Picking your Crypto Exchange

Picking a crypto exchange which you will trust with a lot of money is a lot like getting married. If you fail, you lose half of your money and your house. Maybe not, but losing any amount of hard-earned cash is painful, so we have put together this guide to help you make your choice, so you can be the one that was the smart one all along.

We hope you’re happy with the articles we have already provided for you in the blog’s beginner section. We’re aiming to get as many people onto the topic of blockchain and crypto as we can because we firmly believe blockchain is the future.

The technology, in fact, is developing so rapidly that what life will look like in 10 years pretty much no-onу can tell at this point. One thing is for sure: technology is the key. He who has the best information and can boast being the most technologically advanced will rule the world. It was immediately evident to Satoshi Nakamoto in 2009, and it became evident to most people when the coins that were 5 cents started retailing at $20 000 for a piece. And all it took was a little ingenuous (and ingenious).

You will probably already know the world’s first democracy is already being field-tested in the Swiss city of Gaz. We think blockchain has astonishing potential, and, in fact, it is being actively utilized by many major corporations around the world.

So, suppose you read too many sci-fi books, just like us, when you were a kid, and you decided you were going to do something wild and wonderful with your life and immerse yourself into the stellar and brilliant world of crypto where the wildest dreams (it has been proven) can come true. The first thing you will need is a wallet and a good exchange. After all, there is no point in working hard and then losing it all, just because bad things happen to good people. We always said preparation is everything, which is why we recommend you choose your exchange carefully and do your background research at all times.

Please don’t store all your money in in exchange, and if keeping money in cold storage is difficult for some reason, split the overall sum between several exchanges to minimize the risk.

We hope we have covered the most prominent exchanges so far. You will find them all on our site along with plenty of other information on projects and coins that are required to make an educated and intelligent decision.

We have provided a number of articles so far that give you a chance to familiarize yourself with the basic functions of exchanges. We must stress, however, that in order to get good results you will need to have read the Advanced and the Pro articles too.

As they are coming up, we are looking at probably the question you’re asking yourself at this point (we hope). Now that you have familiarized yourself with exchanges (and we recommend, actually, testing all of them we have covered so you can make an educated choice), the question is - which one is the best?

Could it be that there is one that is the best ever and all you need to do is join Binance and forget all about the rest? Do remember, however, that centralized exchanges are vulnerable to hacking due to the fact that they have one single point of failure, and everyone who’s anyone is gunning for Binance. If you think hacking isn’t a thing these days, think again. So, security is probably the most important thing, right? You could just wash your hands of it and join a decentralized exchange, but they too have stuff about them you want to consider first.

Let’s take a look at a list of things you want to see in your favorite ever exchange.

Remember that there are hundreds of exchanges out there, and the overwhelming majority is not regulated and specifies explicitly they are not required to refund you if anything happens. Even if you assume the exchange you’re dealing with is completely honest, there is the big elephant in the room.

We don’t want to be too obvious, but if you think hacking only happens to small exchanges like Coingather, far from it. Few exchanges, actually, do everything in their power to maintain great levels of security, so we recommend employing an independent agent before you join an exchange and actually have them evaluate it - or recommend a good choice.

Also, consider this: a lot of your personal information, from your address to your taxpayer ID, can go missing. And what happens when someone skilled and malicious gets their hands on your information is anyone’s guess. Probably the most famous example is what happened to Bitfinex in August 2016 - and crypto was worth a lot less then. Sqreen.io reports:

“We analyzed the security of 140 cryptocurrency exchanges and discovered some worrying security issues in most of them.Security shouldn’t be taken lightly (especially if you’re handling >$20billion a day…).The 10 biggest crypto exchanges have an average grade of 3.8 out of a maximum of 10 and a median of 4.5.We can do better.BTW the platform with the largest daily $ volume (on the day we did our analysis) only scored a 2/10.”

And further:

“Out of the 140 exchanges we analyzed less than 40% of them are using headers like the Strict-Transport-Security header or the X-XSS-Protection header. 20% expose server information which isn’t a security vulnerability in itself but that clearly shows the low level of security best practices implemented. And 26% of them use frontend libraries with known vulnerabilities. Only 2% implemented a Content-Security-Policy that, if done well, can offer powerful protection against clickjacking or XSS…

We can do better.

