With cryptocurrencies gaining some long-awaited traction, it has become clear for investors that the moment to buy bitcoin with credit card can’t be postponed anymore.
The bull run that began in 2020 has considerably accelerated in the past couple of months. While it took the market 12 years to reach the $1 trillion dollar market cap, it needed just 2 months to get to the current $2.2 trillion.
This positive momentum is driving a large number of beginner traders and investors towards the crypto markets. And one crucial element to becoming successful in this competitive ecosystem is choosing a reliable and secure exchange platform.
In this article, we will explain some of the important factors to watch for when choosing your crypto exchange. Additionally, we will provide a list of the top exchanges by category, which should help you pick out the best one for your needs.
Let’s get started.
Different Types of crypto exchanges
The first thing you need to understand regarding cryptocurrency exchanges is that there are a few different types, each one with its respective benefits and drawbacks. Let’s have a look at the major categories of exchanges.
Centralized trading platforms (CEX)
Centralized exchanges are the most popular way to trade cryptocurrencies today. These platforms are handled by a single company and offer a service to their users by matching their orders and allowing them to trade with each other, for a small fee.
Most cryptocurrency exchanges also accept FIAT currency deposits and convert them seamlessly into crypto on an online wallet that users can then use for trading.
Another characteristic of such exchanges is the ability to stake your coins through them, gaining access to passive income thanks to your crypto.
However, there’s a major drawback to using a CEX. You see, when you deposit funds on an online wallet, you are transferring the custody of your funds to the exchange. Similar to payment processors like PayPal, they can revoke access to your funds in case you violate some of their rules.
Furthermore, due to the fact that CEXs keep a large number of crypto keys on their servers, they are a prime target for hackers. There’s a long list of hacks that have happened thought crypto’s history, leaving the users at a total loss and with a bitter taste in their mouth.
All in all crypto exchanges are a convenient gateway to trading crypto but aren’t recommended for storing large amounts of funds for extended periods of time.
The 3 most popular and reliable CEXes are Binance, Coinbase, and Kraken.
Decentralized Exchanges (DEX)
Unlike CEXs, decentralized exchanges aren’t governed by a single company. Instead, they are peer-to-peer trading platforms where buy and sell orders are matched through the power of smart contracts.
The platforms use oracles to match the prices of cryptocurrencies, and link user’s private wallets to match their orders. This way, the user never loses custody of their crypto until the moment they engage in a trade.
The only fee the users face is the fees for executing the smart contract on the blockchain.
With that said, DEXes still have some major disadvantages. They are mainly difficult to use and require extensive knowledge of crypto wallets and blockchain functionalities.
Furthermore, the most popular blockchain for decentralized exchanges is Ethereum. As of late, the network has been greatly saturated, which has slowed down transfer times considerably and increased the gas fees to prohibitive levels.
The 3 most popular DEXes are Uniswap, PancakeSwap, and SushiSwap.
Crypto Brokers
Crypto brokers are beginner-friendly platforms where users can easily get access to some of the most popular cryptocurrencies of the moment.
They accept a wide variety of payment methods, making them very convenient for buying crypto quickly. Furthermore, they usually send the purchased cryptocurrency directly to your blockchain wallet, letting you keep control of your funds at all times.
Two drawbacks of these platforms are that they usually don’t allow crypto-to-crypto trading and that their purchasing fees can be a bit steep at times.
The 3 most popular crypto broker platforms are Paybis, CoinMama, and Mercuryo.
Peer-to-Peer exchanges
These platforms act as a trading board for cryptocurrency users. These marketplaces allow users to meet for trading Bitcoin and act as an intermediary in the trade.
Their main advantage is that sellers can choose from anything of value for their payment method, including gift cards, online wallets, bank transfers, even goods and services.
However, they also present a risk for users because of the inherent in-person trading system, similar to Craigslist.
Wrapping up
Choosing the safest and most convenient platform for crypto exchanges will be essential to ensure maximum safety for your funds. Hopefully, our article gave you a good overview of the pros and cons of each type of exchange, which should ultimately help you in choosing the best one for your crypto adventure.
