- what kind of exchanges exist, how to get into
- how to choose the best/the cheapest one
- importance of volume
The types of exchanges available
A cryptocurrency exchange is a platform for exchanging various cryptocurrencies for fiat currencies, or for other cryptocurrencies. The exchange is an online equivalent of a currency exchange booth. There are several types of cryptocurrency exchange available on the market, each with its designated purpose. Direct trading exchanges, cryptocurrency brokers, cryptocurrency funds, and traditional cryptocurrency exchanges are built around the same concept of stock exchanges, where buyers and sellers trade currency based on the current market price and value. Such platforms usually take a fee for each transaction and allow users to exchange with fiat currencies.
Starting with an exchange is rather easy as most simply follow a verification procedure, though some are more stringent in their procedures, like Lykke, which will ask for passport details and photos of the future user.
Choosing the Exchange
Given the multitude of exchanges available on the market, it is best to look at the most popular ones and compare their characteristics, finding the one that suits each investor’s needs best. As of 2017, the three most popular exchanges are Coinbase (fees for buying with a credit card are 3.99%, while the fees for buying with bank transfer are about 1.49%), Changelly (the fastest of all exchanges with a good selected of cryptocurrencies available for exchange) and Poloniex, which has been subject to hacker attacks in the past.
When choosing an exchange, it is important to look at quite a number of factors. The first factor is, of course, the fees as no exchange is a free platform. Next is the question of customer support availability as beginners and even hardened traders often need some assistance to resolve issues. Not the least of questions is that of safety as many exchanges are subject to hacker attacks, thus it is important to read the exchange’s history and reputation. Privacy and limits on buying offered by each exchange are also of primary importance as the platform can be flawed and remain susceptible to attack.
The volume of a cryptocurrency is the total amount of it swapped in a certain period of time. An exchange usually shows its own volume for each cryptocurrency - the amount traded on that particular exchange, normally in the last 24 hours. Choosing the right exchange is important when it comes to volume as some place limits on the amount traded per day. For instance, Lykke has a monthly limit of additional funds introduced from plastic cards set at $6,000 with $3,000 maximum per transaction with the limit being two transactions per day. Hence, if the amount of trading going through the exchange is meant to be high, it is best to look at other offerings like Coinone or Poloniex.
There are projects on the market that seek to indemnify or mitigate the associated risks that investors take when deciding to invest in projects. Cryptics is one such project that seeks to offer the necessary instruments for alleviating the situation with uncertainty. The concept behind it is to support market participants by providing liquidity on exchanges and a safety cushion for retail investors by creating a platform that connects market players and develops algorithms to predict changes in the value of cryptocurrencies. Such instruments based on highly advanced scoring models involving machine learning and AI are incomparable with human intuition that even the luckiest and most prudent investors could ever be endowed with. The multitude of factors involved in predicting a cryptocurrency’s rise or fall are all taken into account by the algorithms that Cryptics employs. Investors should consult such projects as the expense is well worth the ensured profit and peace of mind.