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Although bitcoin exchanges and wallets are related, they are not the same. Crypto exchanges are websites or applications that allow users to buy or sell cryptocurrencies (Bitcoin to Ethereum and vice versa) or convert fiat cash to digital currency (USD to Bitcoin), with funds held in a crypto wallet linked to the exchange.
Exchanges operate as a middleman for all transactions on the site, and they make money by charging transaction fees. Exchange fees might be a fixed amount or a percentage of your trade volume. Some exchanges offer variable fees based on price volatility, which can vary depending on whether you’re a buyer or a seller.
However, cryptocurrency exchanges are frequently a highly sought-after target for cybercriminals. Because funds can be held in exchanges, hackers may be able to gain access to an exchange’s digital server, putting your cash in danger of being compromised. As a result, many crypto exchanges advise withdrawing your security keys from your wallet and placing them in cold storage to protect them from cyber threats.
Continue reading to discover about different types of cryptocurrency exchanges, how they function, and which one you should choose.
1. Coinbase
- A large number of cryptocurrencies and trading pairs
- Beginner-friendly interface and easy purchase process
- Supports over 100 cryptocurrencies and crypto pairs
- Also offers advanced trading platforms in addition to its beginner-friendly platform
- Lower fees with Coinbase Pro
FUNDING METHODS
CRYPTOCURRENCIES
40+
COUNTRIES
100+
Coinbase is a major cryptocurrency exchanges that is made for easier trades that is applicable to both novice and experienced traders. Users with verified can easily buy cryptocurrency funds with fiat money using your bank account and different payment gateways like PayPal etc, though it takes 1-3 business days to get your funds in the exchange. You can buy crypto from Coinbase using fiat currencies such as USD, EUR,CAD, AUD, GBP, CHF, and JPY.
Coinbase offers two different platforms – Coinbase Pro and the main Coinbase platform, which have different user interfaces and transfer fees. Main Coinbase platform has a more simple user interface which beginners can easily use but has higher fees than Coinbase Pro. Coinbase Pro offers a much more advanced approach to their fees. Fees are calculated based on the current pricing tier you are in, tiers which are calculated based on your total trading volume.
2. Kraken
- In all operating jurisdictions, Kraken is fully licensed and able to operate legally, including the US and UK
- Industry-leading security
- All personal information, such as Know Your Customer protocol information is securely encrypted and stored
- A large range of cryptocurrencies to choose from
FUNDING METHODS
Wire Transfer, ACH
CRYPTOCURRENCIES
20+
COUNTRIES
300+
Kraken is one of the leading exchanges in the market that makes it easier to buy, sell, and exchange various currencies using fiat money and is eligible for both experienced and novice investors. With a verified account, users can quickly buy cryptocurrency from a linked bank account, and it’s just as easy as trading between currencies in your account. You can buy crypto from Kraken using fiat currencies such as USD, EUR, CAD, AUD, GBP, CHF, and JPY.
Just like Coinbase, Kraken offers two different platforms – Kraken and Kraken pro. Fees can differ on either due to their convenience. Kraken pro offers much lower fees than the main Kraken platform since prices are based on higher volumes. You can earn discounts immediately as the system reassesses your eligibility tier after every trade.
3. Crypto.com
- Supports over 250 crypto coins
- Wide variety of payment methods
- A Short verification process for fast trading
- Relatively low fees
FUNDING METHODS
Crypto, Credit Card, Bank Transfer, Debit Card
CRYPTOCURRENCIES
200+
COUNTRIES
80+
Crypto.com is one of the most secured exchanges which allows customers to buy, sell, and trade their crypto with little to no worries about lost funds. Verified customers can buy crypto with a bank account and other gateway payments like PayPal, which bought products are stored in cold storage to help prevent hacks and losses. Crypto.com offers support on fiat wallets such as USD, AUD, CAD, EUR, GBP, and BRL.
On top of that, Crypto.com allows its users to access their accounts using their mobile phones with Crypto.com mobile app. Unlike other exchanges with watered-down mobile apps, users have full access to any of Crypto.com’s features with their mobile app. Which users can use to have easier and on-the-go trading.
