Which exchange is best for cryptocurrencies and the safest
Which exchange is best for cryptocurrencies and the safest

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Cryptocurrency Exchanges are online trading platforms that allow you to purchase and sell cryptocurrency easily. These trading platforms work as an intermediate between the buyers and sellers like any other popular trading exchange. Many crypto exchange platforms allow users to trade in various Cryptocurrencies easily.

Investing in cryptocurrencies may not be right for everyone, as they’re still a somewhat speculative investment. Whether or not they make money in the long term, investors can expect a roller coaster ride. That said, if you believe in the long-term potential of cryptocurrencies and have a fairly high risk tolerance, there’s nothing wrong with holding some digital currency as a long-term investment.

What is a cryptocurrency exchange?

A cryptocurrency exchange is a company that facilitates cryptocurrency transactions. Cryptocurrency exchange customers can buy and sell various digital currencies. They may also be able to do the following through the exchange’s platform (not an exhaustive list):

  • Exchange one type of cryptocurrency for another at prevailing exchange rates.
  • Exchange cryptocurrency for fiat currency (like U.S. dollars), or for cryptocurrencies tied to fiat currencies.
  • Spend cryptocurrencies, for example, using a linked debit card.
  • Access educational resources to learn about digital currencies.

Many of the best crypto exchanges have mobile apps which offer convenience if you plan to trade digital assets on the go

Our Top Picks for the Best Crypto Exchanges of October 2023

  • Coinbase – Best for Beginners
  • Binance.US – Best for Low Fees
  • Crypto.com – Best for Security
  • BlockFi – Best for Earning Interest
  • Bisq – Best Decentralized Exchange
  • Coinbase – Best for Beginners

Coinbase – Best for Beginners

Why we chose it: We chose Coinbase as the best crypto exchange for beginners because of its easy-to-use interface, extensive educational material on everything from blockchain to volatility, and robust security features.

If you’re familiar with crypto, chances are you’ve already heard of Coinbase. The exchange is one of the largest and most well-known in the U.S., and its debut on the public market last year was seen by many as a legitimization of the crypto market.

The Coinbase platform does a great job of lowering the barrier to entry for investing in crypto, with a straightforward onboarding process that eases users into trading. At the same time, its interface makes navigating the platform and managing crypto a seamless experience.

Coinbase also features a comprehensive and accessible variety of learning materials. Users are encouraged to use these resources through the Coinbase Earn program, which teaches how to trade specific cryptocurrencies and rewards users with free crypto.

Lastly, the exchange’s security features are worth mentioning: Coinbase uses two-factor authentication on all versions of its platform, stores 98% of customers’ crypto offline, and has an insurance policy to protect custodial accounts of up to $250,000 (in line with per-depositor FDIC coverage limits). Such robust measures are why Coinbase is ultimately worth it, despite the higher fees.

Users who enjoy Coinbase but would like more advanced trading and charting features may want to look at the company’s other exchange platform, Coinbase Pro

Binance.US – Best for Low Fees

Why we chose it: We chose Binance.US as the best crypto exchange for low fees because it features one of the most generous fee structures across all the trading platforms we considered.

Binance is the world’s largest cryptocurrency exchange by trading volume, and its United States partner, Binance.US, offers many of the former’s advantages. One of its greatest assets is a competitive maker/taker fee structure that tops out at 0.1%. This fee starts low and keeps getting lower as your trading volume increases.

Binance.US also offers discounts for using Build and Build (BNB), one of the world’s most popular utility tokens, to buy and sell other coins.

The exchange features more than 120 cryptocurrencies, all of which are purchasable with USD, saving money in conversion fees for those who want to buy crypto directly. This variety of discounts and purchase options benefits advanced users who may also enjoy the platform’s comprehensive market dashboards, margin trading, and variety of order types, including limit orders, market orders, and stop limit orders.

Binance.US is not available in Hawaii, New York, Texas and Vermont.

Crypto.com – Best for Security

Why we chose it: We chose Crypto.com as the best crypto exchange for security because of its multiple layers of protection against crypto fraud and cyberattacks.

Most reputable crypto exchanges feature a solid cybersecurity infrastructure, but this is where Crypto.com really stands out. The exchange is ranked first in the Cybersecurity Ranking and CERtification Platform’s top 100 exchanges by cybersecurity rating.

Crypto.com employs various techniques to keep users’ cryptos secure on its trading platform, including offline cold storage for all crypto, a regulated custodian bank account for traditional currency, and regular software peer-review. It also uses multi-factor identification with a password, biometric, email, phone, and authenticator verification.

In addition, its platform has successfully completed several penetration tests, which are simulated cyberattacks performed to evaluate system security, and has shown proof of its funds over the years.

Security isn’t Crypto.com’s only attraction. The exchange offers the largest selection of currencies among all the companies on our list — over 250 coins.

Other noteworthy features are its non-custodial DeFi wallet — which allows users to send crypto at their preferred speed and earn interest on tokens —, margin trading, prepaid visa cards to spend crypto, and crypto loans.

Bisq – Best Decentralized Exchange

Why we chose it: We chose BlockFi as the best crypto exchange for earning interest because it allows users to earn interest on their crypto and borrow money using Bitcoin as collateral.

Where most crypto exchanges offer bonuses and discounts for high-volume trading, BlockFi has chosen to create financial products that cater to conservative traders instead.

The exchange’s main highlight is its BlockFi Interest Account, offering up to 9.5% APY as monthly compounding interest to crypto investors who store their assets in the account. The platform also lets users use existing bitcoin as collateral for a loan.

