If you have plans to step into the Bitcoin currency world, the first step that you need to take is to choose the most suitable digital currency exchange. There are many points that have to be considered while making the choice. Some of the factors to be kept in mind are the needs of the investor, the trading volume, the resident country, security aspects, etc., among others. Read on to get to know how to choose the best Bitcoin exchange.
Location of the Exchange
It is important to find out where the Bitcoin exchange is located as regulations and laws vary by the country. In fact, many of the countries do not as yet have any laws that relate to digital currency. The best option would be to buy Bitcoins in your home country. It is a good idea to start with a Bitcoin exchange list with the corresponding country of location and choose from it. At this stage it is also important to read through the terms and conditions of the exchange that you intend to choose.
An important point that you as the user has to keep in mind is the currency pairs that ae offered by the exchange for trading. Ensure that the currency that you are going to trade with suits your needs and will help you to meet your financial goals. Exchanges that offer the highest number of trading pairs are Binance, FTX, Coinbase, Kraken and Poloniex.
Depending on user requirements there are some order types that the investors may prefer. Experienced users may require options for trading such as futures and derivatives.
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Purchase of Bitcoins
When you want to invest in Bitcoins, it is good to find out as to how you can pay to make the purchases. You will have to ascertain if the method of payment is through credit cards, PayPal or wire transfers. The payment method also determines how private you want the transaction to be.
It is important to choose an exchange that does not charge exorbitant fees. There are some exchanges that also charge an additional commission of fee over and above the transaction fees that is charged. Most Bitcoin exchanges charge a percentage and over time buying and selling Bitcoins may be an expensive proposition because of this factor. Some exchanges with the lowest fees are Binance, OKcoin, Whaleclub, and Bitfinex.
Any exchange would have an order volume that indicates the number of investors using the exchange to buy and sell. It is a good idea to go through this before making a selection. A high volume is indicative that a large number of users transact with the exchange. It also indicates a higher amount of liquidity. The amount of liquidity that the exchange has is an important factor when choosing one. Liquidity also indicates the ability of the exchange to sell the Bitcoin without any significant change in price.
It is also important to note that an exchange without an order volume cannot be discounted. It can be still legitimate. The absence of an order volume may be because it has not published one or the volume is not big enough yet. Some of the exchanges with the highest liquidity are Binance, OKcoin, Coinbase, and Huobi.
Receipt of Bitcoins
Though the time of receipt of Bitcoins after purchase varies from one exchange to the other, it is important to know when the digital currency will reach your account after purchase. Checking for ‘locked-in’ prices is important. This means that you will be charged at the same rate as when you purchased it even if the Bitcoins arrive late in your account.
It is difficult to remain anonymous if you purchase Bitcoins through an exchange. However, before choosing an exchange, it is vital to check if the exchange follows anti-money laundering and KYC regulations that are set by the country in which the exchange is located. If n you as the investor have to send them some identity related information when you intend to start an account with the exchange.
Ensure that your online Bitcoin exchange is secure enough. The website should be covered by the HTTPS protocol which indicates increased security. Two-factor authentication while logging into an individual account is another indicator of high security.
At present many countries do not have regulations relating to Bitcoin transactions. However, all of today’s happenings indicate that this is going to change with the coming times. With increased exposure in the media, there is every indication that the government will want to excess a certain amount of control in Bitcoin transactions. This is with a view to prevent Bitcoins from becoming a medium for illegal activities.
As the Bitcoin is a digital currency, such exchanges always stand the risk of being attacked/hacked. If a Bitcoin exchange is hacked, the volatile cryptocurrency may lose its value. Hackers benefit from such acts. IT is always, therefore, important to check the site’s accessibility. One tool that is commonly used for the purpose is ‘host-tracker’. If the required URL is keyed in, this tool tries to access the site from different hosting partners in different parts of the world. The software tool also allows you to receive email/SMS alerts that keeps you informed of the site’s uptime. The accessibility is therefore an important point to be factored in when choosing an exchange.
Ease of Use
The exchange website should be easy and simple to use. In these days when most people are on the ‘go’ most of the times, accessibility of the site on the mobile platform is important. It is also important that the app is responsive to both Android and iOS mobile devices Binance, OKcoin, Coinbase and Kraken purportedly have good interfaces and also offer support on mobile devices.
For new investors, responsive customer support function is vital. Reliable customer support is a major factor to be considered by a new investor when choosing an exchange. A good customer support function can save the trader many a heartache in the future.