Are you confused in search of the right cryptocurrencies? Do all those
options available can add to your picks? If you are looking for the answer for
the same, look no further, you will get your queries answered in the coming
sections.
Hi Friends and welcome to Life Lessons Aj
What is a Cryptocurrency Exchange?
Today, you know what Cryptocurrency is. You also know how to transact them. If you don’t know how this is done, check out the previous episode to know How to transact Cryptocurrency in India.
So, what is a Cryptocurrency Exchange?
A cryptocurrency exchange is an online platform that lets its users to transact cryptocurrencies. There are a number of such exchanges available today such as eToro, Coinmama, BlockFi and Coinbase. All the exchanges deal with popular cryptos like Bitcoin and Dogecoin.
If you still don’t understand what a cryptocurrency is, consider them like share markets for cryptos. You invest in stocks at various exchanges like BSE and NSE. In the same way, you exchange and transact for cryptocurrencies in Cryptocurrencies exchange.
It is important to understand that not all
exchanges support all cryptocurrencies, the commission charged also changes from
one exchange to another.
Also, Check out A brief on CryptoCurrencies
Why do you need a
Cryptocurrency Exchange?
A
cryptocurrency exchange plays a critical role in the cryptocurrency world.
These are the only medium where users and investors can transact
cryptocurrencies. If you want to transact cryptocurrencies, you have to create an account in one or the other exchanges.
What do Cryptocurrencies
actually do?
Exchanges
as stated in the previous lines, are not just a platform for trading
cryptocurrencies and swapping crypto for money, they are made for some
additional functions too.
Cryptocurrency
exchanges are essentially matchmakers between the sellers and buyers; moreover,
they facilitate converting one crypto to another.
How to Choose the
Right Cryptocurrency exchange- The Guide
Choosing the
right cryptocurrency exchange for you is not an easy process. You need to take
care of some important aspects for choosing the right cryptocurrency exchange
for you. Here are some aspects that would guide you towards the right exchange:
·
Commission charged
As
described in the previous lines, the commission charged is often different for
different exchanges. There are basically two components of the total commission
charged by an exchange. They are a trading commission for the bids and the
transfer fees to/from the bank account.
·
Available Cryptos
Most of
the well-known crypto exchanges do not allow access to all the coins. Thus one should have to check whether the
particular exchange is able to trade in the crypto in which you are interested
to invest in. The good news at this point is that many exchanges allow sending
and receiving assets (like money and fiat currencies) from other exchange
wallets.
·
Mobile Applications available
Today we
can access everything on our mobile phones. Mobile applications have been
making everything easier and handier. The same is the case with crypto transactions
too. Today most of the exchanges have mobile applications that facilitate their
users with easy access. However, before you choose an exchange, ensure it has a
mobile application.
Today, we
have different applications for different uses. For instance, there is a specialized
application for crypto updates, while some others are focused on transactions.
·
Interface and processing
· Offers and collaborations
Look at what exchanges facilitate offers. Not all of them can be fit for
you. Sometimes, they provide offers for
certain bank transactions.
·
Save yourself from fraud
Online transactions and dealing can be the easiest way to get fraud, thus
be aware. If you are not confident enough, you may choose popular options. At
the end of the day, it is your hard-earned wealth, thus it is your responsibility
to take utmost care of it.
Points to Ponder
·
Cryptocurrency
exchanges are not regulated in many parts of the world. India has no such
regulations that govern the exchanges. In fact, there are no such laws that
state that crypto is legal. Therefore, you must be careful to read the rules
and norms of the exchange before you start transacting on the,
·
Exchanges
charge fees in such a way to increase the interest in investing. For instance,
the amount of fees decreases exponentially as you increase the amount of
investment.
Also, Check out A brief on CryptoCurrencies
Frequently asked
questions
·
Can you use more than one
cryptocurrency exchange at a time?
Any investor can use more than exchange to trade in cryptocurrencies.
They need to maintain more than one wallet and look for updates and trade in
them. However, choosing an exchange that covers a large number of cryptocurrencies is still a better option.
·
Which is the best Cryptocurrency
exchange and why?
It is not
healthy to rank exchanges. Each exchange has one or the other unique feature
that an investor may like. For instance,
an exchange offers a large number of cryptocurrencies, some other exchange charges
less commission. Keeping all these factors in mind, our pick would be eToro.
We shall
look into the description of popular crypto exchanges in further episodes.
·
Is there any alternative to transact
Cryptocurrencies other than exchanges?
While the process to transact the cryptocurrencies remains the same, an
investor can look for a few alternatives other than exchanges to transact. The
investor can buy sell crypto from a Broker. Broker has certain prices and fees
for every transaction which the buyer (investor) has to obey. Whereas, this is
not the case with exchanges. An exchange has multiple sellers and buyers where
the price is set according to demand and supply.
Some other ways of investing would be trusts and bitcoin mutual funds.
Bottom Line
You Reached here, which means you know what all cryptocurrencies are available and how to choose a fitting option for you. There is no perfect answer if someone questions the legitimacy of these currencies. While some countries like china have legalized them, most of the world has not commented on them. As of now, they don't seem to be volatile looking at the demand it has. However, you need to be careful before investing in it.
Please note that this article conveys valuable information only. We hold no responsibility for your decisions.
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