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5 Best Cryptocurrency Exchanges: How To Easily Buy & Trade Cryptocurrency

by | Feb 12, 2018 | Finance

Unfortunately, the crypto space has recently been hijacked by people looking to make profit from buying and selling its coins to others at a higher price than they bought them for. This not only means that the use-value of the various systems is relatively low, but in order to gain any sort of return on investment, you have to use an exchange and trade against the main cryptocurrencies such as Bitcoin and Ethereum.

Digital asset exchanges (as they are known) first emerged in 2011 as a response to the growing adoption of Bitcoin. These bitcoin exchanges were created to provide users with the ability to swap fiat currency such as USD, GBP, or EUR with the myriad of crypto coins that had started to become available. Bitcoin trading took off, and suddenly everyone wanted to know the best place to buy Bitcoins to quickly make a profit.

An essential part of the Bitcoin marketplace, these initial Bitcoin exchanges played a major role in the way they were able to provide liquidity in the crypto market, removing the reliance on peer-to-peer transactions. To this end, it’s essential you’re able to find to best Bitcoin exchange which you can not only trust, but also has low exchange fees and is secure to protect your digital currency investments.

How To Trade Bitcoin

This tutorial highlights the various ways you’re able to engage with the top cryptocurrency exchanges to buy and trade cryptocurrency. The process is the same for all coins – the important thing to remember is that the exchanges form an essential part of how crypto is meant to work, making it essential to discern the various features required to get it working.

What Are Digital Asset Exchanges?

Regardless of what people say, crypto is not a replacement for fiat currency. On the contrary, cryptocurrency is a way to provide a decentralized payment network, which allows people to essentially swap money with each other.

For example, if you have a Bitcoin, you have the ability to decrypt, change and update a small part of the public Bitcoin Ledger – through which EVERY Bitcoin transaction is processed. This ledger is populated by people sending Bitcoin files to each other – the file itself representing an equivalent value in fiat currency.

The point is that whilst most people have become hyped about the coming crypto evolution, the simple reality is that the various coins are worthless without any representation in the real world. A Bitcoin is worth nothing on its own, as is an Ethereum token. The trade in these coins is just a symptom of the modern degenerate banking system – printing money and trying to get people to buy more things.

Ultimately, if you’re looking to get involved with the crypto space, you can only do it by either purchasing or mining the various coins from other people. Because there is no backer for the systems (as there is with fiat currency), the only worth it has is its transactability. This puts the exchange at the core of the ecosystem.

The exchanges themselves are neither publicly-traded nor regulated.

They are all private companies, operating in most cases without any sort of regulatory oversight – which is of course completely legal (they are not lending money directly, rather selling a product). Thus, when conducting business in the crypto world, you have to be very wary about who you’re dealing with.

The way they work is very simple – exchanges such as Coinbase act as a central way for buyers and sellers of the various crypto tokens to buy and sell the tokens from each other.

Best Way To Buy Cryptocurrency

  1. Install the wallet for the exchange you plan on using
  2. Register for an account on the exchange
  3. The most trustworthy/effective exchanges will generally try and verify the identity of each user (either by mail, or through 2-factor authentication on mobile — the latter being less secure)
  4. After doing this, you are able to determine the price of each of the coins that you wish to either buy or sell, and perform the appropriate transaction
  5. If you are a seller of a particular coin, it’s typically the case that the exchange will request you list it with them (typically in exchange for their own token) – this way, they are able to transfer it directly to others upon immediate payment, rather than having to wait for you to ratify the transaction personally
  6. Most exchanges charge ~1% of the transaction in fees. This can be higher depending on where you are located in the world, and which exchange you use

Since the coins being exchanged are just files, there are very few restrictions on who can use them, or where they can be traded. As long as you have a valid Bitcoin address for someone, any exchange should give you the ability to transfer them to others.

Top Bitcoin Exchanges

The following exchanges are some of the most popular & trusted altcoin exchanges in the world, but remember that any type of storage of coins on an exchange is risky. We recommend that you keep your coins in a paper wallet, or on a storage device such as a Ledger that can be accessed if an exchange goes down.

CoinBase (GDAX)

By far the most popular, CoinBase has been funded by venture capitalists from Silicon Valley and the system has helped create over $50 billion dollars’ worth of transactions with over 10 million verified users.

Although based in the US, CoinBase is one of the largest digital exchanges in the world, serving the UK, Europe, Australia, and even Asia. One of the appeals of CoinBase is its ease of use, and ability to purchase crypto with credit right away.

Benefits of CoinBase

  • Ability to quickly sign up and purchase coins with credit
  • Well known and used widely, with FIAT currency protected when stored on CoinBase
  • Easy to use mobile app and live price monitoring

Cons of CoinBase

  • Credit purchase limit, takes time to link debit account
  • Horror stories of users losing money with no customer support
  • Only able to purchase main coins – currently only 4 coins are listed

Kraken

As another highly popular digital currency exchange (widely considered the second most popular), Kraken is responsible for over $5 billion dollars’ worth of transactions.

With multi-factor authentication and very strong support staff, the system is very reliable and widely used by most of the crypto world’s most vocal advocates. Kraken is a good exchange that meets regulations, so your identity must be verified by providing proof of your address before you can deposit FIAT currency.

This means it will take longer to get started, but your money will be a bit safer as you know everyone depositing their money into the exchange to trade has been verified as well.

If you plan on trading often and riding the waves, then it makes sense to keep your coins on the exchange to quickly be able to buy and sell coins. If you plan to hold the coins you trade for, you should withdraw your currencies. Either way, you should activate 2 factor authentication for an added layer of security. Make sure to back-up the 2FA key so you don’t lose your funds if you have to replace your phone.

Using the platform in this way is relatively safe, but if you begin to trade larger amounts of altcoins, we recommend using a paper or hardware wallet.

Gemini

Run by the Winkelvoss Twins (of Facebook fame), Gemini is considered the third best crypto exchange, and is highly reliable. The most important thing to realize with this system is the way in which the Twins have the majority of their Bitcoin holdings inside the system, too. This makes them personally involved with the project.

Cex.io

Widely considered the most popular Bitcoin Exchange in Europe, Cex.io has been online since 2014 and is based in London. With low fees and the ability to withdraw funds immediately, it’s one of the most effective systems for transacting crypto assets outside of the US.

LocalBitcoins

One of the few crypto exchange services which actually has a centralized trust system for users, this is predominantly used by those who want to exchange crypto2 tokens between individual members. Although not the most popular system, it is by far one of the most effective.

A Word On Cryptocurrency Exchange Scams

As aptly demonstrated by the MtGox scandal – whereby users’ tokens were kept in a central server, which was consequently hacked – the reliance on exchanges as an effective way to transfer crypto assets is very precarious.

The main problem with crypto is the low barrier to entry. Literally anyone can create a crypto asset (both Bitcoin and Blockchain are 100% open source), which has attracted the usual smattering of people with questionable intentions.

And whilst it’s true the vast majority of the space is doing it for the joy of creating an effective system, there are a number of people who’d happily prey on the less-informed in order to make a quick buck.

The best advice you should take for the crypto world is to TRUST NO-ONE – keep your coins entirely to yourself except in the rare circumstances when you may wish to either exchange them with others or buy and sell more.

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