For beginners, the world of crypto appears to be an extremely complex one. Not only are there hundreds of details and concepts to learn and memorize, but cryptocurrency itself seems to be all over the place.
There are, after all, hundreds of blockchains, each with peculiar native tokens.
In other words, the cryptocurrency world is no walk in the park for the uninitiated. Without somebody to guide you, it’s almost impossible to find a starting point.
Cryptocurrencies are, however, easy to understand and you need fewer things than you might think to get started.
Particularly if you’re planning on investing, the requirements are not stringent and as long as you follow a few security rules, your money will be safe – or at least, as safe as any investment can be.
1.49% per trade
Offers $10 free bitcoin to new users
- Why We Like IT
- Pros & Cons
Coinbase is supported in over 55+ countries, it is has maintained a great global reputation. Best beginner friendly exchange.
- Good exchange for beginners
- Well-established and reliable company
- Low trading fees
- Coinbase may track transactions
- Bank transfer can take 5 days
.1% per trade
Very low trading & transfer fees
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Binance is the largest crypto exchange in the world, and it dominates the field. Offers low trading fees and large amount of coins to trade.
- Low trading fees
- Highest volume exchange
- Always adding new coins
- Customer support is slow
- Bad website user experience
1.49% per trade
Very low trading & transfer fees
- Why We Like IT
- Pros & Cons
Gemini’s main strengths are its user friendliness, customer support, and the fact that it complies with banking standards. It also offers low rate, and a complete fee-waiver in some cases.
- Trustworthy & Secure
- Fiat Deposits
- High Volume Exchange
- No Margin Trading
- Limited Currencies
The process of investing in cryptocurrencies for most people, in fact, can be reduced to a single, central focal point: A cryptocurrency exchange platform.
Just as you wouldn’t trade stocks in a regular market, you can’t just walk into the butcher shop and ask for cryptocurrencies.
Thanks to the decentralized nature of the market, the bulk of cryptocurrency trading these days happens on crypto exchanges.
What is a cryptocurrency exchange?
Just as you wouldn’t trade stocks in a regular market, you can’t just walk into the butcher shop and ask for cryptocurrencies.
Thanks to the decentralized nature of the market and the low blockchain-to-blockchain interaction, all cryptocurrency trading these days gets done through crypto exchanges.
What are crypto exchanges? These are buy/sell platforms for cryptocurrencies. In other words, they’re where people who have crypto, either from investment, mining, or staking, can sell them to buyers.
Crypto exchanges thus allow a buyer or seller of crypto to put buy or sell orders for them. Usually, on an exchange trading dashboard, the present and past trading prices are displayed.
But in most cases, you’re allowed to post your buy or sell orders at your preferred price.
Transactions take place entirely within the exchange, using crypto wallets from the exchange itself. This prevents scams from taking place, adding extra security to the process of trading crypto.
The exchange takes a fee for the service, as you will expect of a broker.
What do I need to register?
At first, most crypto exchange websites will only ask you for an email and password, as is the norm on most internet marketplaces.
You’re going to need more than that.
While most sites will let you register with only that, proceeding with transactions is an entirely different ball game.
For one, most reputable sites require a valid government issued ID to allow you to cash out, be it in crypto or fiat currencies.
In other words, while you might get away with trading crypto without an ID, you’ll need it if you ever want to use it outside the exchange.
Some exchanges might allow you to cash out without an ID but usually there will be a cap on how much you can take every day, much as PayPal does for unverified accounts.
Also, in order to cash out, you’ll need a place to cash out to – be it a bank account or a private crypto wallet.
Then, there’s also the question of how you’re going to add funds to your exchange account.
Exchanges accept different types of funding sources – from credit cards to crypto wallets – so specific requisites will always vary depending on the exchange you choose.
Using an exchange
Most exchanges work as regular websites – that is, you visit the exchange, log in, and then you can go straight to trading crypto.
There are no extra hurdles, like apps or the like. As long as you have funds or a funding source, you can trade.
Get $10 free Bitcoin when you sign-up to Coinbase
Types of Cryptocurrency Exchanges
Naturally, not all exchanges are the same. While you could just google “crypto exchange” and join the first one you find, that would be ill-advised.
First, because of obvious potential security risks associated with scam sites. However, even if you are on a reputable site, it might not be the type of exchange you need.
You see, cryptocurrencies have an important difference with stock trading in that they can also be used as currencies.
