Cryptocurrency is bringing tons of innovation to the world.
I also had trouble figuring out how to buy cryptocurrency. You probably agree the process is confusing.
But we’re going to show you in this article exactly how to get started with cryptocurrency exchanges so you can start trading.
In this post we will outline some of the best cryptocurrency exchanges, and why you might want to use one over the other. Let’s start!
There are two types of cryptocurrency exchanges:
The first type is called a “fiat exchange”.
Fiat exchanges allow you to buy cryptocurrency with fiat money (dollars, euros, pounds, etc.).
A fiat exchange lets you use traditional payment methods to buy cryptocurrency, like:
Fiat exchanges are how most people make their entry into cryptocurrency exchanges. If you’re new you’ll definitely need to use a fiat exchange, so keep following along.
The second type of exchange is called a “pure cryptocurrency exchange” or “altcoin exchange”. These exchanges don’t deal with traditional payment methods like credit cards and banks.
Instead, altcoin exchanges require that you deposit cryptocurrency FIRST and then you can trade the cryptocurrency you deposited for other coins and altcoins (any coin other than bitcoin).
So, to explain the difference and why you need both, let’s look at a coin called Ripple (XRP).
Ripple is currently the third largest cryptocurrency by market cap.
Most Americans use a platform called Coinbase to buy cryptocurrency, but Coinbase doesn’t sell Ripple.
So how do you get Ripple then?
You must first use Coinbase–your fiat exchange–to buy bitcoin with your bank or credit card. Once you’ve purchased bitcoin, you need to send to a pure cryptocurrency exchange, like Binance.
We hope that clears things up, and now we can start digging in to some exchanges.
If you already have a fiat exchange and are looking for a pure cryptocurrency exchange, click here to see options.
If you need to figure out which fiat exchange would be good for you, then keep reading!
Coinbase is a good gateway into cryptocurrency, especially if it is your first time buying.
The interface is very clean, making it easy to make your first purchase of bitcoin, litecoin or ethereum.
Since most cryptocurrencies must be purchased with bitcoin or ether, Coinbase is a good entry point whether you want Bitcoin or any other cryptocurrency.
The fees for buying with a credit card are 3.99%, while the fees for buying with bank transfer are about 1.49%.
Coinmama is a cryptocurrency broker that sells bitcoin, litecoin and ether for credit card. The fees are somewhat high so it may not be the best long term solution, but is a good and fast way to get started.
Coinmama supports most countries and has high buying limits, plus fast delivery time for coins. You should receive your coins within a few minutes of making payment.
Bitpanda is one of Europe’s largest cryptocurrency exchanges. It sells bitcoin, litecoin, ether, ripple, bcash and a number of other coins.
Bitpanda has some of the lowest fees among European Bitcoin brokers at around 3% per credit card buy, and about 1% for bank transfer.
Europeans can pay with a number of other common payment methods such as SEPA, SOFORT, NETELLER, Skrill and more.
Coinbase Pro is one of the only ways to buy bitcoin, litecoin and ether and bcash for no fees. Coinbase Pro is also owned by Coinbase and you need a Coinbase account before you can sign up on Coinbase Pro.
The main issue with Coinbase Pro is that its interface is quite confusing for new users. If, however, you plan on buying a lot of crypto then it is worth it to learn.
Users from the USA, Europe and UK can use Coinbase Pro and buy for 0 fees. GDAX also covers withdrawal fees from the exchange, too, which is a nice bonus.
Luno is a global exchange that supports Europe and other countries like South Africa, Nigeria, Malaysia and Indonesia.
Europeans can buy via SEPA transfer. Users from the other countries listed can buy using local bank transfer.
Kraken is one of the world’s largest cryptocurrency exchanges. It has been around for a long time and appears to be one of the most well run exchanges.
Kraken is harder for beginners compared to the exchanges listed above, since it requires you to understand orderbooks and order types. However, if you plan on buying larger quantities of coins then Kraken will be a good option since the fees are lower than some of the options listed above.
