Choosing the best cryptocurrency exchange platform is no small task. There are now more than 100 from which to choose; many of them aren’t available to everyone and, they all vary considerably in terms of features and functionality.
To help you choose the exchange that best suits your needs, let’s review the basics of how exchanges operate, their fundamental differences and why choosing the right one is important to investing success.
Put simply, a cryptocurrency exchange is a platform that allows you to trade digital assets such as Bitcoin. Depending on the exchange, you may be able to trade cash (or “fiat currency”) for digital assets, or you may be able to trade one digital asset for another.
Exchanges work by matching buyers and sellers. Much like with equities markets, buyers can purchase coins and tokens with a variety of order types. Virtually all exchanges allow basic market and limit trades. Some platforms also allow more advanced options, including margin and leverage. Most exchanges also allow API-enabled trading, though restrictions vary considerably.
Understanding how features diverge among different cryptocurrency exchanges is the key to selecting the one that best fits your needs. If you’re new to digital asset investing, you’ll need to begin with an exchange that offers cash for crypto purchases (“fiat pairs”). These platforms generally allow you to purchase coins and tokens via credit/debit card, wire deposit or ACH transfer. While there are other ways to acquire crypto for fiat currency (Bitcoin ATMs, for example), fees tend to be higher and convenience lower.
Cryptocurrency exchanges create revenue by charging fees on trades. These fees can vary widely, however, between exchanges. Many exchanges also have sliding fee scales that are affected by how often the user trades or how much volume is attached to those trades.
Ultimately, it is important for cryptocurrency investors to choose an exchange that offers the right mix of features, functionality, performance, and security. To help you make that decision, please review the key information we’ve listed below about major exchange platforms.
Deribit was launched in 2016 by it’s original founder, John Jansen, from the Netherlands. Since their debut, Deribit has disrupted the leveraged trading market and is competing directly with BitMEX.
Since Deribit’s inception, users have begun to expect lightening fast API transactions with proven uptime while trading with up-to 100x on BTC futures. The stability of their cutting-edge API is a welcome change from the status quo and has earned them a top spot for traders who require leveraged trading capabilities.
One of the busiest cryptocurrency platforms (ranked first in 24-hour volume by Coinmarketcap.com), Binance is headquartered in the European nation of Malta. Fees on trades are 0.1-percent, and an additional discount is given to traders who use the platform’s native BNB token for trading.
Deposits are free, and withdrawal fees vary by digital asset. Binance does not offer direct cash for crypto purchases/fiat pairs but has included this step on its development roadmap. Binance has more than 100 coins and tokens listed for trade.
Trading methods offered by Binance include limit, market and stop limit. Trades execute quickly even during periods of heavy server load. API stability is good, and API restrictions include a rate limit of 1200 requests per minute. Binance also has an internal machine learning algorithm that evaluates API trading behavior and can penalize users who repeatedly violate the platform’s rules.
Customer support is available through the main exchange portal. Binance also takes a number of security measures, including cold storage of assets in offline wallets and robust encryption.
Based out of San Francisco, California, Coinbase is one of the oldest and largest cryptocurrency exchanges. Though it only carries five digital assets and has limited trading functionality, Coinbase Pro is one of a smaller number of exchanges offering direct cash for cryptocurrency purchases via your Coinbase account. Coinbase’s streamlined services and easy to navigate UX make it popular with new investors.
Coinbase’s fee structure varies slightly by country. In most cases, the platform charges roughly four-percent for credit/debit card purchases and 1.5-percent for purchases linked to a bank account. Wire transfers have a flat $10 fee, and users may fund their Coinbase account with an ACH transfer at no cost.
Coinbase Pro (formerly GDAX) is a Coinbase product that offers more advanced trading options. The Pro version offers market, limit and stop orders. Each API key or app is rate limited at 10,000 requests per hour. Customer support can be handled via email or through the phone number listed on their website. Coinbase offers security features such as cold storage of crypto assets, encryption and FDIC insurance for cash deposits.
Headquartered in the U.S., and a popular exchange option in Europe, Kraken is a top 20 exchange by volume that offers direct cash for cryptocurrency purchases. Fees on the Kraken platform vary according to the asset traded and the volume of the individual trader. Trading methods include market, limit, stop loss, take profit, margin, and leverage.
In terms of API restrictions, Kraken has three specific call rate limits in place designed to reduce order book manipulation. Speed and stability are good, and the platform has both a live chat and an email function to help resolve any customer support issues.
