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How To Choose Crypto Exchange In 2022: The Beginner’s Guide -->

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How To Choose Crypto Exchange In 2022: The Beginner’s Guide

The first challenge for every beginner venturing into the cryptocurrency market, whether as a day trader or hodler is choosing the right platform.  To be profitable in trading cryptocurrencies, you need the right knowledge and strategy, but more important is your choice of exchange.  

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Read: 10 Harmful Habits That Ruin People's Destiny


Are you in that dilemma and asking common questions such as:

  •  What is the best crypto exchange for day trading?
  • Which is the Best app for cryptocurrency trading?
  • Should I use a centralized or decentralized exchange?
  •  Which crypto exchange is best?
  • Which is the safest crypto exchange?
  • Which crypto exchanges have the lowest fees?
  • Is it better to keep crypto in a wallet or exchange?

 If that is you then you are not left out.  Today’s tutorial looks at the simple step-by-step guide to selecting the best crypto exchange for your trading style.

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Beginners Cryptocurrency Exchange Dilemma

Just as we have alluded to, the first dilemma when trying to venture into the crypto market is usually choosing the platform to use in buying and selling the crypto of interest.  Even a bigger quandary is whether to opt for a centralized or decentralized exchange. In today’s tutorial, we want to demystify the pros and cons of both exchanges and point out some of the things you need to consider in picking an exchange to help you to make a more informed choice.

Take it from us, choosing your broker or exchange right is the most important in your crypto journey and that is what Noble Solutions is about (education and information).  To know firsthand each time we share this type of content, endeavour to follow this blog as it will cost you nothing to do so but you have a lot to benefit from us for free.

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What Is Crypto Currency Exchange?

A cryptocurrency exchange is an online marketplace where users buy, sell, trade, and sometimes store cryptocurrency.  When choosing a cryptocurrency exchange, there are several things to consider, including security, fees, and crypto-currencies the exchange has on their offer.  As we have established earlier, Crypto-currency exchanges can be centralized or decentralized

Centralized Vs Decentralized Exchange

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Centralized Cryptocurrency Exchanges

Centralized cryptocurrency exchanges act as an intermediary between buyers and sellers of different digital assets with one another or for fiat currencies such as the USD. They also serve as custodians, for keeping and safeguarding digital assets. Because of its usability, it is where most of the crypto-currency transactions are conducted through centralized exchanges.

Centralized Crypto exchanges are the safest and most legal way to obtain crypto-currency and we recommend you start with them if you are new in the space and still trying to learn the ropes in crypto trading and yet to fully understand the crypto ecosystem.  

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The Pros And Cons Of Centralized Cryptocurrency Exchanges

Pros

The centralized exchanges are:

  • More beginner user-friendly platforms
  • More secure as evident in the number of hacks experienced by the centralized exchange as compared to decentralized ones
  • Let users buy and sell crypto-currencies online or using a mobile app, which makes it easy to access the crypto markets from anywhere.
  • Providing more options for investors and traders that want to hold verities of digital asset tokens.
  • Leading crypto exchanges typically hold user funds in cold storage to ensure the safety of assets.
  • Regulated global crypto exchanges ordinarily comply with Know Your Customer and Anti-Money Laundering (KYC/AML) rules as well as financial regulations. Therefore, users can be assured they’re not dealing with a fraudulent company or malicious market makers.

Cons

Cons Of Centralized Exchange are:

  • Controlled by a centralized entity and as such your assets are at the mercy of the exchange.
  • Highly vulnerable to manipulation and government interference and the threat of a shutdown.
  • No privacy and custody of your assets

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Decentralized Cryptocurrency Exchange

Decentralized exchange as the name goes is a non-centralized alternative to centralized exchanges.  In contrast to traditional centralized exchanges that make use of a centralized entity, DEXs use smart contracts and decentralized apps to automate transactions and trades.  Buying and selling are done peer-to-peer without intermediary accounts or central authority in a completely non-custodial manner without the need for an intermediary to facilitate the transfer and custody of funds

The Pros And Cons Of Decentralized Cryptocurrency Exchanges

Pro

  • DEX offers complete privacy and less censorship as no KYC is required to transact with the DEX
  • A DEX platform uses smart contracts to facilitate transactions, giving users full control of their digital assets and transactions.
  • DEXs are alternatives to centralized exchanges that rely on centralized institutions like banks and brokers to facilitate crypto exchanges.
  • DEX uses blockchain-based smart contracts to facilitate the exchange of assets.
  • DEXs reduce counterparty risk and can decrease systemic centralization risks in the cryptocurrency ecosystem.
  • DEXs offer complete transparency into the movement of funds and the mechanisms that facilitate exchange.

