The cryptocurrency revolution that Bitcoin started has now become a global phenomenon. With a market capitalisation of $1072.21 billion, Bitcoin laid the foundation stone of today’s massive cryptocurrency industry. The increasing international interest in cryptocurrencies and decentralised finance paved the path for Ethereum to become the second-largest crypto by market value behind Bitcoin.
The Ethereum market cap soared to new heights of $250 billion and became one of the few cryptocurrencies with the most transactions of the ledger by 2021. Due to Ethereum’s versatility, it has become the choice of crypto investors worldwide. If you choose to invest in crypto, you can buy Ethereum AUD from Cointree and other such platforms to learn, buy and sell crypto.
Etherium would be the safest choice to start with for fresh investors who want to invest in crypto. But how to choose the best coin exchange to invest in Ethereum? It can get confusing for beginners; that’s why these seven essential crypto exchange features will help you find the best exchange to trade Ethereum.
Before you start your journey of investing in cryptocurrency, you need to register yourself on a crypto exchange where you can buy and sell Ethereum.
There are various evaluation criteria that you need to analyse before choosing the crypto exchange. Here are some aspects that will help you analyse multiple crypto exchanges and choose the best one.
The rising acceptance and popularity of cryptocurrency have resulted in new crypto exchanges and wallets. It’s essential to check the authenticity of coin exchanges as you will deal with a large sum of money.
A little background analysis will help you to choose a legitimate and secure exchange. There are numerous incompetent platforms that cannot protect the user data and also scam amateur investors. Read about any scam history or past data leaks about the exchanges you are planning to choose.
An authentic exchange also abides by the regional government guidelines and legalities. It’s best to check whether the exchange is legally registered and is also acknowledged and allowed by the government to operate in your country.
While it’s vital to test a platform’s authenticity, it’s also crucial to understand what security measures the exchange has deployed to protect the investors’ money. It also needs to be checked whether the exchange can secure your funds in a time of market fluctuations.
An ideal coin exchange provides 2-factor authentication such as Google Authenticator or an OTP service and multi-signature functionality to provide secure access to investor accounts.
Transaction fees play a significant role in choosing the correct exchange. A day trader who performs multiple transactions in a day doesn’t want higher individual transaction fees. On the other hand, separate transaction fees would not bother a long-term investor with fewer daily transactions.
Every cryptocurrency exchange charges different transaction fees. It’s essential to understand the fee structure to avoid paying higher prices on each of your transactions. An exchange with tokens charges lesser transaction fees than those without the tokens. Compare various exchanges based on their fee structure and the number of tokens they hold to find the suitable one.
Location plays a vital role while choosing a suitable exchange. The majority of exchanges only cater to customers from specific geographical areas such as countries.
Make sure the exchange you choose operates in the country you live in and accepts your preferred currency. It’s also important to understand whether it is legal to trade cryptocurrency in your country. Hence, choose an exchange with the proper licenses and certifications to operate in your country. Also, it would be better to select an exchange in the jurisdiction you are familiar with.
For example, Aussie investors can buy Ethereum AUD from Cointree and other such Australian crypto exchanges accepting AUD currency.
Type of Exchange
There are three types of exchanges based on their features, functionality, and usage.
Brokerage Platform: The user has to provide personal information to verify the account on brokerage exchanges. Brokerage exchanges allow the customers to buy and sell directly from the platform. They enable instant transactions and are perfect for new investors.
Peer to Peer Platform: Peer-to-peer exchanges are also known as P2P platforms. P2P platforms are the perfect choice for investors for whom privacy is the highest priority, and these exchanges allow direct one-on-one trading between two individual traders.
There is not any intermediate body to control or analyze the transaction between those 2 traders. The included parties decide upon the price and payment method independently, and the transaction is always anonymous.
The goal of P2P exchanges is to protect the privacy of the individuals who participate in the transaction. Although these exchanges maintain the anonymity of transactions, the security of funds is a personal responsibility of the traders.
Full Trading Platform: A full trading exchange acts like a real stock market, which puts many traders together and allows them to trade among themselves within the platform. These platforms use to order books to maintain buy and sell orders.
Some of them also provide special order types, customizable graphs, and margin trading. A full trading platform is more suitable for experienced investors.
Volume & Liquidity
A higher volume of trading is a good sign of the exchange’s liquidity and the ability to fulfil investor orders at any point in time, regardless of the size of the transaction. Liquidity is a vital factor, based on the type of trading you do, as it dictates your ability to purchase and sell cryptos on the platform.
If you plan to trade with two of the core cryptocurrencies- Bitcoin and Ethereum, it’s best to go for a centralised exchange. Centralised exchanges are highly liquid as well as very fast. The investors can fulfil their orders within seconds. They are also very secure as compared to other types of exchanges.
The exchanges that follow government regulations and deposit the investor funds in registered banks can provide government-backed deposit insurance to the investors’ fiat accounts. Some exchanges even take out 3rd party insurance on the crypto balances on their exchange.
There are many other evaluation criteria, such as user experience, design, purchase method, customer support, etc., to help you choose the best crypto exchange. Understanding your requirements and needs can help you shortlist the best exchange.