CEX.io is a global Bitcoin exchange that sells bitcoin, litecoin, ether and a bunch of other coins.
CEX supports most countries via credit card and bank transfer so it’s a great way to make your entry into cryptocurrency.
LocalBitcoins is very different than the exchanges listed above. LocalBitcoins allows buyers and sellers to agree on payment methods together and simply acts as escrow for the transaction.
The most common method, however, is cash. Since most people use LocalBitcoins in cities, it is a great way to buy bitcoins if the exchange options in your country are limited.
Most cities with over a few hundred thousand people have good liquidity on LocalBitcoins.
These are exchanges that require you to deposit cryptocurrency to start trading. Usually, this means depositing bitcoin (BTC) or ether (ETH).
Here is a quick comparison before we go into more detail on each exchange:
|Fees||Holds Funds||Based In||Founded|
Binance is a cryptocurrency exchange based in Malta. It has very low fees at just 0.05% per trade.
It supports lots of coins and has its site available in multiple languages, such as Chinese, English, Korean, Spanish, Japanese, Russian and French.
Once you purchase Litecoin, Bitcoin or Ethereum you can use Binance to convert one of those three coins into nearly any altcoin.
Binance has become popular for a few reasons:
This means it’s very easy to go in and out of coins at a good price. Most coins have deep markets, making Binance ideal for both big and small buyers and traders.
Binance has, by far, the best cryptocurrency exchange app. Binance’s app is available for both iOS and Android. It’s very easy to use and my be one of the most well designed applications I’ve ever seen.
Here is what the Binance mobile app looks like:
Changelly is a unique exchange in that you don’t actually need to deposit coins.
You simply tell Changelly which coin you want to buy, and how much of it you want to buy. Changelly will then tell you how much of the coin you are buying with to send.
The whole process is very fast and convenient. If the crypto markets are moving fast, Changelly is a super fast way to exchange since you do not need to wait for your deposit to clear. You can lock in your rate and simply wait for your exchange to go through.
Bittrex is one of the world’s largest 10 cryptocurrency exchanges. It supports a bunch of coins that other exchanges support. It generally has good volume across all its pairs, making it ideal for both large and small buyers and sellers.
Bittrex recently launched a new interface, after nearly three years using the same design.
Poloniex used to be the largest cryptocurrency exchange, but lost a lot of users when it had trouble scaling to support a surge of new signups.
The likely path for Poloniex is that is becomes a cutting edge exchange as money from Goldman Sachs and Circle start going towards improving the exchange.
Cryptopia is a cryptocurrency exchange based in New Zealand. It is much smaller than the exchanges listed above, but is targeted at a different type of user.
Cryptopia has a lot of small and obscure coins listed on its exchange. Most of the coins on Cryptopia are only listed on Cryptopia and aren’t listed on the largest exchanges like Binance or Bittrex.
The main thing to know when you’re trading cryptocurrency is:
Do NOT get comfortable leaving your cryptocurrency on an exchange. Ideally you should deposit on an exchange, make your trade, and then withdrawal the coins.
If you can’t do that, at least assume that there is a good chance your account will get hacked.
A cryptocurrency exchanged called Coincheck was hacked for $500 million as recently as January 2018.
Your best option is to store your coins on a hardware wallet like the Ledger Nano S. The Nano S supports the most coins out of any of the other hardware wallets.
If you can’t buy a Nano S, Exodus wallet is a solid desktop wallet that supports a lot of coins. The main issue with Exodus is that it is not open source.
The best fiat cryptocurrency exchange for beginners is probably Coinbase. I say this for a few reasons:
The best pure cryptocurrency exchange for beginners is probably Binance. The main reasons are:
If you’re still unsure, this video goes deep into which exchange might be best for you:
I realize I’ve mentioned Binance a bunch already, but it’s also likely the best exchange for day trading for a few reasons.
