6 Factors to Consider When Choosing a Crypto Exchange

A crypto exchange is a platform that eases the buying and selling of cryptocurrencies. Crypto exchanges can be centralized, decentralized, or hybrid. When choosing a crypto exchange, assess your interests to find an exchange that suits your goals. Discussed below are the factors to consider when choosing a crypto exchange.

1.   Security

Cryptocurrency isn’t regulated by any central institution, meaning your funds aren’t protected. Some crypto exchanges use insurance policies to protect their users’ digital currencies from fraud or hacking. Consider the online security measures the exchange has implemented, including two-factor authentication. The ideal crypto exchange should follow modern identity verification best practices, such as the use of a driver’s license scanner, to ensure they onboard legitimate, verified users to prevent identity theft, seal fraud loopholes and ensure regulatory compliance. When selecting a crypto exchange, ensure that its security guidelines and measures are clearly outlined on its website.

2.   Available coins

There are over 1300 cryptocurrencies to choose from. Different crypto exchanges provide different crypto coins. While it’s easy to get Bitcoin and Ethereum on almost every exchange you find, finding the latest altcoins may need a lot of shopping around. Research to determine the cryptocurrency that’s right for you to avoid losing your investment. The most recent coins are speculative and riskier to gamble on, so consider sticking with the more established ones.

3.   Liquidity

When picking an exchange, ensure it has enough trading volume to facilitate buying, selling, and trading your cryptocurrency at any time. Crypto prices are constantly changing, so choosing an exchange with high trade volume means you can sell or buy crypto coins before the prices vary. Picking an exchange with low trade volume means your transaction may not go through right away. This may cost you more than anticipated.

4.   Trading fees

Trading fees vary across different crypto exchanges. This makes it an essential consideration when choosing an exchange because they deduct a percentage of your transaction or investment. Some exchanges may charge their trading fees based on your transaction size, the currencies you trade in, or activity level. Others offer discounted prices, so choose one that best suits your needs and trading experience level. Consider how the charged fee will affect your investment.

5.   Reputation

The cryptocurrency market is relatively new and is yet to gain people’s trust regarding guaranteed returns and security. Most exchanges have been victims of theft, scams, hacks, and data breaches during the initial stages of blockchain technology, where lots of funds were lost and compromised in hacking activities, causing mistrust. Before settling on a specific crypto exchange, conduct a background check to determine if they’ve been associated with fraud or security breaches.

6.   Accessibility

Your location may hinder you from selling or buying cryptos from specific exchanges, thanks to state and national regulations. In the U.S., there’s a lot of regulatory uncertainty surrounding cryptocurrencies, resulting in some states instituting their own rules. For example, for exchanges to operate in New York, they’re required to acquire a Bit License, and only licensed companies provide certain approved coins.

Other states may not have such strict regulations, but they do regulate or are in the process of doing so. When selecting an exchange, learn more about the geographic limitations and other accessibility factors such as acceptable currencies.


Exchanges differ in providing security, user experience, and regulation. Research and consider these factors when choosing a crypto exchange.

Carolyn Coley is a blockchain reporter. She joined Smartereum after graduating from UC Berkeley in 2018.


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