What is Cryptocurrency Exchange? A Beginners Guide

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Crypto Exchange Explained

At the present time, most of crypto exchanges and owners are worried about their future due to the rules and regulations of the government.

Governments in many countries ban crypto or charge investors high taxes on crypto profits. Like China, India, Iraq, Egypt, etc.

But on the other side, many crypto exchanges become generating more revenue day by day. Because their user belongs from those countries where governments support crypto.

Many countries support cryptocurrency like El Salvador, Australia, Canada, etc.

According to the market watch, crypto exchanges’ revenue grew by 600% in 2021. Also, market cap or investors or money are growing.

Cryptocurrency trading volume has grown from US$1.3trn (Q3 2020) to US$13.3trn (Q3 2021) worldwide.

Popular cryptocurrencies like bitcoin, Ethereum, dogecoin, and others give a huge amount of return in a few years.   

Bitcoin gives a 4,000+% return in 3 years. 

Therefore, many investors invest and trade in cryptocurrency to earn huge amounts of profit.

What is Cryptocurrency Exchange?

A crypto exchange is a platform that allows users to exchange cryptocurrency from one to another one Like exchange Litecoin to bitcoin. Here you can buy and sell cryptocurrency same as the stock market. Users also can convert their regular money (US Dollar or rupee) into cryptocurrency and cryptocurrency to money.

For Example 

Binance is a crypto exchange platform where you can buy or sell crypto coins. Here first you need to transfer money from your bank account to your Binance crypto wallet. 

Now you can trade with this money. 

The market of cryptocurrency is similar to the stock market but more complicated. 

Because in the crypto market an investor does not predict the future of a coin or the value of the coin as well as cannot do technical analysis.

Tyrone Ross (CEO of Onramp invest) says there is no one crypto exchange that is good for users. Choosing a crypto exchange is depends on the interest of the user that aligns with their goals.  

Some examples of cryptocurrency exchanges

  • Binance
  • Coinbase
  • Wazirx
  • CoinDCX

Types of Cryptocurrency Exchanges?

Type Of Crypto Exchanges

There are various crypto exchanges available in the market from which you can choose one as per your requirement. 

Mostly there are three types of crypto exchange available.

  1. Centralized
  2. Decentralized
  3. Hybrid

Now lest understand one by one

1. Centralized Crypto Exchange

Centralized Exchanges is one of the most popular crypto exchanges. It provides a platform that allows users to trade cryptocurrency remotely. This centralized platform is controlled by a specific intermediary (bank or other financial institution).

But there are many pros and cons have that you need to consider

Pros Cons
User Friendly: It provides an easy-to-use platform which can be easily understood by beginners. It provides all crypto trading solutions in one place..

Reliable: It provides an extra layer of security and reliability in transactions and trading. This can track all the transactions and offer higher levels of comfort. 

Hacking risk: These exchanges are managed by centralized companies and provide a level of security to the users. This security can be hackable by a hacker. 

Transaction fees: The charges depend on the centralized company. They will charge high transaction fees for their services.

2.. Decentralized Crypto Exchange

It is a peer-to-peer platform that allows users to transfer crypto or money from one account to another one without any intermediary. This platform is a great option for traders seeking anonymity. 

This platform also has many advantages and disadvantages 

Pros  Cons
Prevent From Hackers: Because they are anonymous, anyone cant track them, and can’t get information. And they don’t need to transfer their assets to a third party. 

Anonymity: You don’t need to fill out any KYC forms. They offer full privacy, security, and anonymity to the users. 

Complexity: These platforms allow only one time to generate keys and passwords. If you forget it then you cant access your account.  And your digital assets will be lost forever and can’t be recovered. 

Lack of fiat payments

These platforms are not good for beginners because they do not allow for the trading of fiat currencies for cryptocurrency. 

 

3. Hybrid Crypto Exchange

This exchange platform facilitates both centralized and decentralized exchanges. These platforms provide, centralized features such as a user-friendly interface, easy-to-use, remotely managed, and decentralized features such as anonymity, reliability, security, and more.

These exchanges offer maximum control over your cryptocurrency. So, it reduces the cost of the platform. 

It offers high security, privacy, and keep protects your funds from hackers.

How To Choose Crypto Exchange?

As we know there are lots of different types of crypto exchanges available and choosing the right exchange is your responsibility.

Here I write some important points that help to decide you the best crypto exchange. 

  • Crypto selection: If you are a newbie in crypto trading then you can go with the small exchanges. They offer you limited crypto coins for exchange and trading. But if you are experienced then choosing the right exchange is not a big thing.
  • Security: The crypto market is not controlled by anyone and is not supported by the government. So choose a secure exchange that provides encryption, two-step verification, and cold storage.
  • Fees: The crypto market is becoming popular day by day and more people join these platforms. So competition increases and risk is reduced, as well as exchange fees will be standardized.
  • Regulation: You must keep eye on the government’s regulation for crypto. 
  • Fund Transfer: Some platform allows the only crypto transfer and some are linked to your bank account for transfer funds. 
  • Wallets: Every crypto exchange did not come with a Hot wallet for trading. But you need a cold wallet if you have a large amount of crypto.
  • Mobile Apps: Some platforms is not come up with a mobile version. because we use mobile more than a PC, we need a mobile app. 
  • Customer Service: Having great customer support is very important because if you face any issue in fund transfer or trading then you can complain about it. 

Top 3 Crypto Currency Exchange

Binance: This is one of the best crypto exchanges in the world with the highest volume ($24,774,723,164) and its exchange score is 9.9. The average liquidity 839 and the weekly visit is 24,448,014. It offer lowest transaction fees.

CoinBase: This is second largest crypto exchange platform in the world with the weekly traffic 2,952,564 and its trade volume is $4,057,956,946. The exchange score is 8.4 and average liquidity 723.

Crypto.com: This is the third most popular crypto exchange platform in the world. It provide outstanding cybersecurity infrastructure and large selection of crypto coins. The volume is $3,897,456,274 and weekly visit is 2,518,077

 

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