From financial institutions to everyday investors, an ever-increasing number of people are interested in cryptocurrency. If you want to buy or sell cryptocurrencies, open an account on a cryptocurrency exchange. A cryptocurrency exchange enables the trading of cryptocurrencies for other assets, including virtual and fiat currencies. In other words, it acts as a facilitator between the buyer and seller. Don’t invest more than 5% of your portfolio into cryptocurrency, and stick to Ethereum, which is available on most cryptocurrency exchanges.
There are many different cryptocurrency exchanges, and they’re definitely not created equal. If you want to put your money in Ether, do your homework and get a perspective on your own. There are countless cryptocurrency exchanges worldwide inviting investors to trade digital assets. Since you’re a newbie to cryptocurrency investing, you’ll find it hard to distinguish a quality provider from one that only appears to be reputable. You can’t go with whatever exchange you come across, so exercise caution. These are the aspects to consider when selecting a cryptocurrency exchange.
Look At The List of Supported Assets
There are more than 19,000 cryptocurrencies, and what’s truly surprising is the growth rate. No exchange will offer every digital asset. If you’re looking to buy or sell other cryptocurrencies than Ethereum, check the list of supported assets before deciding on an exchange. Binance, for example, supports a wide range of cryptocurrencies. It supports more than 500 cryptocurrencies for global traders and 80 for US investors. If you’re looking to add Ethereum to your investment portfolio, you can see the current ETH price in real-time. It’s no small thing considering that Ethereum’s price changes quite quickly.
If you want to invest in lesser-known cryptocurrencies, see if the cryptocurrency exchange allows trading in that digital currency. Some digital assets deserve their obscurity, while others are golden investing opportunities. There are many things to think about when choosing virtual currencies to invest in, including market capitalization, the total coins to be mined and current supply, and the coin’s use cases. Some cryptocurrency exchanges only support a few assets, while others allow you to trade countless coins.
Find A Cryptocurrency Exchange with Liquidity
Because of the lack of volume, cryptocurrency exchanges sometimes lack liquidity, meaning that it can be challenging to find buyers or sellers when trading volumes are low. This is why it’s crucial to find an exchange with liquidity. You should be able to turn your coins into cash (and vice versa) without much difficulty. The cryptocurrency exchange should offer the possibility of executing the trade immediately, without waiting. If you’re a rational thinker, choose higher liquidity because it makes trades more efficient and profitable. Review the ratings, reviews, legal requirements, and, above all, the trading volume on the cryptocurrency exchange.
Research Exchange Fees Before You Open an Account
A cryptocurrency exchange charges fees for its services and convenience. Every time you buy or sell, a percentage of your investment or transaction is deducted by the platform. Simply put, the exchange charges a fee each time you deposit, trade, or make a withdrawal. Many cryptocurrency exchanges offer lower fees to incentivize liquidity exchange. What is more, users receive a discount when paying their fees using the exchange’s token. This, in turn, helps the business maintain and improve its infrastructure. Exchange tokens are immensely helpful, as they give access to voting rights, exclusive coin offerings, and more.
Which is the best cryptocurrency exchange for you depends on the costs you’re willing to incur and the country you live in. Fees vary from one platform to the other. Customers are able to access reduced costs based on the trading volume and length of membership, to name a few. Get a good understanding of all the fees that apply to your account. Fees are one of the most important factors to take into consideration when choosing a cryptocurrency exchange, yet they shouldn’t be the only one.
Read The Security Clauses on The Website
Take into account the security measures that the cryptocurrency exchange has in place. The security of your data and funds is your main concern. Tragically, cryptocurrency exchanges are a prime target for cyber thieves. Malicious actors won’t try to exploit the vulnerabilities in cryptocurrencies because they know how difficult it is. Also, hackers rarely attack wallets. They’re mostly interested in trading platforms. Needless to say, you should choose a cryptocurrency exchange with strong security measures in place. Go through the security clauses on the website, and check out the reviews and ratings for any shortcomings.
Get A Handle on Tax Reporting
Cryptocurrency profits are taxable. If you realize a gain after selling, say, Ethereum, you’re required to pay taxes on that amount. Gone are the days of anonymous cryptocurrency transactions. If you don’t report your income correctly, you could face harsh penalties. Given that tax reporting is important, before deciding on a cryptocurrency exchange, see if tax forms will be sent to you. Know how and when tax information will be sent to you. Keep in mind that not every platform provides tax forms. But don’t worry, they’ll still provide the information you need.
Opening an account on a cryptocurrency exchange is similar to signing up for a web-based brokerage account. You’ll have to provide a small bit of personal information. The exchange will then send you an email to confirm that you’re in control of the address. As importantly, you need to add a payment method that can be used for deposits and withdrawals. Depending on the cryptocurrency exchange, you may need to go through a more extensive vetting process. Additional verification could include uploading a copy of a government-issued ID card. You may be required to take a photo of yourself holding the ID card.
All in all, the world of cryptocurrency is evolving rapidly. If you don’t currently invest, you should. Digital assets offer greater choice, independence, and opportunity. Once you’ve decided that you want to buy and sell Ethereum or another cryptocurrency, create an account on a trading platform and start investing.