A rise in popularity for cryptocurrency means we are now spoilt for choice when it comes to choosing an exchange to buy, sell, and trade cryptocurrency.
Keep reading to discover our top 5 things to look out for when using a crypto exchange.
When choosing an exchange it is best practice to ensure that it is secure and authentic. Security on exchanges is imperative, as it is an important element in the protection of your crypto portfolio.
Look out for an exchange that implements:
- SSL certificates (check the web address for ‘https://’ at the start of the URL) and offer bug bounties for vulnerabilities found on their site.
- Strong password requirements such as a minimum length, a mix of characters, numbers, and symbols
- Two-Factor Authentication (2FA)
- ID verification procedures
Two Factor Authentication
Two-factor authentication, also known as ‘Enhanced Security’ on CoinJar or more casually known as 2FA, is a method of authentication that helps to verify your identity when signing into a service.
Two-factor authentication uses a combination of two different factors, such as something you know, something you have, or something you are. Generally speaking, 2FA involves sending you a one-time code to a device you have. Once the code has been entered you will be able to sign in to your account.
Most exchanges require users to fully verify their identity to comply with relevant local, state or federal government regulations. ID verification is in place for exchanges to ensure the legitimacy of their customers and the transactions they are making on the exchange.
In most cases where exchanges require verification, users won’t be able to deposit or withdraw fiat currency to and from exchanges without undergoing full ID verification.
Processes of verifying identity will vary between exchanges and wait times can take between a few minutes to a few days to become fully verified. Here at CoinJar, we use Digital iD™ exclusively to verify all Australian customers as it conforms to Safe Harbour AML Rules. Digital iD™ allows users to become fully verified within a matter of minutes and begin trading!
User interface and experience
The user interface and functionality of the overall experience when interacting with the exchange is another key factor.
An intuitive interface and good user experience will assist user actions on the exchange to be more informed and efficient.
The ability to customise the layout of the trading interface and switch from light to dark themes are a few features integrated into CoinJar Exchange that attribute to a more user-friendly interface and experience.
User experience is subjective and preferences of exchange interfaces will vary from person to person. However, you should consider what you would like to utilise out of an exchange and how the interface will enable this.
An Application Programming Interface (API) facilitates an exchange of data between two systems or devices. In this instance, an exchange’s API can enable programmatic viewing of current prices or trends, historical price data, and more.
With data pulled from an API, you can build your own applications or scripts to react to changes in the data – such as creating your own alerts for price changes, trading bots, or posting tweets when a cryptocurrency goes to the moon. APIs are generally used by advanced users or developers, but with some basic knowledge, you can utilise almost any API.
CoinJar Exchange offers two different APIs, as well as a Data Feed. The CoinJar Exchange Data API offers a REST-style API for your applications to access public market data. The Trading API offers the ability to manage orders and accounts, which allows for trading bots to be built.
Methods for purchasing cryptocurrency can vary between exchanges. Deposits by bank transfer, PayPal, credit and debit cards are a few common ways exchanges allow you to buy cryptocurrency.
If you are just starting out and don’t currently own any cryptocurrency, then it is necessary to choose an exchange that accepts fiat currency so that you can purchase crypto to enter the market.
It is also important to note the time it takes to complete purchases. Some exchanges can process transactions almost instantly, while others can take up to a few days for the funds to appear in your account.
Fee structures can vary between exchanges. Depending on the volume of currency you are trading, the rate of an exchange’s transaction fees can be a key element when choosing an exchange.
Tiered subscriptions are utilised by some exchanges to offer lower fees to higher volume traders. CoinJar Exchange follows a tiered subscription plan where plans are based on the volume of cryptocurrency you trade. If you are a high volume trader, tiered subscriptions can be beneficial to lower the cost of overall fees and gain access to additional support services.
In contrast to a tiered subscription, other exchanges may have a flat fee structure. Meaning that there is one standard trading fee no matter the volume of currency you buy, sell or trade.
Choosing the right exchange will impact your overall trading experience. It is important to choose an exchange that will suit your needs, trading style, and will have all the features that you will require.
Make sure to check out our advanced trading platform CoinJar Exchange.