You can trade them in quantities both higher and lower than a single unit, and how much you buy or sell will change depending on your needs. Since they’re a form of currency, they can be traded for each other, too.
Which is why there are three types of crypto exchanges.
Fiat-only crypto exchanges only trade on cryptocurrencies with fiat currencies. They don’t allow the user to deposit cryptocurrencies on the exchange.
You can only fund your account by using fiat currencies like the dollar, euro or yen.
The second type of exchange is much more complex. Crypto-only exchange websites do exactly what their name says:
They’re for exchanging crypto for another crypto. Fiat currencies aren’t used at all on the platform.
These platforms are ideal for some day traders, or for those who enjoy riding the waves of the market and constantly exchange their crypto for whatever token is having its day.
They’re also great for people using cryptocurrencies for personal transactions since it allows them to exchange the crypto they have for the one they need in a single step.
They’re naturally much more difficult for a beginner to navigate, since prices will be quoted based on the default crypto like Bitcoin or Ethereum.
Fiat and crypto (hybrid)
The last type of crypto exchange is the most user friendly. Fiat and crypto sites allow users to trade using both types of currencies.
These allow you to jump into the market, park or trade your crypto as you need, and then jump out, all in the same place.
They’re ideal if you plan on doing more than just parking cryptocurrencies.
Do note that some sites that could be seen as hybrid will allow you to buy in with fiat but won’t allow you to cash out to fiat later.
Binance, for example, is one of these – they’ll accept buy-ins with credit cards sometimes, but they won’t let you sell your crypto for fiat.
Make sure you’re joining a proper hybrid market if that’s your pick.
7 Most Important Factors When Choosing an Exchange
As with anything, there are a few things you need to look at before you open an account – let alone start trading – in any crypto exchange.
The most important among these are:
Authenticity and security
Cryptocurrencies are extremely safe and almost impossible to steal as long as you adhere to a few security rules. One of those rules happens to be ‘don’t trust insecure exchanges.’
The security track record of your exchange is extremely important when choosing.
While individuals are also targeted for their crypto, pretty much every major case of cryptocurrency robbery has happened because somebody hacked an exchange site.
Therefore, you can’t ignore the security of your chosen exchange.
It's legitimacy is also something you must consider. As a beginner, only go for exchanges with many users and plenty of positive reviews.
Don’t trust small sites, or places that promise a lot – particularly if the community isn’t recommending the place, or if it’s a new exchange.
Method of Purchase
This is simple. Using a crypto exchange is useless if ‘take your payment’ method is not allowed.
No matter how you plan on funding your account – be it fiat via credit card, PayPal, cryptocurrencies, Skrill, etc. – you’ll need an exchange site that accepts such payment.
Do your homework and look it up – although luckily, failing to consider this shouldn’t cause you to waste more than the time it took you to register.
Like the point above, an exchange site is useless if it won’t trade the token you need. Every cryptocurrency exchange has its own set of tokens supported. So, you should make sure the one you want is there.
The most famous tokens (BTC, ETH, Ripple) are supported by most exchange sites.
However, if you’re planning on investing in cryptocurrency startups, they might not be listed on bigger exchanges yet. Plan ahead and go for places where they can be traded.
Trading platform: P2P or Broker
Apart from traditional cryptocurrency exchanges, which work in the same way stock exchanges do, some exchanges use other two possible ways: Peer-to-peer, or broker.
Peer-to-peer exchanges connect you to another user who is interested in buying/selling your goods.
These exchanges simply connect you to a potential buyer/seller and you settle with such for an amount and price.
Broker-type exchanges instead buy and sell the crypto they need, as they need it.
They have a stock of crypto to offer and accept fiat or other crypto in return. In this regard, they work much like currency exchange platforms.
All crypto exchange sites will charge fees per transaction. Some might waive fees when trading with specific currencies, usually those they’ve partnered with, but those transactions are just exceptions.
For the vast majority of transactions, expect to pay a fee.
The exchange you choose needs to be transparent both about the fees charged and the type of fee. A P2P broker, for example, might charge a fee for the listing only.
Meanwhile, exchanges that work like the stock market will usually charge a percentage of the transaction value.
As for broker-type exchanges the buy/sell prices displayed already includes built-in charges.
Ease of use
What counts as ‘ease of use’ will depend on your level of expertise and your goals when trading crypto.
Certain exchange sites might offer really advanced features a professional trader would want but that will only confuse a newbie.
Therefore, ease of use is difficult to define. However, if you’re new, ask the community about it. Nothing is ever as difficult as it first appears.
