How to Choose an Exchange for Cryptocurrency Trading?

It is difficult for a person who first entered the crypto market to understand which crypto trading platform to choose. In addition, an inexperienced investor should figure out which cryptocurrency is not fraudulent and will not appropriate his investments. Of course, if we take the TOP-10 coins by capitalization, the risks are significantly reduced but not completely eliminated. However, every crypto investor wants to find a coin that will grow ten or a hundredfold.

In this article, we will discuss the two most important aspects that will be useful to novice users. Initially, we will discuss the criteria for choosing a cryptocurrency exchange platform. Then we will analyze how to determine the right digital coins for investing and trading. 

What is a Crypto Trading Platform?

As is known, digital coins work in different blockchains that cannot interact with each other, so direct exchange operations between them are impossible. Crypto exchanges are intermediaries between buyers and sellers of various digital coins. Globally, crypto exchanges fall into two categories: centralized (CEX) and decentralized (DEX). Next, we will discuss the criteria you need to choose centralized platforms for trading.

How to Choose a Cryptocurrency Exchange Platform? 

  • Legal Issues

Gone are the days when crypto exchanges without a license were popular among traders. Now people want to ensure their funds are safe and cannot be stolen, including exchange management. To avoid such a negative scenario, a crypto exchange must have a license, depending on the jurisdiction of the platform’s registration. This may be a Gibraltar DLT license, MSB status (status of a financial service provider) in the FinCEN USA and FINTRAC Canada agencies, a license from the Hong Kong financial regulator, and others.

Crypto exchanges that operate without licenses still exist. An example is Binance. Look, the largest crypto exchange in the world does not have a license. However, even if funds are stolen from clients, the administration of the crypto exchange compensates for the damage. That is Binance. The exchange would not have such influence in the crypto sector if it did not have transparent relationships with users. If you come across a little-known exchange with no license, better pass by.

  • Reputation of the developers’ team

When choosing a cryptocurrency exchange, one of the essential factors is the openness of its creators and representatives. Pay attention to the social networks of the company. Up-to-date information about the site should always be updated: new functions, data on cooperation, malfunctions in the system, and so on.

At the beginning of the development of the digital economy industry, crypto exchanges preferred not to disclose information about their creators. And if there was some kind of failure in the system or customer funds were transferred to attackers, they preferred to hide it. Many of these exchanges ended up with an exit scams.

  • Simple and straightforward interface.

In the digital space, there is a common concept – user memory. That means that if a person is used to the fact that on the online marketplace, the shopping cart is located on the top right, then visiting other websites, one will look for it right there. If a new marketplace decides to place this basket on the bottom left, it will be difficult for the client to navigate it, so one will likely search for a more convenient service to use.

It works similarly with a cryptocurrency trading platform. There are specific standards for how they usually look and how traders used to apply them. Innovations in the approach of a trading interface are welcomed, but they are often introduced to stand out from other crypto exchanges and do not benefit user experience.

There are cases when people lost money on some exchanges only because they could not figure out the interface, which, by the website management, was supposed to facilitate the work process. Always pay attention to whether you are comfortable with the exchange because it matters.

  • Liquidity

There should be enough liquidity on popular crypto exchange assets. Of course, not for all the website assets, as some have little demand and are quoted in a narrow circle of traders. However, if you trade in the BTC/USDT pair and, at some point, cannot open a deal, although the price was indicated as the average marke’s, this means only one thing – the crypto exchange cannot provide enough liquidity for operation. Your transaction will open as soon as another trader agrees to buy an asset from you or sell you his own. Such curiosities never occur on large exchanges such as Binance, Coinbase, and WhiteBIT, but they are widespread on little-known platforms. That means you will not be able to open a trade at the moment you decide. That significantly reduces potential profits and greatly increases possible losses because timing matters in trading.

  • Safety measures

Last but not least is security. See exactly how a crypto exchange protects your account: a seed phrase, two-factor authentication, the ability to connect to Google Authenticator, create a whitelist for withdrawing funds, and more.

When you register on a reliable platform with all these safety measures, it aims to offer all these methods to you, and it is imperative to make the most of them. However, many clients neglect the usual security rules, which is obviously not the best idea. The crypto industry is still of interest to cybercriminals since it does not have fully formed legal regulations. Bear in mind: your money is your responsibility.

Where to Buy Cryptocurrency: CEX vs DEX?

As mentioned above, digital currencies can be purchased not only on centralized exchanges. Many traders use the services of decentralized platforms (DEX). They are a Web 3 application to which you can link your external wallet and start trading immediately without registration.