Our analysis isn’t saying that these exchanges have blatant vulnerabilities. But I’m questioning whether they implemented deeper security controls and protections if they didn’t implement basic security best practices that only take a few minutes (or seconds with Sqreen) to implement.”

As you can see, security is a big deal and exchanges don’t often take it anywhere near as seriously as they should. Screen just how safe you are and go to an authority on the subject is you’re going to deal with large quantities of funds. Kucoin is quite good in terms of security, we noticed. And do go through with it.

This can be tricky, and some exchanges cam offers limited variety, but essentially you want to be able to get your money out of an exchange and onto your card without using a third party, which will include wasting time and money. Trust us. Or try sending your money to a supported third-party company (of which there are fewer and fewer on the list) like Payeer, wait for them, get charged by the exchange to send the money, get charged by Payeer, wait for Payeer to send the money to your card, get charged by your card provider, pass about 10 security checks...you get us. Intermediaries are a pain, which is why blockchain was invented, to begin with.

Completely regulated Coinbase, which has branches all over the world, will let you (unless you’re in Hawaii, ha) get your money out into your bank account provided you are in compliance with all the security protocols.

It’s also very easy to get your cash out directly into your bank account with Gemini. Also note that Coinbase is a good choice in terms of security, which we talked about above. Note there are limitations and nuances when it comes to all these clauses, so please read the Terms and Conditions carefully:

“5.3. Central Bank Currency Transactions. You may purchase supported Digital Currency by linking a valid payment method, such as a credit or debit card, to your Digital Currency Wallet. You authorize us to debit funds using your selected payment method(s) to complete your purchase. Although we will attempt to deliver Digital Currency to you as promptly as possible, funds may be debited from your selected payment method before the status of your Digital Currency transaction is shown as complete and is delivered to your Digital Currency Wallet.

You may sell Digital Currency in exchange for central bank issued currency (such as GBP or EUR) supported by Coinbase. In such circumstances, you authorize us to debit your Hosted Digital Currency Wallet and to send instructions to credit your selected payment method(s) in settlement of sale transactions. We will send these instructions as soon as reasonably possible. Any GBP or EUR should be credited to your selected payment method(s) by the end of the business day after we send such instructions <...> We may suspend, restrict, or terminate your access to any or all of the Coinbase Services and/or deactivate or cancel your Coinbase Account, without reason by giving you two month notice. You acknowledge that our decision to take certain actions, including limiting access to, suspending, or closing your Coinbase Account, may be based on confidential criteria that are essential to our risk management and security protocols. You agree that we are under no obligation to disclose the details of its risk management and security procedures to you.”

This one is kind of a mixed bag, but we do believe a good interface means a lot. If you’re faced with a landing page of an exchange that looks like a chicken walked into a puddle of ink and then across the page (graphs included), not a good sign.

Exchanges should be reasonably well presented, like Okex, and feature a good support service, which is invaluable should something go wrong - and it will. Good support is always a good sign, and it’s great if they are always around, even at night, and get back to you quickly. We should also point out that even skilled veterans can get caught off guard and require support, so not only the new people need it.

The site should be easy to use, too, unless it’s specifically designed for pro traders, in which case it will be a complete nightmare, and have an intuitive interface. Like Albert Einstein said, the definition of genius is taking the complex and making it simple. Simple, however, doesn’t mean cheap, and good graphics are also a good indication. Not tacky. Just good.

Above anything, an exchange, like a good car, should feel comfortable to you and be associated with good experiences. If you’re getting too many issues with it, keep looking. After all, there are plenty of exchanges around, and some of them are clearly better than others.

Surprisingly, however, there is no clear correlation between trading volume and security, so we recommend exploring as many exchanges as you can, so you can find the best one, with these ↑ considerations in mind, and also getting familiar with the Advanced and Pro sections of the articles that are soon coming up.

Farewell, out thoughtful and loyal reader! Be careful margin-trading (or, better yet, don’t), read all the project documentation to the end, and keep providing your valuable feedback. We will be back in touch soon.