You should assume you will, at some point, need to contact customer support. And when this happens, you want it to be good.
So always review the platform users’ opinions on this. Go for what works well and has great support. If you’re a beginner, it’s quite likely you’ll need it.
Top 10 Best Cryptocurrency Exchanges
Here are some of the best-reviewed crypto exchanges today:
This is the largest crypto exchange in the world, and it dominates the field.
This platform doesn’t just offer its services as a traditional exchange; it also has its own token and plays host to several initial exchange offerings, which has largely replaced initial coin offerings.
While it's security rating isn’t perfect, the legitimacy can’t be doubted.
It also boasts low fees (0.1%, this is further halved if you opt for its native token-BNB for transaction fees). A large number of tokens and coins are up for trading here.
However, one thing to note is that Binance is a crypto-only exchange.
It recently added the option to buy in with credit cards, as one would from a broker but it’s impossible to cash out your crypto for fiat.
You can only withdraw using your preferred crypto.
Customer support used to be every slow here. Of late, it has enhanced its support efficiency with more hands recruited for a faster response rate.
Before the emergence of Binance, Coinbase was the world’s leading broker. With support in 55 countries and growing, it has maintained its global reputation.
Coinbase is a one-stop shop for many people just getting started with crypto trading.
Its fees aren’t too small, but also not too high – varying between 1.4 and 3.4%, depending on your country and payment method.
Sadly, until recently, it offered limited coverage with analysts tagging it as a European, American, and Australian-only exchange. Now, more countries are enjoying its services.
Funding here is easy for European, American, Canadian and Australian users. Bank cards, PayPal, ACH, Wire transfers are supported.
For users from other parts of the world, funding sources are limited. Despite the coverage limitation, Coinbase has probably the easiest interface in the market.
Another well-trusted exchange, Gemini’s main strengths are its user friendliness, customer support, and the fact that it complies with banking standards.
It also offers low rate, and a complete fee-waiver in some cases.
The downsides with Gemini, however, must be mentioned: Gemini accounts can only be funded with a bank account or crypto, and the platform only offers BTC and ETH.
While decent if you’re specifically looking for these leading crypto, it is restrictive when looking for new tokens.
It also has limited coverage as it favors American, European and leading Asian markets. It has indicated it will improve its global coverage soon.
Bitrex is reputed as a major token-based exchange. Bittrex is one of the fastest growing crypto exchanges currently. It serves mostly as a platform for trading cryptocurrencies.
Although it offers an option to fund an account with fiat currency, the minimum threshold is $10,000 and you can only buy ETH, BTC, and USDT for fiat, making it not at all beginner friendly.
The user interface will also be problematic for newcomers, as the site is clearly geared towards experienced traders. As common with congested exchange sites, their customer support times can grow long.
On the upside, if you’re ok with performing only token trades or investing over $10,000 in crypto, Bittrex meets the mark.
It offers one of the largest selections of trading pairs, allowing you to exchange for most of the commonly traded cryptocurrencies.
Fees payable here, while not as low as low as Binance, peaks at around 0.25%.
One of the oldest crypto exchanges, Kraken FX boosts a huge user base and the trust of its active community.
The site has been notoriously resilient to hacks, making it the exchange of choice for many.
It's open support for margin trading also makes it the exchange to go to for those used to the practice and since it offers a mobile app, you don’t even need a computer for trading.
Initially, it supported only BTC and ETH but it has since accommodated the most common tokens.
On the other hand, Kraken’s recent growth spurt means both support and account authentication can be slow.
It's registration process also requires an ID, something other sites – like Binance – don’t fully require. As for fees, these are well within the industry standard.
Bitstamp is Europe’s biggest crypto exchange and is currently headquartered in the UK.
It boosts a healthy user base and is EU-licensed, so it complies with local regulations.
It's safety rating is great as a result, so your money should be safe with here – that is to say, Bitstamp is as legit as they come.
On the flipside, it’s not an easy platform to use and it’s geared towards those who already know what they’re doing.
While it's customer support isn’t the best, it’s often ranked better than other exchanges.
The account verification process is slow, however, so plan ahead if you’re hoping to go for Bitstamp.
Poloniex often boast about being the crypto exchange site with the highest trading volumes for altcoins.
Regardless of whether these claims are true, Poloniex is indeed one of the largest exchanges around.
Following its claims of trading volumes for altcoins, Poloniex offers a huge range of those, while also offering BTC trades.
It's interface is easy to use and it’s generally considered beginner friendly.