Day traders make a lot of trades, and Binance has the lowest fees among all exchanges (like Bittrex, Poloniex, etc.).
Binance has the most liquidity of any exchange. You can get in and out of coins fast at good prices.
Among pure crypto exchanges, Binance has the lowest fees.
For exchanges that deal with credit cards and bank transfers, Coinbase (broker), GDAX (exchange) and Bitpanda (broker) have the lowest fees.
How much personal information does the exchange require? Do you need to upload a picture of your ID?
How much can you buy? If you plan on buying a large amount, does the exchange support this much in exchange?
There are also sometimes withdrawal limits on exchanges that limit how much you can withdraw at once. This can be annoying since if you deal with large amounts you will have to withdraw small amounts over a few days.
OTC markets are available for buying large amounts of Bitcoin, but these markets are yet to appear for other coins for now.
How much does the exchange charge for converting your money? And how does this fee compare to other similar exchanges?
The average fee for credit card buys are about 4%. Bank transfer buying fees are usually 1-1.5%. Compare the rates of any exchange to other similar exchanges.
Cash fees are usually 1%, although there is often a 5-10% premium. This is especially true at ATMs, where there is always a premium.
How fast will your coins be delivered? Note that most problems with speed are due to the legacy banking system and not with cryptocurrency.
Credit card buys are often instant. Bank transfer buys can take days to clear. Cash buys are instant but you have to physically move and can’t do it online.
How long has the exchange been around? Is it regulated? Many exchanges have been scams in the past, so research any exchange before you deposit money with them.
Robinhood was a popular stock trading app that recently launched cryptocurrency trading. However, the app only supports four states as of now:
Coinbase is probably the easiest way to buy cryptocurrency with USD. Americans can easily buy crypto with a credit card, debit card or bank transfer (ACH).
Americans can also wire Coinbase USD if they want to buy larger amounts.
We have a detailed guide on how to buy Ripple cryptocurrency. There are many different ways to buy, but in most cases you need to buy bitcoins or ether and then convert it into XRP.
There are some excellent apps in the iOS and Android stores that allow you to easily buy crypto.
There is no easy way to buy cryptocurrency with PayPal. You will first have to buy bitcoin with PayPal and then you can use the bitcoins to trade for other coins on a crypto-to-crypto exchange.
CoinMarketCap is the most popular way to check cryptocurrency exchange rates.
If you want to see charts, CryptoWatch has an excellent and easy to use interface for checking prices and charting.
The main difference in the crypto exchanges is that some require you to deposit money, while some “instant exchange” your money.
If you have to make a deposit, then you are at much bigger risk of losing money than if you use something like Changelly where there is only a small window of time before your exchange goes through.
The main benefit to using an exchange like Changelly is that if the exchange scammed someone, it would be announced soon and all deposits would stop going into Changelly.
With deposit exchanges, they have lots of customer funds stored and can exit scam at almost any time. We are not saying that all deposit exchanges are scams, but simply that there is more risk when you use this type of exchange.
Check if the exchange is regulated. If it has a history of hacks, be careful!
Check if the exchange has good customer support and is responsive to support requests.
Check if the exchange has been around for a good amount of time and has built a solid reputation. BTC-e is one of the oldest exchanges. Its owner are anonymous, but it is one of the most trusted exchanges because it has good support, has never been hacked, and has never run away with customer money. That could change at anytime, obviously.
As mentioned earlier, NEVER STORE YOUR COINS ON AN EXCHANGE! If you do not have the private keys to your coins, they are not yours. Simple as that.
Make sure you get a secure crypto wallet and use that to store your coins. Hardware wallets cost money but if you are serious about secure storage of your coins they are simply a must have. We hate to see people lose money in crypto! Take responsibility.
There’s an important difference between Bitcoin/cryptocurrency transactions and other means of money transmission, such as credit cards, bank transfers or PayPal - Bitcoin/crypto payments are irreversible.
