Find the top cryptocurrency exchanges
On Financer.com, we love cryptocurrency. Today, we’re going to help you get started and find you the best cryptocurrency exchanges on the market.
In the comparison above, you’ll find our selection of the top cryptocurrency platforms based on our review.
A cryptocurrency exchange is an online platform where users can buy and sell digital currency and other assets. In many ways, they are similar to stock exchanges.
It’s fairly easy to begin trading on cryptocurrency exchanges and it takes less than an hour to get started.
In the guide below, we’re going to help you understand how crypto exchanges works, the differences between decentralized and centralized, and things to have in mind before starting to trade on cryptocurrency platforms.
Comparing cryptocurrency exchanges
There are a number of cryptocurrency exchanges but they are not all created equal.
Bigger exchanges offer more security, and more liquidity, but are often missing out on newer, promising projects. They are often very strict with identity verification requirements (a.k.a KYC) and have slow support.
Smaller exchanges offer more speculative tokens, more lenient KYC requirements, and more responsive support. However, liquidity on the exchanges is quite low, meaning that you may lose money when you trade due to slippage.
Many smaller crypto exchanges often lack security and don’t hold emergency insurance funds, which protect your savings in case of a hack.
Features as well as fees can vary wildly from exchange to exchange.
As if this wasn’t already confusing enough, there is a new generation of exchanges called Decentralized Exchanges (DEXs), which come with a unique set of features such as no governing authority, no KYC requirements, and direct ownership of your assets.
DEXs are however more complicated to use and recommended for more experienced and speculative traders. Since DEXs have no support, one mistake can lead to losing all of your funds or paying an extraordinary amount of fees.
To make it easier for you, we recommend sticking with the top centralized cryptocurrency exchanges.
What are the top cryptocurrency exchanges?
The list of top cryptocurrency exchanges will vary based on the type of exchange (centralized or decentralized), the type of cryptocurrencies you are looking to buy or sell (bitcoins or altcoins), and the trading features you are looking for.
However, there’s some exchanges that are really well known, and tend to offer the best stability, functionality and coin supply.
Based on liquidity and trading volume, CMC lists these as the top cryptocurrency exchanges:
|Crypto exchange||Liquidity score||Markets||Coins|
Tips to find the best cryptocurrency exchange
The best cryptocurrency exchange platform for you will depend on several factors, including the type of exchange you prefer, the kind of cryptocurrencies you are looking to buy or sell and your level of expertise. So, it’s important to consider what’s most important to you and then do your homework.
Here are 6 items to check to help you decide on the best cryptocurrency exchanges:
Be aware of when comparing crypto exchanges
Follow each step to find the best crypto exchange
First and foremost, confirm that the exchanges are available to operate in your country of residence and that there are no trading restrictions. Big exchanges like Binance are not available in the US, so they use subsidiaries such as Binance.us, which however has much less liquidity than the main exchange.
Payment methods vary among cryptocurrency exchanges – from bank wire transfers only to cryptocurrency only, to accept Visa and Mastercard. Check to be sure your preferred methods of payment are available.
If you are just getting started, having access to an exchange that allows for direct fiat to crypto exchange is essential.
Look for exchanges that have been in the market for years and have a strong reputation. Pay importance to a transparent organizational structure, a large and experienced team, independent audits, a large social media following, and generally positive customer reviews across different platforms.
If an exchange is not secured properly, you could lose your assets. Research for previous hacks on the exchange and how they dealt with each case. Check if there are insurance funds covering potential hacks and how the timeframe that users get compensated in case of such events.
Also verify that security systems are available such as 2FA, IP and device whitelists, withdrawal address management, and cold wallet storage of non-trading assets.
Different companies have different pricing models so compare all exchange fees and be sure you understand their fee structure. Some have a flat fee per trade while others require a percentage of each trade based on their specific criteria. In either case, fees generally decrease with an increase in the amount and frequency of trades.
Also, check for any deposit or withdrawal fees. Companies may offer quick and convenient ways to buy and sell cryptocurrencies such as with a credit or debit card, but they may also come with much higher fees.