It's fees are quite competitive, and it offers enough information on the market for its users to make decisions regarding trading decisions.
This platform is also well known among the margin trading community for its informative features.
Poloniex has a good record and perhaps, operating out of the USA means that it is not ready to cut corners. It has surely stood the test of time as a crypto exchange.
Another old crypto exchange, Cex.io works as a broker and a traditional exchange, with the latter being the main attraction since its brokerage fees are huge.
It is registered with local authorities and thus requires user-identification as per anti-money laundering laws.
It offers features for margin trading and accept payments in both cryptocurrencies and fiat – both via credit card and traditional banking.
It is considered trustworthy by many users. One thing that draw criticisms in the user community is the exorbitant fees charged here – as they are higher than most platforms.
Unlike other trading sites, however, Cex.io’s customer support has been hailed for its prompt response.
Bitfinex is available for global cryptocurrency traders, investors, and users. Surprisingly, that list doesn’t include the USA.
It caters to more advanced traders, so its interface isn’t particularly easy to use – at times confusing to even experienced traders.
On the other hand, for those who take the time to learn the interface, the amount of data Bitfinex shows is second to none.
It also has a focus on customer service, giving it one of the best CS departments in the market. Market funding and leverage are the leading services here.
The real downside of Bitfinex, besides being unavailable for the US, is its extremely limited funding options – the only fiat currency option being a wire transfer.
It does support several dozen tokens, however, which can be freely traded in the platform.
On the security front, Bitfinex has been hacked several times – however, affected users always get reimbursed promptly.
With over 200,000 registered users, Coinmama is hardly a small exchange site. It is available in many countries (226,) which means you can use it almost anywhere in the world.
More importantly, it offers quite convenient funding options, allowing users to pay with debit cards, credit cards, and even cash via Western Union.
Coinmama, however, works only as a broker, distinctly sells crypto and never buys unless you have a European bank account.
This means that unless you’re planning on parking your crypto for the long run or actively using it, other exchange sites might be better suited for you.
On top of this, it charges hefty transaction fees that can quickly add up.
Unlike other sites, however, Coinmama offers a ‘price lock’ which guarantees the transaction price even if it takes a while to proceed.
Many customers see this as a plus, since buying $100 in BTC will translate to different amounts of the token depending on the hour of the day. Coinmama signs a contract right as you click buy and sticks with it.
You can’t buy amounts lower than $60 on the website. While small at first sight, it also refuses to sell under 0.1BTC, which costs about ten times more than $600.
This makes it an inconvenient place for new traders since micro-purchases aren’t allowed.
The site is registered in the Slovak Republic, and it is generally considered trustable. Its customer support is email only but it provides a comprehensive knowledge base for common issues.
How to Invest & Trade Bitcoin/Altcoin
While reading about cryptocurrency exchanges is fine, there are important details about the process of investing or trading one shouldn’t ignore.
These details are often what makes or breaks a trader, after all.
How does trading in an exchange work?
Although this is simple, it’s always better to explain. Depending on the type of exchange, you’ll be able to perform different tasks.
For example, if you go for a sell-only broker you’ll only be able to buy crypto from them.
If you ever want to sell, you must have an account with another exchange along with a private wallet you can use to move your funds.
Since this process can take time, it wouldn’t be advised for investments. So first of all, get an exchange that works for you.
Once that is done, the trading process is actually simple. Exchanges work based on buy/sell orders.
These orders tell the exchanges how much you want to buy or sell of a specific crypto. They’re the operational base of exchanges.
To sell on an exchange, you need to set your order. And when somebody offers to buy at your price, the trade will happen automatically.
And your wallet will be credited on the exchange with the sales proceeds.
How does trading work in a Crypto marketplace?
Depending on the type of marketplace, the steps might vary. If the platform is a peer-to-peer one, instead you’ll be put in contact with the interested party.
You only need to pay the seller using the preferred option. The platform will lock the seller’s account to the tune of the transaction units.
Once the seller verifies your payment, the crypto will be released to your wallet.
A Trading Plan
First and foremost--don’t trade crazy. Don’t just buy whatever is going up – crypto goes up and down all the time. And always set limits for jumping in and out of the market.
Riding a bump is alright but you need to draw a line on where it’s better to jump out. Just as well, waves are great – but they’re temporary. Set a jump -out point and don’t expect values to just keep rising.
Also, buy crypto you can understand. Each token is tied to a project and its value often has to do with how well that project is doing.
