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What’s a cryptocurrency alternate? A newbie's information to 2022

In the past, the concept of owning digital money probably sounded strange and out of reach, but after the surge in popularity of cryptocurrencies in recent years, many have chosen to own and invest in this type of currency. If you are curious about beginner cryptocurrency trading, you might be wondering, "What is a cryptocurrency exchange?"

What is a cryptocurrency exchange?

If you're wondering where to buy cryptocurrency, using a cryptocurrency exchange is probably the place to start your investment journey. Cryptocurrency exchanges are online platforms that are used to buy and sell cryptocurrencies. These platforms act as intermediaries between buyers and sellers and allow users to trade cryptocurrencies using fiat money or altcoins.

Many investors choose to use cryptocurrency exchanges because of their relatively low trading fees. Be aware, however, that some platforms may not be beginner friendly and tend to overwhelm users, especially those unfamiliar with stock trading. For this reason, it is important to understand the differences between each exchange platform in order to find the one that works best for you.

Types of cryptocurrency exchanges

If you are looking to buy your first cryptocurrency, you need to understand the types of crypto exchanges beforehand:

Centralized

The centralized crypto exchange is the most common type of exchange platform and uses a third party – a middleman – to help carry out transactions. The middleman acts as a bank so that people trust him with their money and provide security and surveillance. Some investors find this concept misleading as cryptocurrencies are considered decentralized and no central authority is required.

Decentralized

Unlike centralized cryptocurrency exchanges, there is no middleman for decentralized exchanges – instead they use blockchain technology or distributed ledgers. In this less common type of exchange, the currency is not held by a third party and transactions are conducted peer-to-peer with smart contracts.

Notable crypto exchanges

There are over 6,500 cryptocurrencies today, which means there is a large market for crypto exchanges reaching over 300 platforms. Before choosing the best cryptocurrency trading platform based on your needs, it is important to do your own research as there are many options available. Here are some recommended crypto exchange platforms:

Binance

Binance was founded in 2017 and is considered by many investors to be the best crypto trading platform.

Trading Fees:

0.1 percent spot trading fee
0.5 percent buy-it-now / sell fee

advantages
disadvantage

Lower fees
Not beginner friendly

Wide range of currencies
Not supported by some states

Advanced charting
Fewer crypto-to-cryptocurrency pairs

Coin base

With over 50 cryptocurrencies to trade, some consider Coinbase to be the best platform to buy cryptocurrencies. And with high security and transparency, Coinbase makes it easy for users to buy and sell crypto. This is a great platform for pure crypto traders who want to earn staking rewards as well.

Trading Fees:

Coinbase: from 99 cents to $ 2.99
Coinbase Pro: up to 0.5 percent

advantages
disadvantage

Simple user interface
Higher fees

High liquidity
No control over wallet keys

Good selection of currencies

Twins

Gemini offers over 40 cryptocurrencies and is a good platform for both beginners and avid traders. Although it has a simple user interface, Gemini also offers upgrade features and tools for advanced trading. The platform, which was launched in 2015, is transparent with regard to its security measures and stores the cryptocurrencies in an offline cold storage system.

Trading Fees:

0.5 percent convenience fee
99 cents to $ 2.99 transaction fee and 1.49 percent for trades over $ 200

advantages
disadvantage

Beginner friendly
Higher fees

Strong security

Available in all US states

octopus

Kraken, one of the oldest platforms, was founded in 2011 and is also considered to be one of the best cryptocurrency exchanges. With over 60 cryptocurrencies and high cybersecurity ratings, Kraken also has relatively cheap trading fees and is great for seasoned traders.

Trading Fees:

advantages
disadvantage

Lower fees
Not beginner friendly

Strong cybersecurity

Advanced trading functions

KuCoin

KuCoin offers more than 300 different cryptocurrencies and is also one of the largest cryptocurrency exchanges. With a simple platform, KuCoin makes trading pretty easy, which can be great for beginners, with additional features that make it ideal for more experienced users as well.

Trading Fees:

0.1 percent spot trading fee
0.5 percent buy-it-now / sell fee

advantages
disadvantage

Lower fees
Low trading volume

Easy to use

Wide range of currencies

Bittrex

Bittrex is a great platform for anyone looking for a wide variety of cryptos – it offers over 190 of them. Bittrex was founded in 2014 and believes that security is the key to a good exchange platform. It's also user-friendly, which makes it a good platform for beginners.

Trading Fees:

0.25 percent trading flat rate

advantages
disadvantage

Beginner friendly
High fee for low volume trades

Wide range of currencies

Secure

What to look for when choosing a cryptocurrency exchange

Ultimately, everyone has their own opinion about the best place to buy cryptocurrencies. Whether you've made a decision or are still deciding between a few options, it's important to know what to look for when choosing a cryptocurrency exchange before committing to it.

Is it accessible?

No matter where you are in the world, you should consider what cryptocurrency exchanges are available in your country and what government regulations there are. A look at the platform website or the terms of use can help you determine if it is available to you.

Which coins are offered?

It may come as a surprise that many cryptocurrency exchanges do not offer all cryptocurrencies. New smaller capitalization coins may be limited to certain platforms. It's a good idea to find out in advance which cryptocurrencies you want to buy, and then choose an exchange that offers them.

Are there any fees?

While some people prefer the lower fee option, it is important to understand what those fees apply to and how they are billed. Sometimes a higher fee gives you more security and makes it easier to exchange cryptos. You may find that paying a higher fee gives you an overall better experience than a platform with a lower fee.

Is it safe?

One of the top reasons to use cryptocurrency is security, so choosing a secure platform is just as important to keeping your money safe. Some platforms protect your digital currency with insurance policies in case of fraud or hacking. When choosing an exchange, consider other security features, such as: B. a two-factor authentication system. If you decide against one of the larger exchanges, keep in mind that newer or smaller exchanges may not offer the best security measures.

Does it have liquidity?

One characteristic of crypto exchanges that can be overlooked is whether they have liquidity. You want to make sure that you can sell your cryptocurrency anytime and at the best price. This requires the exchange to have sufficient trading volume, and often the more popular crypto exchanges have higher levels of liquidity.

What are the storage options?

Whether you are a beginner or if you've already immersed yourself in crypto investing, it's important to consider the storage options available for this platform. Although there are conflicting options for keeping your cryptos in your wallet or storing them on the platform, as a beginner, choosing an exchange that will allow you to keep them on the online account is a great option. Just make sure you are allowed to take them off the wallet if you later decide you want to move them to your wallet.

Does it provide tax information?

Just like investing in stocks, every time you make capital gains while trading cryptocurrencies, you must report it in your taxes. Some platforms will provide you with Form 1099-B, which will keep a record of your profits and losses and facilitate subsequent tax returns. Since taxes can be tricky, especially for beginners, finding a platform that gives you this information can make filing taxes less of a hassle.

Are there any additional tools?

With so many crypto exchanges to choose from, they also differ in what additional tools or benefits they offer you. Take into account how the platform works and what it looks like, as well as whether it is easy to use and whether it connects to your personal investment tracking app like the Mint app.

Bottom line: crypto investments start with self-education

If you started reading this guide and asked yourself, "What is a cryptocurrency exchange?" Hopefully by now you understand what to look for when choosing a platform. But it doesn't stop there – investing in cryptocurrency can be a learning experience that requires a lot of research. The market is always changing and learning never stops. Hence, keeping an eye on your finances can be a great way to have a positive trading experience.

What is a cryptocurrency exchange?

Sources: Investopedia | Time | BitGrad

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