Learn about the different types of cryptocurrency exchanges and the criteria for choosing the best crypto exchange sites
A cryptocurrency exchange is a business where people can trade cryptocurrencies for other assets, typically fiat money or other digital currencies. The cryptocurrency exchange brings the buyer and seller of different cryptocurrencies together in exchange for a fee whenever a trade is made. Some exchanges focus on a few select cryptocurrencies while others will deal in a large number of coins.
There are exchanges that only handle cryptocurrencies while others deal in additional assets such as stocks or other services such as crypto loan or crypto savings accounts. There are two basic types of cryptocurrency exchanges:
A centralized cryptocurrency exchange is a company that provides a platform for trading cryptocurrency. These companies facilitate and monitor transactions and secure the buyers’ and sellers’ assets for a fee. Their deals are not tracked on the blockchain. Centralized exchanges require the registration and identification of users to comply with the KYC rule. Typically centralized crypto exchanges provide users with flat pairs at stable prices. They are the most popular type of cryptocurrency exchange.
Decentralized cryptocurrency exchanges have no third party oversight and allow peer to peer trading. They are sometimes known as an instant crypto exchange since users don’t have to fulfill KYC requirements. Fees will generally be less on this type of exchange.
There are more choices than there ever has been when looking for a cryptocurrency exchange. CoinMarketCap tracks over 250 different exchanges and there are probably several hundred more that it doesn’t. So what is the best cryptocurrency exchange? There are plenty of good ones out there and what is best for one person may not be best for somebody else. Some investors make multiple trades trying to earn Bitcoin and other cryptocurrencies through the volatility of the crypto market. Others prefer to just buy crypto and hold it, waiting for the price to increase. When choosing a crypto exchange site, there are some basic criteria that should be considered:
To make things easier we have provided an overview of a few of the most popular crypto exchanges in 2022.
Binance Cryptocurrency exchange was founded in 2017 and is now the largest crypto exchange by volume. They support over 175 different cryptocurrencies including top coins like BTC, ETH, and LTC. Their services are available in over 100 countries. US dollar deposits are not allowed but they accept 20 other fiat currencies including the Euro. Funding methods are debit and credit cards, wire transfer, and ACH. There are over 600 different trading pairs offered on Binance and a few fiat/crypto pairs. Binance has both mobile and desktop applications in addition to their online website.
Kraken was founded in 2013 and is one of the oldest crypto exchanges in the industry. They are the fourth largest cryptocurrency exchange by trading volume. They support almost 40 different cryptocurrencies including Bitcoin, Ethereum, and other top cryptocurrencies. There are over 150 trading pairs offered on their site. Kraken supports 7 fiat currencies including US dollars and the Euro. Kraken has never been hacked and stores most of its crypto offline. Trading fees range from 0% to 0.26%. Accounts can be funded by wire transfers or bank accounts (ACH).
eToro was launched in 2006 and is an online broker and trading platform for stocks and cryptocurrency based in Israel. They support 16 different cryptocurrencies including Bitcoin, Ripple, and Ethereum. One thing eToro is noted for is their no fee crypto exchange. These are actually commission free trades as long as traders don’t leverage or short-sell the asset. The minimum deposit to get started at eToro is $1000.
Gemini crypto exchange is based in New York and was founded in 2015 by Cameron and Tyler Winklevoss. Gemini is known for its safety and compliance with US laws and regulations. The site supports over 45 coins including Bitcoin, Ether, and Chainlink. Gemini also has its own stablecoin, the Gemini Dollar (GUSD). They accept several fiat currencies including USD, AUD, CAD, EUR, GBP, SGD, and HKD. Fiat currencies can be deposited by domestic or international wire transfer or via ACH bank transfer in the US.
There are over 4000 cryptocurrencies in existence as of 2021. Many of these have very little if any following or trading volume. However, there are others that are very popular with investors. Many of those who are considering investing in crypto are looking for an online crypto exchange sites that deals in the top cryptocurrencies.
Bitcoin is the best known and most widely adopted cryptocurrency. It was launched in 2009 and has an approximate market capitalization of $600 billion. The return on BTC in 2020 was 309%. Almost everybody has heard of Bitcoin and it is still an attractive crypto for investors. Bitcoin on its own makes up almost the-thirds of the cryptocurrency market. Despite its popularity, there are some negatives for Bitcoin. Its ledger is unwieldy and transactions can take over 15 minutes to clear. Some of the best exchanges for BTC trading are Binance, Kraken, eToro, and Gemini.
