Cryptocurrency exchanges allow you to swap fiat money (dollars, euros, etc.) for cryptocurrency, or cryptocurrency for cryptocurrency.
These exchanges are bringing innovation that the traditional financial system has not seen for years.
In this post we will outline some of the best exchanges, and why you might want to use one over the other.
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, Coinbase is a good entry point whether you want Bitcoin or any other cryptocurrency.
Coinbase lets customers from the USA, Canada, UK, Europe, Singapore, and Australia buy bitcoins, litecoins and ether with a credit card or bank account.
The fees for buying with a credit card are 3.99%, while the fees for buying with bank transfer are about 1.49%.
Binance is a cryptocurrency exchange based in Hong Kong. It has very low fees at just 0.1% 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.
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.
Poloniex is the largest crypto exchange in terms of volume. It has good liquidity for most alt/BTC pairs.
The main issue is that in the past, the biggest crypto exchanges that deal with purely altcoins have all run away with customer money. In the past, this happened with MintPal and Cryptsy, although neither was as big as Poloniex. If Poloniex ever exit scammed, it would likely lead to a crash in many of the altcoins markets.
If you are going to use Poloniex, try to limit the amount of time you store money on the exchange. Poloniex is a big target for hackers, and if they succeed the exchange will likely take whatever % of total money the hackers steal and divide that across all customers, like it has in the past.
This is one benefit that exchanges like Changelly and Shapeshift have over exchanges like Poloniex. There is much less risk of you losing money to theft or hack.
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.
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.