Not all cryptocurrency platforms offer access to all coins so, it’s important to know if a particular exchange has the specific cryptocurrencies you want. Choose exchanges that have a large number of listed tokens/coins and that regularly announce new listings. Also look for exchanges with a high number of trading pairs, which will give you more trading options, and minimize your fees.
Look for exchanges with high trading volumes, and high liquidity index scores. The higher the market’s liquidity, the less trade slippage will occur when you trade, saving you significant money in the long run.
As you become a more experienced crypto trader, you will be looking for new ways to mitigate your risk or increase your potential earnings. Using an exchange that offers a variety of trading features such as leveraged trading and perpetual futures is an important arsenal in your trading strategy.
How do cryptocurrency exchanges work?
In general, when users place buy or sell trades the exchange matches them based on supply and demand and an accepted price point. The exact method used depends on the type of exchange and the specific exchange.
There are two basic types of cryptocurrency exchanges:
- Centralized Exchange (CEX)
- Decentralized Exchanges (DEX)
Here’s a quick summary of centralized vs decentralized exchanges:
|Centralized Crypto Exchange||Decentralized Crypto Exchange|
|Platform||Third party handles transactions||Peer-to-peer transactions|
|Types of trades||Crypto-to-crypto, fiat-to-crypto, leverage trading||Crypto-to-crypto only|
|Private Keys||Exchange holds custody of the private keys||User holds custody of their private keys|
|Security||Risk of hackers and theft||Minimal risk of hackers and theft|
|Ease of use||Easy – similar to working with a bank||Can be complex|
|Fees (Range)||Low (0.025%) to very high(0.4%)||Zero (0%) to high (0.3%) + Gas fees|
|Liquidity||High liquidity||Low liquidity|
Centralized cryptocurrency exchange
Centralized cryptocurrency exchanges have a third party or middle man that oversees the day-to-day operations and completes the transactions much like a bank.
Ease of use – trades are handled much like bank transactions so they are familiar to most people, even beginners.
Highly liquid – some of the top cryptocurrency exchanges are centralized exchanges so it’s typically easier for buyers and sellers to make trades in a timely manner with less price volatility.
Fiat gateway – buyers and sellers can trade with conventional fiat currencies like dollars, euros, pounds and yen in addition to crypto currencies.
Pros with centralized exchanges
Hacking risk. Because of their centralized design, these exchanges are often targets for hackers and thieves.
Higher transaction fees. The ease of use and convenience they provide often comes at a higher cost.
Lack of privacy. Users must complete some type of verification which may vary from simply confirming their email address to providing detailed personal and bank information.
Cons with centralized exchanges
Decentralized cryptocurrency exchange
Decentralized exchanges are peer-to-peer platforms. That is, users buy and sell directly. There is no middle man. The exchange operates on a network of computers and completes transactions via an automated process.
Despite the positive features of decentralized exchanges, they are not nearly as popular as centralized exchanges primarily because they are more technically challenging to use.
Transparency. There is no middle man, only offer peer-to-peer trades which mitigates market and price manipulation.
Reduced risk of hacking or downtime. Because they operate on a network of computers there is no central or single point to hack or go down.
Anonymity. Decentralized exchanges do not require users to verify their identity.
Security. Users have complete control over their assets at all times.
Pros with decentralized exchange
Can be complex to use – aside from getting familiar with the platform and the process, users must remember keys and passwords or their assets could be lost forever.
They do not allow fiat trades – unlike centralized exchanges, decentralized exchanges only offer crypto-to-crypto trades, making them less convenient for users who do not already hold cryptocurrencies.
Low liquidity – due to the lack of trading volume at times, it may be difficult for some sellers to find buyers and vice versa in a timely manner.
Cons with decentralized exchanges
- Cryptocurrency – Wikipedia
- What Is Cryptocurrency? Beginners Guide to Digital Cash – NerdWallet
- What is a cryptocurrency exchange and how do they work? – Coininsider.com
- Cryptocurrency Exchanges – Overview, Advantages, Top 10 – Corporatefinanceinstitute.com
- How Does a Cryptocurrency Exchange Work? (In 2020) – Coinzilla.com
- What is a Cryptocurrency Exchange? – CryptoCurrency Facts
- How Do Cryptocurrency Exchanges Work? – BTC Wires