 Cons

  • Low liquidity conditions lead to large amounts of slippage
  • High transaction fees in most cases
  • Little or no customer service
  • Lack of fiat payment integration.
  • The complexity of the system as the user must not lose their private keys and password of their wallets

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The Most Important Things To Consider In Choosing Cryptocurrency Exchange Platforms

Note that the above is not all there is about both centralized and decentralized exchanges but just the very basics.  When choosing a crypto exchange, centralized or decentralized, there are several factors to consider. The most important things to look at are:

 Supported assets:                        If you are looking to buy cryptocurrencies other than Bitcoin and Ethereum look at the list of supported assets before deciding on an exchange. Some only support a few cryptos, while others allow you to trade hundreds.

Payment Methods And Cost Of Deposit And Withdrawal:       Crypto exchanges typically offer a handful of ways to fund your account or purchase crypto-currencies directly. While most exchanges support wire transfers, some platforms also allow you to buy crypto using p2p, credit cards, debit cards, and other digital payment methods such as Wise, etc

Fees: High fees can eat into your investment returns, which is why it is important to research crypto exchange fees before you open an account. Crypto exchanges typically charge trading fees and withdrawal fees, but other hiding fees can also pop up along the line especially if you are dealing with unregulated exchanges.

Security:       This is one of the areas you should pay kin attention to while choosing an exchange.  Unfortunately, crypto exchanges are a prime target for hackers looking to get their hands on crypto-currency. Security breaches and cyber theft are common in the crypto exchange landscape, which is why it is essential to choose an exchange with strong security measures in place.

Customer service:                      If you are new to cryptocurrency or investing, you may have questions or need help getting started. In that case, choosing an exchange with excellent customer support is probably the right move.

Reputation:  Before you sign up for an account on a crypto exchange, it’s a good idea to research that exchange’s reputation first. Read customer reviews, look into the exchange’s history, and look for any recent news stories that might provide some valuable insight

 Look For an Exchange That Serves All Of The Above? Here Is Our Top Pick for Crypto-currency Exchange

Conclusion

Centralized exchanges closely align with financial regulations from governmental authorities (such as the U.S. Securities and Exchange Commission). Many will insure U.S. dollar deposits and require proof of identity to use the platform. Has centralized governing authority

Whereas Decentralized exchanges are unregulated online exchanges hosted on distributed nodes that are user-owned, and there is no centralized governing authority. While this may sound scary, decentralized exchanges offer transparent transactions and fees as well as direct peer-to-peer exchange of crypto-currency.

DEXs are a foundational pillar of the cryptocurrency ecosystem, letting users exchange digital assets in a peer-to-peer manner without the need for intermediaries. DEXs have experienced increasing adoption in the last few years due to the instant liquidity they can enable for newly launched tokens, their seamless onboarding experience, and the democratized access to trading and liquidity provision they provide.

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It however remains to be seen if the majority of trading activity will migrate to DEXs especially in the next bull run of the crypto market generally and whether web3 will support long-term growth and institutional adoption. However, DEXs are expected to remain a vital infrastructure for the cryptocurrency ecosystem. It will continue to see improvements in transaction scalability, smart contract security, governance infrastructure, and user experience.

Although centralized exchanges are more user-friendly and potentially safer, a decentralized exchange is a revolutionary innovation that will most likely become the industry standard in the future. We understand that a new trader just venturing into trading crypto assets, is more concerned with making money in the immediate term than with what will happen in ten years. In terms of short-term advantages, CEXs provide a safe entry into the world of crypto trading, whereas DEXs are a riskier environment with larger rewards if you play the game well. The bottom line is that you should do both. Also, keep in mind the golden rule of crypto trading and investment generally: never invest money you can't afford to lose, be it in CEX or DEX, online or offline


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