Kraken also has security protocols in place, including offline storage of digital assets and high-end encryption.
Located in Seattle, Washington, Bittrex is one of the more well-established cryptocurrency exchanges. Founded in 2013, Bittrex currently offers market and limit trading, and has announced plans to introduce margin trading in the future. Bittrex also recently announced the implementation of direct cash for crypto purchases. This option is currently only open to corporate clients, but the company says it will expand cash purchases to all users in the future.
Fees on Bittrex are a flat 0.25 percent on trades, with withdrawal fees that vary by digital asset. The platform is stable and performance is good. API restrictions include a limit of 500 open orders or 200,000 orders per 24 hours.
Bittrex handles customer support through the use of tickets on its website. Security measures include cold storage of cryptocurrency and encryption.
Based in Hong Kong, KuCoin is a newer but fast-growing cryptocurrency exchange that offers well over 100 coins and tokens for trade. Trade methods include market and limit, and fees are 0.1 percent on all trades, with additional withdrawal fees that vary by asset. Fees are reduced by holding the platform’s native KCS token.
Kucoin does not offer cash for crypto purchases currently, focusing on crypto for crypto trades only. The platform performs well and is reliable, and customer support requests are processed through the exchange’s website.
API restrictions include a 30000 daily limit on the “cancel order” command. Kucoin takes a variety of measures to help ensure security, including cold storage of assets and complex encryption.
Headquartered in London, England, CEX.io is notable for offering users both cash for crypto purchases and offering a variety of trading methods, including market, limit, margin, and leverage.
Currently, the platform offers eight coins and tokens for trade. Fees vary by volume, but start at 0.25-percent per trade. Open and rollover fees are also assessed on margin trades (HaasOnline does not currently support margin trading for CEX.io). Speed and stability are good. API restrictions include a cap of 600 requests per ten minutes.
Customer support is handled via the CEX.io website and through email. The platform takes a variety of security measures, including keeping digital assets in cold storage and the use of encryption.
Based in the U.S. and operated by Cameron and Tyler Winklevoss, Gemini is a well-established digital asset exchange that offers direct cash for crypto purchases. Gemini, like Coinbase, is also notable for serving institutional as well as smaller retail investors.
Gemini offers market and limit trades on three digital assets: Bitcoin, Ethereum and ZCash. Fees are determined on a sliding scale tied to a variety of factors. The platform is fast and stable. Customer support is handled via website.
API restrictions include a cap of 120 requests per minute, although users are encouraged not to exceed 60. Gemini takes a number of security steps, including cold storage, encryption and FDIC insurance on cash deposits.
Along with the exchanges listed above, you may also wish to consider the following:
- Bitfinex — Bitfinex is a high volume exchange based in Hong Kong that offers fiat pairings on some digital assets and margin trading. Rate limit caps vary between 10 and 90 requests per minute. Not available to U.S. users.
- Huobi/Huobi Pro — Based in Singapore, Huobi is another high volume exchange that offers fiat pairs (in limited markets) and margin trading. Not available to U.S. investors, who must use their HBUS affiliate.
- BitMEX – Located in Hong Kong, BitMEX is a sophisticated trading platform offering cryptocurrency derivatives. While Bitmex offers more advanced functionality than most other trading platforms, it is unavailable to U.S. investors.
- Bitstamp — Headquartered in Luxembourg, Bitstamp is one of the longest-established exchanges. It offers fiat pairings and allows market and limit trading of five coins and tokens.
- Poloniex — Based in U.S., Poloniex is a top 30 exchange that offers 101 coin pairings. Owned by Circle, a Goldman Sachs-backed financial services firm, this platform allows margin trading.
- OKEX — Headquartered in Hong Kong, OKEX is a high volume exchange that offers trading of more than 100 digital assets. The exchange does not offer fiat pairs. Margin trading is allowed.
- HitBTC – Based in Hong Kong, HitBTC offers users the ability to trade more than 200 digital assets. HitBTC offers margin trading (HaasOnline does not support margin trading for HitBTC) but does not offer fiat pairs.
Choosing the best cryptocurrency exchange is a task that requires careful evaluation of all possible choices. To help you streamline this decision, please consider the information outlined above when making your choice.
By performing due diligence, you can help ensure that you find an exchange that best suits your specific trading needs.
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