A Beginner's Guide to Cryptocurrency Exchanges

Cryptocurrency exchanges allow users to buy, sell and trade their cryptocurrencies. It's important to know that the most popular cryptocurrency exchanges are custodial, meaning they are the ones in possession of your coins. You are able to deposit fiat currencies directly, and trading on these exchanges is done off-chain, resulting in cheaper and faster transactions (trading is tracked on their balance sheet instead of being verified by the blockchain, which also makes it less transparent).

Although nowadays exchanges are getting more and more secure, it is still not advised to keep large amounts on exchanges. If possible, store your crypto in your own wallet. Also when choosing your exchange, make sure it supports all of your digital asset needs. Now let's dive into the world of cryptocurrency exchanges!

Fees: Between $0.99 and $2.99 depending on the dollar value of the purchase.

Binance

Kraken

 
 

Coinbase (Best for beginners)

Coinbase is one of the biggest licensed and fully regulated cryptocurrency exchanges, founded in 2012. It has a really simple interface, and generally, this exchange is very easy to use. It was one of the first exchanges to find mainstream popularity in the US. This community usually advises newbies to start with Coinbase, as it is extremely easy to use. Later on, we advise you to switch to more advanced exchanges such as Binance or Kraken.

Additional tips:
 

  • If you learned the ropes using Coinbase, then Coinbase Pro can be a decent next step if you're okay with trading only a few altcoins this exchange offers.
     

  • You can earn some crypto using Coinbase Earn. You'll only need to watch a few educational videos, and if you can solve the quizzes after that correctly, you'll earn a few coins.

Additional tips:
 

  • Through Binance Earn, you can invest your coins using Locked Staking, Defi Staking, Launchpad, etc. A great way to make passive income while also HODLingyour coins. Please DYOR on risks and rewards. Beware that you can stake from your own wallet as well.
     

  • You can order the Binance Visa Card, which helps you convert and spend your favorite cryptocurrencies at more than 60 million merchants worldwide. You just need to transfer crypto from your spot wallet to your card wallet, and you're ready to go. A great way of making profits.

What to look for when choosing your exchange?

 
 

PROS

CONS

✅ Very easy to use

✅ Trustworthy exchange

❌ Higher fees

❌ Fewer altcoins are available

Binance.com (or Binance.us if you're a United States resident) offers the most cryptocurrency trading pairs of any trusted exchange, and it also has the highest trading volume among exchanges. You can directly purchase crypto with a credit or debit card, and over 20 fiat currencies are allowed currently. An ideal choice if you're more familiar with cryptos.

PROS

CONS

✅ Very low fees

✅ Large selection of cryptos and trading pairs

❌ Binance US is not supported in 13 states

❌ It is meant for advanced users

Fees: 0.1% for the taker side and 0.1% for the maker side. This scales down with trade volume to 0.02% for both sides of the trade. Using Binance’s native cryptocurrency, BNB, lowers fees by 25%.

This exchange is one of the oldest ones, launched in 2013. It replaced the once-dominant Mt. Gox, and has kept its reputable place ever since. Kraken supports 7 fiat currencies and has the 4th biggest trading volume among cryptocurrency exchanges. Another thing to like about Kraken is that they accept users from around the world. Kraken is also known for its amazing customer service, as compared to the other exchanges.

PROS

CONS

✅ Never been hacked

✅ Low fees

❌ Had problems with a huge influx of new members in 2017.

❌ More suitable for advanced users

Fees: What you are charged per trade depends on whether you are buying or selling. Buyers usually pay 0.16% and sellers usually pay 0.26% on each trade.

Additional tips:
 

  • Jesse Powell, the CEO of Kraken warned users NOT to keep funds on trading platforms for a long time. Make sure to follow his advice and use your own wallet.

  • low trading/deposit/withdrawal fees,
     

  • adequate customer service,
     

  • whether it had any security issues in the past (hack, cyber-attacks, etc.),
     

  • whether your preferred deposit method is available,
     

  • and whether said exchange supports the coins you want to buy/trade.
     

There are more exchanges that could fit your needs, but Coinbase, Binance, and Kraken should be satisfactory for most of the new folks in this sub. Don't forget to do your own research, and keep your coins safe! :)