If you’re cheated, there’s no central authority to refund or reverse your payment. It’s also highly unlikely that authorities will be able to assist, as it’s extremely difficult to establish ownership of a Bitcoin address.
Fortunately, a little common sense and knowledge will go a long way to avoiding scams.
A good maxim to keep in mind when considering any proposition is:
If it sounds too good to be true, it probably is. Browsing cryptocurrency-related forums, sites or social media, you’ll encounter many enticing offers of high investment returns.
Often times these are not exchanges. But, if a scheme or exchange is presented as highly-profitable and low-risk, ask yourself why such a great opportunity is being shared with the public.
Remember, you’re most susceptible to being scammed when you allow desire for easy money to override your logic and caution. Discipline yourself to make decisions only after calm reflection and beware of anyone rushing you or using FoMO tactics to manipulate your emotions.
Another gem and the reason trust ratings exist:
The best indicator of future behavior is past behavior. If someone making an offer has a history of shady dealings (as reflected by their trust rating on BitcoinTalk, LocalBitcoins, the WoT etc.) then be on your guard.
Exercise equal caution when dealing with a newbie with no history, as busted scammers often simply create new accounts and start over. The same goes for exchanges with no history.
It’s also possible that an exchange with a great history may be planning a “long con,” in which they build up a good reputation by behaving honourably – until a large sum is up for grabs. Always balance the value of their good reputation against the money at stake.
And remember, reputational feedback is only as valuable as your knowledge and trust of the provider. Positive ratings from numerous newly-registered accounts may signal a Sybil Attack, whereby a scammer games the rating system by creating shell accounts for the sole purpose of raising their trust profile.
Of course, not all payments can be escrowed. Bitcoin exchange deposits are a good example.
Mt. Gox is the most infamous case of a fraudulent exchange, in which 650,000 bitcoins were lost. There were many warning signs before Gox failed and it’s worthwhile to research the entire saga to learn what they were.
The more you learn about previous scams, the easier it becomes to recognize the signs.
Unless you’re an active trader, a good rule of thumb is to never leave your bitcoins or fiat money on an exchange. Bitcoins outside your personal wallet are bitcoins you don’t own.
Before jumping aboard any scheme promising regular payments, learn to recognize the tell-tale signs of a Ponzi scheme, in which payments from new entrants go towards funding older members, at least until the whole rotten swindle collapses.
Pirateat40 was the biggest of the Bitcoin Ponzi schemers to date, and reading through his thread will provide insight into the ways of scammers, shills and their victims. Sadly, victims are often the fiercest defenders of such scams, at least until they lose their shirts.
Modern cryptocurrency Ponzi schemes are often disguised as cloud mining plans. This thread offers excellent advice on spotting these scams and indeed, Josh Garza’s GAWminers, which was mentioned as highly suspect at the time, turned out to be the biggest and most audacious cloud mining scheme to date.
We hope the above advice will save your bitcoins from scammers. When in doubt:
Research more, exercise patience and caution, use escrow if possible and discuss things with those you know and trust.
The rising popularity of cryptocurrencies and their booming value means that hackers are now looking for ways to steal money from users and exchanges. In fact, cryptocurrency exchanges have been hit by more than 60hacker attacks since 2011 that have led to the loss of millions of dollars in wealth.
A common link that connects some of the cryptocurrency exchanges that have been affected by hacker attacks is that they were centralized in nature. The likes of Mt. Gox, Coinrail, Bitfinex, and Bithumb, among others, were all centralized exchanges, which meant that they held users’ money as deposits. Additionally, centralized exchanges are also the custodians of users’ private keys.
They store these private keys in some centralized server or database, making them easy prey for hackers. In case the database is compromised, users of that cryptocurrency exchange stand to lose their wealth in almost no time. That’s one of the reasons why it is always suggested that users shouldn’t leave their cryptocurrency in their exchange accounts.
