How to choose the best and most secure crypto exchange
There are hundreds of cryptocurrency exchanges out there. We’re going to explore how to choose the one that’s right for you
There are hundreds of cryptocurrency exchanges out there — and for most people who have never owned Bitcoin before, these platforms are exceedingly likely to be their first point of contact with the industry. Here, we’re going to explore how to choose the crypto exchange that’s right for you.
How to choose a cryptocurrency exchange
Doing your homework before you decide to transact with a crypto exchange is nothing short of crucial. There are security concerns that the industry has been struggling to shake off for several years — not to mention increasing levels of scrutiny and regulation from countries nervous that cryptocurrencies have the potential to undermine their economies.
When you’re Googling around for the best place to buy a digital currency, first consider whether or not it has a good reputation. It can take some digging to get an accurate idea of whether they are well-regarded. Obviously, a crypto exchange is only going to put glowing testimonials on its official website — and this means scouring social media and specialist publications for independent reviews on whether its service is up to scratch.
You should scrutinize where a crypto exchange is based, and whether they are legally allowed to sell the likes of Bitcoin and Ethereum in your country. Choosing a local platform has other benefits, as there’s a greater chance that they will provide trading pairs for major cryptos in your local fiat currency. Some nations require Know Your Customer checks such as passport photos and bank details, as this helps to prevent money laundering. Although these measures can be annoying, it does help illustrate that a company is credible and taking its obligations seriously.
The payment methods you can use on the exchange should also be given some consideration. Most consumers want to buy crypto using bank transfers, credit cards, PayPal or even cash. Finding a service that fits your needs — and executes transactions without any delays or technical hitches — is nothing short of essential.
So, you’ve found a local exchange with trading pairs and payment methods that suit your circumstances. Then the bombshell revelation comes: the commission they charge for making conversions, deposits and withdrawals is nothing short of extortionate. Just like you would compare mortgage providers or electricity companies before making a decision, it’s sensible to assess each platform’s fees side by side to guarantee that you’re getting the best deal.
We’ve got this far, but there is one major hurdle that lies ahead: determining the most secure crypto exchange.
Finding the safest crypto exchanges
Despite a spate of devastating cyberattacks, with hackers managing to get away with billions of dollars, security breaches on crypto exchanges remain devastatingly common. Finding the most secure crypto exchange can help to shield you against these risks — but again, it’s important that you do your research rather than simply taking a platform’s claims at face value.
A powerful way of illustrating this point is to look at Mt. Gox, which at one point was the world’s biggest crypto exchange. At the peak of its operation, more than 70% of all Bitcoin transactions were handled through its site. Unfortunately, things went very wrong in 2014, when more than 850,000 Bitcoins were lost in a hack attack. To put this into perspective, this was more than 6% of BTC in circulation at the time — and at the time of writing, it would be worth more than $6.8 billion.
The safest crypto exchanges will rely heavily on something known as cold storage. This is where cryptocurrency is kept in an environment away from an internet connection, putting funds out of the reach of hackers. This should always be coupled with impressive levels of transparency, and the addresses of these cold wallets should be provided to ensure that consumers can independently verify whether these addresses are being used to store crypto as promised.
Certain websites do provide rankings for major exchanges based on a multitude of factors, such as whether their coding is robust and whether users are given adequate protections in the event that something goes wrong. But although security needs to be a priority for these platforms, that isn’t to say that consumers themselves shouldn’t be taking any precautions. It’s vital to select a password that is both long and contains a plethora of special characters — and it’s also worth diversifying funds across several exchanges to prevent everything from being lost in a cyberattack. Patience is also a virtue — and although it may be inconvenient to suffer delays while transactions are settled and cleared, it’s worth taking comfort in the fact that platforms often slow things down in order to ensure that assets don’t end up in the hands of malicious actors.
Security concerns surrounding crypto exchanges aren’t going to go away any time soon, but platforms are making a concerted effort to up their game. This, when concerned by awareness among consumers, can help reduce the frequency of cyberattacks.