Do your research. Understand what’s going on in the world. Trading cryptocurrencies goes beyond just buying low and selling high.
How crypto day trading works?
One of the riskier types of trading is known as “day trading.” This practice involves buying and selling, usually buying early in the day and selling before the day is over.
Day trading is really risky but good day traders can make decent amounts of money by accurately reading the market and buying whatever is hot on that day.
In essence, day traders take advantage of smaller bumps and waves in the market instead of playing the long game.
Safeguards to use when trading
Most exchanges will offer a few safeguards to protect your investment. Usually, you can set a sell point, a price level at which the sale is triggered.
This will help you avoid losing your crypto to massive price drops.
While they’re optional in most cases, for day traders these safeguards are mandatory.
Since day traders explore immediate profits, in order to safeguard the trading capital, exit points must be set.
It’s heavily advised to use these safeguards when trading. The crypto market is extremely volatile and sometimes waiting just an hour or two longer can mean losing lots of money.
Unlike the stock market, crypto exchanges work 24/7, that means prices can rise or drop at any time.
The art of leverage
Leveraging in crypto trading means that you are able to take positions in the market using borrowed funds.
So, while you may have 1 BTC, you will be able to trade with 5 BTC, depending on the platform you are using. Some platforms offer 1: 5, others 1:3 or more.
For day traders, leverage is an integral part of their operation.
However, there’s nothing keeping you away from using leverage for mid or long-term investments.
As always, investing is risky. Using leverage for investments is even riskier. However, when this works it can pay off greatly.
You’ll be taking a risk, but you’ll also be able to multiply your earnings much faster if done right.
Usually, you need to gain some trading experience before going for leverage. A newcomer is likely to make mistakes, and mistakes when using leverage are costly.
But once you learn to read the market and know what to expect, taking leverage when you’re sure a token is going to go up can be a great path towards huge earnings.
Multiple accounts, and why (or when) you should have them
For some people, having multiple accounts can be great. This works in many cases whether you are a personal investor or a professional trader.
As a personal investor, you might be better placed to manage your portfolio and hedge against risk by maintaining multiple exchange accounts.
So, for example, you may use Coinbase to maintain a safekeeping account, Binance for penny-crypto trading purposes, and Bitfinex for leveraging.
As an individual trader, this might play out differently. You can have up to 3 accounts at separate exchanges or more. But, if you have no money to trade, it will be unproductive.
Regular traders make money daily by transferring balances between low-priced markets to high-priced markets.
You might just find out that a token is soaring in price but it is not listed on the exchange you use. So, what’s the way out? Keep multiple accounts and ride the market.
How to Get Started (4 easy steps)
Now that you have gained enough knowledge about crypto trading to make informed decisions about investing, you should be able to get into the crypto trading world.
Having a plan is essential: What do you want to attain? “Getting rich” is a nice goal but this is hardly a plan. The plan is the roadmap to get there.
The first step will always be planning. You need to look at the market, investigate different tokens, and choose which you want to invest in.
Then, you look for an exchange that trades on that token. Take your time. Verify the exchange’s reputation and look into its fees and customer support. Make sure you can trade in it.
Once that’s done, you buy what you want.
Trade, hold, sell, buy, and sell again.
Important note: Once you have crypto, you need to always stay up to date with the market. Cryptocurrencies can change in value within hours. Set safeguards to avoid losing everything. Even if you know the market, never assume things won’t go wrong.
Just as you’ll want safeguards in case things go south, also know when to jump out as things go up. And don’t be afraid of investing in different tokens or even switching altogether. It’s part of the market and part of the business.
Should You Invest in Cryptocurrencies?
Investing in cryptocurrencies can be very scary. All investments are. However, it is much easier than most people think.
You can do it all from your living room without needing to hire anyone to deal with things for you. And unlike in the stock market, you can invest as little or as much as you want.
You don’t need to buy 1BTC to invest in bitcoin – if you can only afford a tenth, or even less, that’s fine.
This makes the crypto market one of the easiest ways to invest in our world today. You just need the determination, some savings, a knowledge base, and a steady internet service provider.
One of the leading cryptocurrency exchanges in the world for beginners. Get $10 Free BTC when you sign up.
Asif is a cryptocurrency enthusiast and journalist who’s been writing on the subject since 2014. He also has a keen interest in social engineering and cybersecurity. When not busy writing about cryptocurrency, he can be found reading books and listening to music. He holds an M.Sc in Life Science and an MBA in Finance & Banking.