In addition to its novel financial products, BlockFi also features an affordable fee structure and a strong cybersecurity infrastructure. The exchange charges spread fees and withdrawal fees, but no transaction fees for trading on its exchange. To keep your data secure, BlockFi uses tools such as two-factor authentication and allowlisting, which lets users ban withdrawals or restrict them to certain addresses to avoid theft.

Consumers should keep in mind that decentralized finance (DeFi) products and services like BlockFi carry significant risks related to the technology of the software, the assets involved, and compliance with regulators.

Coinbase – Best for Beginners

Why we chose it: We chose Bisq as the best decentralized exchange because it follows the ethos of Bitcoin best by maintaining an open-source platform that is completely decentralized without limiting currency support.

Formerly known as Bitsquare, Bisq brings the clean, easy-to-use interface and vast coin support of centralized exchanges to a decentralized environment. The platform is built on open-source software, meaning its design is publicly available, and the project is funded by personal savings and donations from its community of users.

Bisq doesn’t need a third party to conduct cryptocurrency transactions, nor does it require users to submit personal information to trade on the platform. It’s an excellent alternative for Bitcoin fans looking for a wide variety of coins to trade with, including altcoins like Cardano, XRP, and Dogecoin. In fact, it’s not typical for decentralized exchanges to support so many digital assets — and fiat currency.

Additionally, the platform’s security features, such as multisignature and a security deposit system, enhance the inherent safety and privacy of decentralized exchanges by ensuring that both parties act honestly and have complete control of their funds during the trading process.

Do you need a cryptocurrency wallet?

Cryptocurrency wallets are a safe way to store your digital assets, but you really only need one if you plan to amass large amounts of crypto assets or want to spend your crypto easily. The cryptocurrency you own is protected by public and private keys — a bit like your PIN and bank account number. You use a wallet to store your encrypted keys and keep them safe.

There are two types of wallet:

  • Cold wallet. This is usually a piece of hardware that is kept offline, making it extremely difficult to hack. Cold wallets cost between $50 and $150, and are often considered the safest way to store digital currencies.
  • Hot wallet. Hot wallets are connected to the internet, so they are not as secure. However, like normal wallets, they are a convenient place to keep small amounts of crypto you might want to use.

Until recently, when cryptocurrency became more mainstream, wallets were a lot more necessary. In the early days, several cryptocurrency exchanges fell victim to hacks. And at that point, if your crypto was stolen, there was no way to get it back. So long-term crypto enthusiasts use exchanges only for trading, and store their coins in their own wallets.

However, these days, it is a lot safer to leave your coins with the exchange or brokerage where you bought them. The best app for cryptocurrency will have excellent security and store your assets offline in cold storage. Several companies also insure the crypto assets they hold.

Moreover, some platforms don’t give you the option to move your digital currencies. For example, the crypto platforms offered by Robinhood or SoFi Active Investing are designed for investment purposes. So if you bought Bitcoin with them, you wouldn’t be able to move it out of your account.

In contrast, some of the best exchanges, like Coinbase and Gemini, have built-in wallets. Like any good exchange, each lets you transfer your currency to an external wallet as well, though you may have to pay a withdrawal fee. You may have to find a wallet that is compatible with your exchange.

Think about what you plan to do with your cryptocurrencies before you buy them. If you are investing long term and want to buy and hold, you may be happy to entrust your crypto keys to the exchange or brokerage. But if you plan to trade regularly or want to spend your coins, a wallet may make sense. In which case, you’ll need to look for the best app for trading cryptocurrency that will connect easily to your wallet.

What Makes a Cryptocurrency Exchange Safe?

There are a variety of factors that make an exchange safe, such as licenses, asset storage, insurance and account security. Below are some of the most important things to consider when looking at an exchange’s security and what they entail.

Licenses

Is the exchange licensed with the country it operates from? This can be FINTRAC for Canada, AUSTRAC for Australia, FINCEN or state licenses for US exchanges, or the FCA for UK exchanges, to name a few. If you are looking at an exchange and they do not have any licenses, then steer clear.

FDIC Insurance/Insurance Policies

Does the exchange have an insurance policy, whether through the FDIC or a similar body such as private companies? It is important that any exchange you use has some form of insurance in the event of a hack, even if they have never been hacked. This ensures that if their security fails, you will be covered.

Customer Support

Does the exchange offer customer support in the form of a live chat or phone support? An exchange needs to have some sort of customer support that is easily accessible if you run into an issue. Be wary of any exchange that has poor customer support or none.

Storage of Assets (Hot vs Cold Storage)

Does the exchange keep the majority of their assets in hot or cold storage? It is important for an exchange to keep most user assets in cold storage because this means they are inaccessible if the exchange is hacked. Make sure the exchange you are using keeps at least 90% of funds in cold storage, air-gapped if possible.

Publicly Traded Company

Is the exchange a publicly traded company? If they are, like Coinbase, then it means that they have undergone audits and other regulatory checks to reach that listing. While an exchange does not need to be publicly traded to ensure security, it helps because it means that the exchange has undergone thorough examination.

Two Factor-Authentication (2FA) and IP Tracking/Whitelisting

Does the exchange require users to enable 2FA or other IP tracking or whitelisting options? These security features help ensure that only the user whose account it is can perform transactions. It is better security if the exchange forces the use of 2FA, as this means they want users to play a role in their own account security.

Bug Bounties

Does the exchange offer bug bounties? An exchange that offers bug bounties is encouraging users to find fault with their programming so that they can improve their security.

It is a good thing if an exchange offers this type of bounty because it means that are confident in their security and that they are intent on continuously improving it. The same can be said of penetration tests.

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