Advantages of DEX:

  • Anonymity. Such platforms do not collect information about the user, so it is almost impossible to trace the final beneficiary.
  • Security. Decentralized exchanges do not store the funds of their users, so hacker attacks do not impose a threat to you.
  • Selection of coins. On the DEX, as a rule, you can buy little-known tokens that have not yet been listed on CEXs.

 Disadvantages of DEX:

  • Limited functionality. On DEX, you can only exchange coins, receive rewards and provide liquidity. There are no familiar trading tools typical for CEX.
  • Responsibility. Since the exchange does not store your money, this becomes your headache. And if experienced users know the rules for the safe storage of cryptocurrencies, it is much more difficult for beginners to provide that.
  • Vulnerability. If you become a liquidity provider, be prepared to take risks. If the security protocol is compromised, attackers can get your funds. It is important to note that not all decentralized exchanges compensate funds to liquidity providers in such cases.

So it is impossible to unambiguously answer the question of where to buy cryptocurrency. It is purely individual since these two formats of trading platforms close inherently different tasks. Some people prefer DEX, others CEX. But if we are talking about beginners, it is definitely better to start your acquaintance with the world of digital currencies from centralized platforms. For example, the largest crypto exchange in Europe, WhiteBIT.

How to Pick a Digital Asset?

Many projects in the crypto industry aim to raise investments. It provides the coin’s price growth. As a result, the project’s management brings a massive amount of its coins to the market and sells them out at an inflated price, thus depreciating them. To avoid investing in such projects, you should always pay attention to the details. Here are some of them:

  • Project’s community

The best thing to characterize the project is, of course, its community. Usually, most crypto companies have chats on Telegram and Discord pages where users actively communicate when the project is live. If cryptocurrency was developed only with the purpose of raising investments, why would its developers interact with the community? They will not be able to discuss the price of cryptocurrency 24/7.

Of course, you should not immediately trust people in chats, but with the help of the Telegram channels and interaction over a month or two, you can understand whether the project is really working or only want to look like that. In addition, you can communicate with several chat participants and get the whole picture of the project.

  • Product

Either the project has a really working product that is in demand and provides demand for the project’s cryptocurrency, or it doesn’t exist, and the money raised will soon disappear. It is exciting and funny to watch how the representatives of these projects try to attract new investors. They even manage to compare their cryptocurrencies with Bitcoin, hinting that a leading cryptocurrency is just an investment tool that initially costs nothing. Be cautious, and do not be caught in a trap of lurring promises.

  • Team

As with crypto exchanges, the more the public knows about the project’s creators, the less likely your money will fall into the wrong hands. There is one crucial point here: if a media personality, actor, singer, or others participate in a new crypto project, this does not mean the project is doomed to success.

An example is an American boxer, Floyd Mayweather. During the ICO boom, he advertised crypto projects in batches, receiving huge amounts of money. Guess how many of the projects promoted by Floyd have been scammed? More than a half! You should not unconditionally pick the project advertised by a famous person.

  • Crypto price

Pay attention to the chart of the cryptocurrency you were about to buy. Usually, when trading starts, its price climbs up, then goes down to lower levels – this happens almost in every second case. Pay attention to whether there have been sudden pumps or dumps of cryptocurrencies all the time.

  • Project prospects

If there is an entirely new product behind the coin that is not similar to those already on the market, then it is better to analyze and find out how much adopted it will be in the future. After all, new is good but not always in demand.

The project can be analogous to existing ones. In this case, you can see how competitors are doing and figure out if the project you have chosen can perform better. If you find the reasons to think so, invest and wait until your decision brings you a profit.

Final Thoughts

Investing in the crypto industry is not much different from investing in the traditional market, at least in preparation and analysis. However, profits on the crypto market are much bigger. Everything needs to be carefully analyzed so that first, your funds get to the right website, and then you acquire profitable assets. Only in this case will it be possible to receive a stable profit. If you do not want to analyze the market, then be prepared for unexpected losses.

When choosing where to buy crypto, pay attention to the WhiteBIT platform. 445 promising cryptocurrencies are represented on it, the exchange complies with all regulatory legal acts of the European Union, and its team is open and has an impeccable reputation. Moreover, the management of WhiteBIT is actively helping the Armed Forces of Ukraine, as well as civilians who have suffered as a result of Russia’s military aggression. Using the services of the WhiteBIT exchange, you bring closer the victory of Ukraine and the peace in the center of Europe.

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