinex, and Polonex are all examples of business models that use this model.
P2P Exchanges
Platforms which allow peer-to-peer trading of cryptocurrency, i.e. between peers. These exchanges allow you to sell or purchase currencies from individuals who don’t necessarily base their selling prices on the market value.
These exchanges usually charge a small handling fee for each transaction. Localbitcoins is one of the most popular.
Cryptocurrency Exchanges Fees
All cryptocurrency exchanges regardless of type act as intermediaries. You will be charged a fee at the end. What are the fees you will have to pay?
- Fees based on payment method: Exchanges don’t usually charge fees like this, but the person who issued the payment will. You will have to pay fees whether you’re buying cryptocurrency, depositing funds into your wallet, etc. You will also have to pay currency exchange fees, for example. When buying Bitcoins using Euros.
- The commissions earned for each transaction are the spreads or commissions. These commissions are calculated based on the volume of trades and can either be fixed or variable depending on market prices.
- When withdrawing funds, you may be charged two commissions. The first is based on the method of payment (if you want to withdraw the balances to your debit card, bank account, PayPal, or credit card). The second is for currency conversion (if you want to receive your Bitcoins, for instance, in USD or EUR).
Payment Methods
You can choose from a variety of payment methods when you buy cryptocurrencies or deposit your money at a cryptocurrency exchange:
Credit and/or debit card: Charges of up to 3% are usually charged for using a credit or debit card.
PayPal: Like card payments, it is also one of the most costly options. Fees are usually around 3-4 percent.
Bank transfer: is the most common and popular method, with a fee of around 1%.
Deposit in cryptocurrencies: If you want to purchase cryptocurrencies, then this is not the option for you. If you have digital currencies that you want to deposit in an exchange or exchange for other digital currencies, then you can do it with no commission.
5 factors for choosing the best Crypto Exchange
Available cryptocurrencies: Not all exchanges allow you to buy or trade all cryptos. For example, Bitstamp doesn’t offer Dash.
Fees and payment options: Costs vary greatly from exchange to exchange. You should check the fees that are charged depending on your payment method, including spreads and balance disposal. The payment method is important: if you want to purchase Bitcoins using your Visa card, an exchange that doesn’t accept credit cards is not worth it.
Security: A good exchange must offer liquidity and hold cryptocurrencies valued at more than a few hundreds of millions USD. The best platforms, on the other hand keep the majority of their funds offline (paper or USBs), to protect themselves from attacks.
Wallet? Yes or No?: Some exchanges, such as Coinbase, also provide a wallet service. You can purchase cryptocurrencies from your digital wallet, without having to register with an exchange.
Limits: Exchanges set limits for depositing and withdrawing balances. As with regular ATMs, they usually limit the amount that can be deposited or withdrawn in one go. The amounts are quite high (above $1000), but it all depends on what you need as an investor.
What are the best cryptocurrency exchanges for 2023?
1- Binance
Binance is the largest cryptocurrency exchange in the world and one of the biggest in China.
It was founded in the summer 2017 and has since managed to carve a niche amongst the giants in the industry. They offer trading in more than 100 crypto currencies, as well as security, liquidity and customer support in multiple languages.
With its own cryptocurrency, BNB (Binance Coin), you can also buy Bitcoin, Ethereum etc. Only if you have already purchased other cryptocurrencies. It comes with its own desktop and mobile app, as well as a wallet. This exchange is suitable for both novices and experienced traders, who can trade using margin.
2- Coinbase
Coinbase, the largest Bitcoin exchange in the world, operates in over 100 countries.
The platform was founded in 2012 in San Francisco, USA. Its enormous security guarantees (97% of funds stored offline: USBs or printed form) as well as its introduction of a Mobile Wallet have made it a star.
Coinbase allows you to buy and sell Bitcoins as well as some of the other most popular cryptocurrencies, including Ethereum, Litecoin, and Bitcoin Cash. Check the fees that you’ll have to pay based on the payment option you select.
3- Bitpanda
Fintech was founded in Vienna, Austria in 2014. It has become Europe’s main exchange for digital assets like Bitcoin, Ethereum, Litecoin, and more. For the moment, they only accept European clients.
This cryptocurrency exchange offers a variety of extra services, such as the Bitpanda Savings Service, which allows you to create your own savings plan using tokens, or Bitpanda Metals, where you can invest in precious metals like gold and silver. You can also get discounts by using your BEST token.
