How to Choose a Crypto Exchange?

Buying cryptocurrency seems like a nice way to earn passive income. People who invest wisely get great profits. It seems that there is always a promising cryptocurrency or two to invest in. But where to get these promising coins.

The easiest way is to use exchange platforms. For example, you can convert btc to xlm on one of such exchange platforms. If you don’t have cryptocurrency yet, you may even convert fiat money to the coin of your choosing. But how to choose a crypto exchange and what types of platforms are there?

What is a Crypto Exchange?

It’s a platform where you can exchange one type of cryptocurrency for another. It has a similar idea to traditional exchanges, but with several differences. For example, there are different types of exchanges to use. Some exchanges require proving your identity to make sure the account is safe. Moreover, to secure access to funds some platforms offer a two-step authentication procedure.

Types of Cryptocurrency Exchanges

As it was mentioned, crypto exchanges can be of different types. The main two are as follows:

  • decentralized;
  • centralized.

A decentralized exchange speaks for itself. It is based on blockchain technology and requires having an account. It’s a peer-to-peer exchange, meaning, you need to find a buyer for your coin on your own. There are no third-party helping sellers and buyers find each other, but it at least has no fees. Another disadvantage is that you can’t buy cryptocurrency by using fiat money.

A centralized cryptocurrency exchange is based on the idea of having a third party as an intermediate to help to hook up buyers and sellers. The advantage is understandable – you can buy or sell coins any time you wish. Moreover, you can even buy coins by using fiat money. But using centralized exchanges requires fees. 

Tips on Choosing a Reliable Crypto Exchange

If you prefer acting quick, then it’s best to use a centralized exchange. It will allow you to react fast and buy a promising currency, or sell the one you believe may go down in price. Moreover, a centralized exchange offers you to buy currency by using fiat money, so you can start by using this type of website and then if you like, proceed with a decentralized platform. 

As for how to choose a platform, here are a few tips:

  • It should be safe. If it still has no safe connection to the Internet, it’s not worthy of your attention. Take a look at the certificate, it should be HTTPS, only in this case your personal and financial information is safe.
  • The availability of various coins. If the exchange has only a few most known coins, then it won’t be of any benefit to you.
  • The ability to purchase crypto coins by using fiat money. You may not have cryptocurrency just yet, or you have fiat money and wish to invest in more coins, and you will be able to do it only if the exchange allows this type of operation. 
  • Quality interface and good overall experience. If the site is difficult to use, maybe, it’s best to find another option.

The exchange of your choosing should be protected and have tons of coins in stock. Only then will you have good experience with investing in digital tokens.