4. Binance
- Relatively lower fees in comparison to other exchanges
- Wide range of cryptocurrencies with over 300 different assets to choose on
- Advanced trading tools for advanced traders
- Crypto-to-crypto or fiat-to-crypto trading
FUNDING METHODS
CRYPTOCURRENCIES
175+
COUNTRIES
100+
Binance is the world’s largest cryptocurrency exchange, with its relatively low fees, access to hundreds of cryptocurrencies, and advanced features, it may be considered one of the best interfaces to trade-in. However, the sheer number of choices which can be overwhelming to both novice and experienced traders alike, makes it hard for beginner traders to get a grasp of knowledge about the exchange.
Binance offers support to both desktop and mobile with its mobile app, which makes it easier for users to trade anytime, anywhere. On top of that, Binance has a two-factor authorization (2FA) via the Google Authenticator app or SMS, which makes it more secure as no one can access your account without having access to your devices.
Users can buy cryptocurrencies on Binance using bank transfers, and gateway payments like PayPal, although fees may vary on different modes of payment. Binance accepts a wide range of currencies and makes it easy for you to buy crypto using USD, EUR, CNY, AUD, INR, RUB, and other fiat currencies.
5. Prime XBT
- It offers lower fees, maximum leverage, competitive trading conditions, and competitive trading fees
- Offers 100x leverage of up to 1:100
- Robust technical analysis tools and charting
- Trades can be executed instantly since the platform uses the latest liquidity resources
- Novel covesting feature and turbo trade
FUNDING METHODS
Crypto, Credit Card
CRYPTOCURRENCIES
7
PrimeXBT is one of the leading crypto trading platforms in which users can buy, sell, and trade cryptocurrencies with high-margin trading. Unlike most crypto exchanges, PrimeXBT does not support any form of direct bank transfers or deposits through credit or debit cards. In order to trade using the exchange, users must have an existing cryptocurrency supported by PrimeXBT, such as BTC, ETH, USDT, USDC and, its own coin – COV.
As mentioned earlier, PrimeXBT offers margin trading of up to one hundred times your initial investment amount. In addition to that, it has a novel “covesting” feature that lets you see and mimic the trading moves of the top investors on the website, which allows new investors to help guide themselves towards cryptocurrency trading.
What Is the Best Crypto Exchange?
Here are some of the best cryptocurrency exchanges. They are all reliable and it comes to personal preference and geographic location which one to choose.
- Coinbase
- Kraken
- Crypto.com
- Prime XBT
- Binance
What Is a Cryptocurrency Exchange?
A crypto exchange is a platform through which you can buy and sell cryptocurrencies. You can use exchanges to trade crypto with one another or to buy crypto using fiat or regular currencies. Which in turn makes an exchange act as an intermediary between a buyer and a seller – a middleman in simple terms.
- Crypto exchanges are used to trade crypto-to-crypto or crypto-to-fiat and vice versa.
- Exchanges reflect on the current market prices of the cryptocurrencies they offer.
- There are different types of cryptocurrency exchanges which have different features which users can use to base their preferred exchange.
How Do Crypto Exchanges Work?
By setting up an account with a crypto exchange, it enables you to buy and sell cryptocurrencies. Depending on an exchange, you can buy crypto using fiat currencies like USD and trade one crypto for another. Some exchanges don’t support any kind of bank transfers, to users must need to have existing crypto funds to trade on those kinds of exchanges. These are called decentralized exchanges.
Unlike traditional exchanges that have set trading hours, cryptocurrency exchanges are active all the time 24 hours a day, 7 days a week. Crypto traders have all the time to buy and sell their funds, which makes it more convenient than traditional trading.
- Some of the most commonly known exchanges in the market with a beginner-friendly interface are Coinbase, Kraken, and Crypto.com. They have varying fees which new traders must check before setting up an account on either.
- The largest crypto exchange by trading volume is Binance. It has many choices to pick on so new users may not be able to use it properly.
What Are the Different Types of Crypto Exchanges?