Bitpanda allows you to buy and sell all major cryptocurrencies, including Bitcoin Cash, Ethereum Classic Dash, litecoin Ripple etc. You can pay via SOFORT, Visa/MasterCard, Skrill/Neteller, Giropay/EPS, bank transfer, SEPA, Amazon redeemable vouchers, cryptocurrency wallet deposits.
4- Bitfinex
Bitfinex, a cryptocurrency exchange and trading platform, offers both spot cryptocurrency trading and buying as well as margin trading.
Bitfinex, a Hong Kong-based exchange founded in 2012, has successfully carved out a place for itself in the market thanks to the professional trading platform it offers and the low or zero commissions that are charged for cryptocurrency exchange.
Bitfinex allows you to trade and buy all major cryptocurrencies, including Bitcoin, Bitcoin Cash (Bitcoin Gold), Ethereum, Ethereum Classic Dash, litecoin Ripple Neo OmiseGo etc. You can only deposit in fiat currency or cryptocurrencies.
5- Liquid
Liquid, a Japanese exchange that was founded in 2014, has transacted $50 billion worth of transactions in the past few months. This makes it one the most popular and best exchanges.
Liquid allows you to buy up to 69 different tokens, including Bitcoin, Ethereum and Litecoin.
Liquid Pro is a mobile application (iOS or Android) which gives you access to the trading platform, and thus hundreds of coins. You can also link your wallet to this app.
6- Kriptomat
Kriptomat is a new service from Estonia that allows you to store, buy, and sell cryptocurrencies with your credit card. ).
This platform is designed to be simple for new users, who are looking to get their feet wet in the cryptocurrency world. You can easily create an account, and begin trading.
You can purchase and sell Bitcoins on Kriptomat, as well as Ethereum, Litecoin, and Bitcoin Cash, using credit/debit card, bank transfer, and cryptocurrency deposits.
7- Bitstamp
Bitstamp, the largest cryptocurrency exchange worldwide and in Europe, is one of the world’s most important. It has subsidiaries located in the United Kingdom and Luxembourg.
Founded in 2011, the exchange is a major player in the industry. It, along with Coinbase, makes up the “Big Four”, which are the four exchanges who determine the Bitcoin price in the CoinDesk Bitcoin Price Index.
Bistamp allows you to buy Bitcoin, Ripple Litecoin, and Ethereum via bank transfer, SEPA credit card, or cryptocurrency deposit. It has a lot of interesting features, even though it doesn’t have its own wallet.
8- Cex.io
The English Cryptocurrency Exchange was founded in 2013, and it is based in London. It offers services worldwide, but especially in the United States.
Cex.io does not offer a wallet but it offers an online interface as well as a mobile application. It has the lowest fees on deposits and withdrawals, except for bank transfers.
Cex.io allows you to buy popular cryptocurrencies such as BTC, DASH, ETH, XRP, ZEC, BCH, BTG, LTC, XLM, TRX, BTT, MHC using fiat currency: USD, EUR, RUB, GBP. You can do this via credit or debit cards, bank transfers, or cryptocurrency deposits.
9- Kraken
Kraken is one of the oldest and most reputable cryptocurrency exchanges to buy and trade Bitcoin and other cryptocurrencies.
Kraken, a regulated and secure exchange founded in 2011, is based in San Francisco in the USA. European banks and governments have entrusted it with their trust (e.g. The Japanese government has recognized Kraken as a safe and regulated exchange. The platform provides traders with a variety of tools, including investment management, execution speed, liquidity and more. ).
Kraken allows you to trade 16 different cryptocurrencies including Bitcoin, Ether Classic (Ether), Litecoin Cash, Ripple Dash, Dogecoin and more. You can also exchange these currencies for the most popular ones on the market, such as USD, EUR GBP JPY and CAD.
10- Poloniex
Poloniex, the largest cryptocurrency exchange in the United States, is the most popular place to trade cryptocurrency.
Poloniex, a cryptocurrency exchange based in the United States and founded in 2014, allows both the trading of cryptocurrencies on margin as well as the exchange. Be careful! It is not a good exchange for beginners because you can only deposit in cryptocurrency.
Poloniex offers a wide range of trading options, with more than 40 different cryptocurrencies available, such as Bitcoin, Ethereum Litecoin Monero Ripple Bitshares.
We hope this article has been useful for you to understand how cryptocurrency exchanges work, what are the best options and the most important factors to take into account when choosing a crypto exchange to exchange cryptocurrencies for traditional currencies or other cryptos.