Litecoin was released in 2011 and is often referred to as the silver to Bitcoin’s gold. The approximate market capitalization of Litecoin is $12 billion. In 2020 LTC was up 140%. One of the advantages of Litecoin is that a block can be verified and added to the blockchain in 2.5 minutes which is much faster than Bitcoin. There is also a cap of 84 million Litecoins which is 4 times more than Bitcoin’s cap. Some popular Litecoin exchanges are Binance, eToro, Gemini, and Kraken.
Ethereum was established in 2015 and has an approximate market capitalization of $100 billion, making it the second biggest cryptocurrency. In 2020 the return on ETH was 470%. Part of the reason for its popularity is the technology behind it and the ability to create smart contracts. Ethereum is also fast and transactions can be cleared in 15 seconds as opposed to Bitcoin’s 15 minutes. It has also been widely adopted and there are over 600,000 wallet addresses in use. Investors can trade ETH on Gemini, Binance, eToro, and Kraken.
Ripple’s XRP is a centralized cryptocurrency that was established in 2012. It has an approximate market capitalization of $13 billion. The return on XRP in 2020 was 16%. XRP differs from many cryptocurrencies in that it is mined, managed, and administered by Ripple Labs rather than a community. This gives XRP the benefits of centralized payment processors including the ability to negotiate with large banks. It is used by some financial institutions as an alternative to the SWIFT network. The best exchange for XRP trading may be Binance or Kraken but it is also available on other exchanges like eToro.
Cryptocurrency exchange rates are basically the price of that particular crypto in a base currency such as US dollars. When referring to a crypto exchange rate people usually mean the price of that cryptocurrency on a leading exchange or a composite price made from the average of multiple exchanges. The price of specific crypto on an exchange is generally the price of the last transaction. Crypto exchange rates can be affected by a number of factors including:
Crypto exchange reviews are a good way to learn about different exchanges and see what they have to offer. They provide the readers important information such as fees, cryptocurrencies, and fiat currencies supported on a site, minimum trade amounts, and security measures among other things.
The purpose of cryptocurrency exchanges is to match buyers with sellers for which they charge a fee. Investors can opt to buy or sell crypto. The basic process to use a crypto exchange is simple:
Decentralized cryptocurrency exchanges allow direct peer to peer crypto transactions. They provide essentially the same services as centralized platforms but rather than a third party overseeing and securing transactions, these actions are handled by the blockchain using methods such as smart contracts. Orders, the matching process, and all other processes remain stored on the blockchain. Crypto exchange fees tend to be less on decentralized exchanges and there are generally no KYC requirements. Learning how to use a decentralized crypto exchange does require some experience with cryptocurrency markets and is not recommended for beginners. There are several good platforms but Uniswap may be the best decentralized crypto exchange in 2022.
The size of a cryptocurrency exchange is usually based on crypto exchange volume of trades. The biggest crypto exchanges by trading volume are:
A cryptocurrency exchange app allows users to trade crypto and manage their cryptocurrency portfolio right from their mobile phones. There are plenty of options to choose from which can make selecting an app difficult. Users will want to consider factors like security, supported pairs, and location when considering which crypto exchange app to install. Here are a few of the best cryptocurrency exchange apps in 2022:
There are many good crypto exchanges. The best one for you is the one that offers the crypto and service you want with fees and security you are comfortable with. Binance, eToro, Gemini, and Kraken are all excellent cryptocurrency exchanges.
Learn the relevant regulations where you will conduct business and select a bank or payment provider to work with. Obtain the necessary software by buying it, building it, or using an open source script. Establish a transaction history and liquidity on the exchange, possibly by joining a network of exchanges.
The best crypto exchange websites depend on the user’s needs. Binance is the best for those wanting a lot of cryptocurrency options and pairs. Kraken has some of the lowest fees and excellent security, while Coinbase is a good choice for beginners.
Typically when people talk about the biggest crypto exchanges they are referring to those that have the largest trading volume. The biggest crypto exchanges by trading volume are Binance, Huobi Global, Coinbase Pro, Kraken, and Bitfinex.
