The Bitcoin trading price is nowhere near its astronomical high of $20,000 per coin. In reality, that’s not a bad thing.
You might find now is a perfect time to buy your first cryptocurrency. There are a vast number of cryptocurrencies to choose from, and a bunch of cryptocurrency exchanges to purchase them from, too.
But how do you know which exchange to use? Who’s worth trusting and who should you stay away from? How much will you pay to use the trustworthy exchanges? Let’s take a look.
How to Choose a Cryptocurrency Exchange
Before diving into the exchanges, let’s think about your cryptocurrency skills and what you need in your cryptocurrency exchange.
- Reputation. Before anything else, is the cryptocurrency exchange reputable? Does it have a solid history without bungling payments, withholding user funds, or simply stealing everyone’s currency?A cursory internet search usually uncovers any interesting negative stories. Now, there are always some bad experiences. In those cases, read the story, then see if there are a bunch of similar experiences from the same exchange. If so, you might want to give that one a miss.
- Fees. Next up, how much is it going to cost you to use the exchange? The vast majority of exchanges charge a nominal percentage of your transaction, varying between exchanges.Obviously, you don’t want to pay over the odds. But sometimes paying slightly more secures a better overall experience, so it is about finding a happy balance.
- Payment Types. How many different ways can you purchase cryptocurrencies on the exchange? Do they accept bank transfers? Debit and credit cards?Few sites accept PayPal as a valid payment type due to the high risk of fraudulent transactions (stolen accounts and so on).
- Verification. The vast majority of sites require at least some form of user identification. Verification varies between sites but usually involves a driver’s license, passport, or similar. Some sites, like GDAX, require multiple forms of user identification before verification.
- Geography. Does the exchange have any geographical limitations? Some cryptocurrency exchanges only serve customers in certain locations.
The Best Cryptocurrency Exchanges
The cryptocurrency exchange you choose will depend on what you want to buy. Some exchanges only offer the major cryptocurrencies for sale: Bitcoin, Ethereum, and similar.
There are thousands of smaller cryptocurrencies, too, most of which are listed on smaller exchanges. Finally, there are exchanges that (appear) to exist to pump and dump cryptocurrencies (though large exchanges aren’t impervious to this issue, either).
There is no right or wrong cryptocurrency exchange. Exchanges vary, have individual quirks, pros and cons. Here are five you need to check out.
Coinbase and GDAX are actually two different exchanges under one roof.
Coinbase is an important and well-respected fiat-to-cryptocurrency exchange (actually, it is a broker, but as we’re talking about GDAX it is worth considering). It is perfect for cryptocurrency newcomers in that is secure, easy to use, and accepts a range of fiat currency sources.
Furthermore, to keep things simple, Coinbase only lists four cryptocurrencies: Bitcoin, Bitcoin Cash, Ethereum, and Litecoin.
One major Coinbase downside is their fees. Making multiple fiat-to-crypto transactions quickly eats into your bank account. Fees vary by payment method and by country. Coinbase is also known to track and store data on how their users spend cryptocurrency purchased on the site.
While this is to protect Coinbase against cryptocurrency spent purchasing more nefarious goods and services, it is something to be aware of. (All good cryptocurrency advice says transfer your Bitcoin to a secure wallet, anyway, severing the line of tracking.)
GDAX is the Coinbase cryptocurrency exchange. The GDAX exchange features the same four cryptocurrencies but with fiat pairings. This means you can freely trade between Bitcoin and USD, for instance. Also, unlike Coinbase, there are a variety of order types, allowing you to place an order ahead of time to catch the highs and lows. GDAX does not allow any margin trading.
Like Coinbase, GDAX has an accessible interface that you will learn in a few minutes. Furthermore, as the Coinbase trading exchange, you pay significantly lower fees on GDAX than on the regular retail site. You can also move any cryptocurrency from Coinbase to GDAX without attracting a fee.
Useful for: Absolute beginners.
Not useful for: Day traders, those looking for altcoins.
Binance is one of the top cryptocurrency exchanges, both by trading volume and overall usability. Binance features a substantial range of cryptocurrencies and is often one of the first exchanges to list exciting new cryptocurrency projects.
Unlike GDAX, Binance is a strictly crypto-to-crypto exchange, with all trading pegged relative to Bitcoin, Ethereum, USDT (Tether), or Binance’s in-house currency, BNB.
The Binance interface is slightly clunky, but advanced users will quickly find their way around. Newcomers might need some extra time, but it isn’t overwhelming. Finally, Binance trading fees vary between 0.05 and 0.1 percent, which is quite reasonable.
Useful for: Intermediate users and onwards, day traders.
Not useful for: Trading fiat currency, beginners.
Bisq, formerly known as Bitsquare, is a relatively popular exchange that is also completely decentralized (unlike many of the alternatives on this list). Bisq regularly appears on lists of the most secure and private cryptocurrency exchanges, too, and its open source code further adds to those credentials.
Aside from its security and privacy credentials, many users prefer Bisq for its easy fiat-crypto trading. You find a user selling the type of cryptocurrency you want, contact them, and make your payment.
Bisq presides overpayments, arbitrating any sticky situations and making sure everything flows smoothly. In that, Bisq is a specialized cryptocurrency exchange, rather than a full altcoin exchange, like Binance.
Useful for: Trading between fiat and cryptocurrencies.
Not useful for: Rapid day trading, beginners.
BitMex differs from the other exchanges on this list. Instead of trading fiat-to-crypto or crypto-to-crypto, BitMex offers futures contracts on several leading cryptocurrencies. A futures contract obliges the user to buy or sell cryptocurrency at a predetermined future date and price.
BitMex users also speculate as to the position (the price) of a cryptocurrency in relation to a futures contract (known as an option).
One major difference from regular exchanges is the concept of leverage. BitMex users can use leverage to increase the amount of potential profit (but also lose more, too). BitMex users effectively bet on the volatility of Bitcoin and other cryptocurrencies rather than trading the currencies themselves. In that, BitMex is one of the more difficult exchanges to navigate initially.
Useful for: Advanced traders, swing trading, futures contracts.
Not useful for: Fiat-to-crypto, crypto-to-crypto, beginners, even intermediate users should exercise caution.
Your final cryptocurrency exchange to check out is LocalBitcoins. LocalBitcoins is a peer-to-peer Bitcoin exchange. Users directly contact the seller or buyer listing Bitcoin at a price they agree with, as well as a payment or sale method. LocalBitcoin vendors accept a truly staggering range of transaction methods, including gift card codes, PayPal, altcoins, wire transfers and more.
The combination of sales and payment methods, and vendors working in “248 countries” makes LocalBitcoins one of the most popular Bitcoin exchanges.
Furthermore, LocalBitcoins is an instant trade platform. Depending on your payment or purchase method, your transaction might be over in minutes. And finally, the LocalBitcoins interface is one of the easiest to use, allowing you to sort vendors by country, payment type, currency type, and more.
Useful for: Quick fiat-Bitcoin transactions, some altcoins, all user abilities.
Not useful for: Swing trading, crypto-to-crypto, day trading.
Are Other Cryptocurrency Exchanges Worthwhile?
There are more cryptocurrency exchanges out there. A lot more, in fact. Some users won’t agree with the cryptocurrency exchanges on this list, either, because everyone has their preferences. But these five exchanges represent a blend of beginners-to-advanced tools, tools for day and swing trading, and quick crypto-fiat transactions.
The most important thing to remember is remaining secure with a solid Bitcoin/cryptocurrency wallet!