In effect, users don’t have control over their crypto assets if they are using a centralized exchange. However, the emergence of decentralized exchanges can change the narrative and potentially reduce the number of hacks. That’s because a decentralized exchange doesn’t hold critical user data in a single location and it doesn’t entrust data to a third party, which makes it difficult for the same to be compromised.
In addition, there are some other advantages of using a decentralized exchange. One of the biggest advantages is that decentralized exchanges give users more control over their privacy since they don’t require sign-ups or know-your-client (KYC) documents. As these exchanges are hosted in a decentralized manner, they cannot be taken down by either hackers or governments in the guise of regulation.
Additionally, the distributed nature of the hosting of decentralized exchanges means that they are not prone to downtimes. But the fact remains that centralized exchanges are still very popular because they make it easy for users to buy, sell, or trade in cryptocurrency despite their drawbacks. At the same time, decentralized exchanges are still in the development phase, which means that they are not very friendly to use.
Apart from these problems, decentralized exchanges also suffer from lack of liquidity because of their limited use, while the lack of a central point of contact means that there would be difficulty in addressing users’ concerns. So, decentralized exchanges might not be a viable option for users as of now, but there are some promising developments taking in this place.
The likes of CryptoBridge, EtherDelta, and many other decentralized exchange projects are in the development phase. They could turn out to be the key drivers behind the broader adoption of cryptocurrencies because of the independence, anonymity, and security that they bring to the table.
Trading volume is one of the most important criteria a user needs to look at while selecting a cryptocurrency exchange for a few basic reasons. For one, higher volumes will allow users to easily buy or sell the cryptocurrency of their choice without much difficulty because of the available liquidity. Next, higher volumes on a cryptocurrency exchange are an indication that it is widely trusted by a lot of users.
At the same time, the trading volumes will also help users get an idea about the buying and selling activity on a cryptocurrency and determine the direction in which the price could be heading. As such, a cryptocurrency exchange with high volumes brings many benefits to users looking to deal in digital currencies. Here are some of the exchanges with the highest volumes as of this writing:
As of this writing, Binance occupies the first place among all the cryptocurrency exchanges with a 24-hour trading volume of more than $1.3 billion, and that too by a fair distance. Its trading volumes are nearly 30% higher when compared to the next occupant on this list. Bitcoin accounts for the majority of the volumes at nearly 29%, followed by Ripple.
OKEx follows Binance with a 24-hour trading volume of just over $1 billion. Like Binance, Bitcoin is the most widely traded digital currency on this exchange as well with almost 30% of the overall volumes. The next most traded platform on OKEx is EOS, opening up an opportunity for users looking to trade this coin.
Bitfinex is the next name on the list with a 24-hour trading volume of nearly $800 million. Bitcoin enjoys a greater proportion of trading on this cryptocurrency exchange as it accounts for nearly 46% volumes, followed by Ethereum and Ripple.
While a cryptocurrency exchange with high volumes definitely presents an advantage for the user, it is worth keeping in mind that it shouldn’t be the definitive criteria. Exchanges have been known to manipulate trading volumes with the help of bots. Additionally, high volumes aren’t a guarantee that a cryptocurrency exchange is entirely reliable.
For instance, Bitfinex, the third name on the list above, was hacked in August 2016 and $72 million in Bitcoin was stolen from this exchange. Just before the theft, Bitfinex was fined by the U.S. Commodity Futures Trading Commission for offering illegal commodity transactions. As such, users shouldn’t rely on volume alone while selecting a cryptocurrency exchange.
Moreover, certain new exchanges have been growing at a really impressive rate. Gemini, for instance, was witnessing 100% volume growth every two days back in 2015, and it is now looking to widen its horizons by bringing institutional investors into the cryptocurrency market. This should ensure further volume growth going forward, which also means that users shouldn’t restrict themselves to exchanges with only high volumes and consider other options as well that are fast coming up.