In the market, there are currently three different exchanges with different overviews in general, which are: (1.) centralized exchanges, (2.) decentralized exchanges, and (3.) hybrid exchanges. Continue reading below to know what different crypto exchanges offer.
1. Centralized Exchanges
Centralized exchanges or CEXs, are the most common type of crypto exchange in the market, accounting for 95% of all exchanges and 99% of all crypto transactions.
For investors, a centralized exchange is one of the most important methods of transacting. They are online platforms that act as the middleman in the process of trading between two parties – the buyer and the seller. Since a centralized exchange is governed by a company, it is a more reliable mode of trade.
- A centralized exchange is controlled and operated by a certain company, which keeps the trades fair and speeds up the trading process.
- Centralized markets don’t have a competing price model for an individual stock which makes stock prices more predictable.
Pros
- Has high trading volume
- Offers high security and reliability
Cons
- Since CEXs are fully online, there are risks of cyberattacks and hacking
- High transaction fees
2. Decentralized Exchanges
Decentralized exchanges or DEXs don’t act as the middleman of the trade. It functions as a peer-to-peer exchange, which lets all parties in the trade – the buyers, sellers, and dealers transact with prices in real-time. Since a DEX uses various devices to communicate, traders do not need to be located in the same place to transact.
- Unlike traditional trades that require traders to be in the same place, a DEX incorporates the use of digital technology which allows buyers and sellers to deal directly through liquidity pools.
- The most used decentralized exchange is Uniswap.
Pros
- The absence of a middleman or a centralized exchange may result in lower transaction fees than in centralized markets.
- Decentralized exchanges allow better transparency between parties, especially since DEXs use technology to further ensure all parties share mutually agreed-upon information.
Cons
- Since a DEX does not have a company governing it, there is no one to monitor transactions, offer assistance, or provide a legal framework. This means you’re all on your own, if you mess up on a transaction, there’s no turning it back.
3. Hybrid Exchanges
- A new exchange which incorporates both features of centralized and decentralized exchanges. It’s still in development so expect more features to come as time goes on.
Pros
- Has an easy-to-use user interface.
- Fast matching speed and offers support to fiat currencies.
Cons
- It has limited features and low trading volume due to HEX being a new exchange and is still in development.
You are scared centralized exchanges like Coinbase and Binance can take your assets if they go bankrupt. Do you know your bank can do the same thing, right?
How to Open a Crypto Exchange Account (Choose the Exchange You Want)
Go to Coinbase's main website - coinbase.com and click [Register]
On the registration page, enter your email address, create a password for your account, and enter the Referral ID (if any). Then, read and agree to the Terms of Service and click [Create Account].
Complete the security verification
The system will send a verification code to your email. Please enter the verification code within 30 minutes. If you can’t find the email in your inbox, please check your other mail folders as well, or click [Resend Email] to resend.
That’s it and you can trade using Coinbase!
For further security, you can enable 2FA, phone and google verification.
Do You Need an External Cryptocurrency Wallet?
Do you need an external wallet? For starters, no, you don’t really need one. Many crypto exchanges allow their users to store cryptocurrencies within a wallet associated with the exchange, and many people leave it as is.
Although, leaving your funds in an exchange poses risks of lost funds due to cyber attacks. So an external cryptocurrency wallet is essential to store your crypto funds more securely.
Benefits of Keeping Assets on an Exchange
How to Choose a Crypto Exchange?
Check the number of supported coins.
Make sure there is enough liquidity - the ability to turn cash into coins or vice versa.
Compare the fees of one crypto exchange to another. Some exchanges offer wildly different fees for the same amount of features so knowing the difference between both is a must.
Check the security. Exchanges are vulnerable to hacks and any type of cyber attack.
Consider the type of exchange - whether it’s decentralized, centralized, or hybrid.
Frequently Asked Questions
How do you buy cryptocurrencies?
How much money do you need to buy crypto?
Which crypto exchange has the lowest fees?
Currently, the crypto exchange with the lowest fees in the market is Binance. With its stellar amount of trading volumes, users can have massive discounts on fees which can be free at times.