How to Choose a Crypto Exchange?

The boom of the crypto industry over the last couple of years has led to massive adoption of the crypto space. With the development of newer tokens and various projects every day, the rise of crypto enthusiasts has also led to an increase in the number of crypto exchanges. The rising interest would ultimately result in any curious crypto investors needing to make decisions about how to start investing in crypto assets for some passive income, including how to store their digital assets.

To understand the absolute basic requirement for anyone to dive into the crypto market, let us take a look at what crypto exchanges are and take a deep dive into various types of crypto exchanges before choosing one to start investing in crypto tokens!

What Is a Crypto Exchange?

To explain a crypto exchange in simple terms, it is a platform on which you can buy and sell crypto assets. Any interested party can make use of the exchanges to trade one crypto for another, or they can simply use their choice of fiat currency – like INR or USD – to buy crypto tokens. These crypto exchanges provide the marketplace for crypto tokens, very similar to how e-commerce platforms like Amazon or Walmart to be then chosen by any trader or investor for their portfolio. These exchanges also help facilitate a user to deposit money via methods such as direct bank transfer, net banking or P2P, etc, and charge a minimum commission or fee for every transaction done using its services. However, this rate is absolutely dependent on the exchanges.

Any crypto exchange displays the current market prices of the crypto tokens it offers. One can simply transfer some fiat currency to their exchange wallets and invest in the token of their choice. They can also choose to convert those cryptos back into the Indian rupee or another currency on an exchange or use the token in their wallet in exchange for another crypto token!

Steps to choose a Crypto Exchange – Comparing Crypto Exchange Platforms

The crypto exchanges work similarly to how a broker works. It gives the traders all the tools they will need to execute the trades, like buying Bitcoin, Ethereum or other altcoins. However, there are certain criteria that need to be taken into account before choosing a crypto exchange. They are as follows:

• Step 1: Do Your Research

While choosing a crypto token for investment requires thorough research, choosing a crypto exchange to execute those trades also requires intensive research. This is to make sure the exchange adheres to all the requirements of the trader along with being an easy way for them to explore. 

While doing your research, took for the market sentiments regarding the exchange, and what the company is saying about itself. Have there been issues with security in the past, or has the exchange faced any hurdles along its journey so far? Look for how the exchange has addressed those problems.

• Step 2: Go With Higher Security

While conducting your research, making a note of all the security measures set in place for the exchanges is also important. Keep an eye our for their Product Feature blogs, it will surely mention their security measures in detail! 

Irrespective of the security measures, for your safety, keep some of your assets in a cold wallet, while you can keep the rest in the hard wallet. 

• Step 3: Transparency of the Exchange

Trust and transparency are an important part of the exchange’s behalf, as many countries still do not have crypto regulations set in place. To identify a reliable exchange, evaluate the audit information of the exchange. Audit reports usually provide information regarding the financial health of a company.

• Step 4: Coins and Tokens

While the above points are very crucial, it is also important to see if the exchange has a history of mass coin listing and delisting. Exchanges like CoinDCX have a 7M Model in place, which conducts a rigorous check on any new token before listing it on their platform.

• Step 5: Order Book Volume

An Order book is a consolidated list of purchase and sale orders that is offered on the exchange. Higher Order Book Volume indicates that more traders and investors are using the exchange. This, in turn, leads to higher liquidity for existing investors while exiting any particular crypto asset.

• Step 6: Location of Exchange

Lastly, the location where the exchange is based is equally important. That is because it will determine the rules and regulations applicable to the exchange. Investors must be aware of the registered office of the exchange and the adherence to relevant law and legislature.

Criteria For Choosing Crypto Exchanges – What Should You Look at When Choosing a Crypto Exchange?

Exchange Fees

The quantum of fees levied is not the same for all exchanges, they vary from one exchange to another. While some exchanges charge a flat fee, some adds additional transaction charges. At times, exchanges levy fees at each step of a transaction.

Payment Method

The number of ways an exchange offers as payment getaways defines the commitment they have to their users.

KYC Compliance

Many crypto exchanges in India require KYC Compliance to redeem profits. While the process is not lengthy, it safeguards investors from financial crimes.

User Interface

Before making a decision on a crypto exchange, making a note of the user interface offered by the exchange is very important. That particular step must be thoroughly tested for safety. It is a givem that security is a priority for both mobile and web applications. It should not be overlooked since digital tokens are prone to theft and hacking.

Customer service

The type of customer service a crypto exchange has also matters a lot! The faster the service, the more satisfied with the exchange any investor will be!

Types of Crypto Exchanges Charges in India

As mentioned above, there are various types of crypto exchanges available for investors to choose from. However, with the different types of crypto exchanges, there are also different types of fees that are available in the market. Let us take a look at what those are.

Joining Fee

The majority of the crypto exchanges in India, such as CoinDCX and others, have completely waived off the joining fee. However, some exchanges may still have a very small amount of membership fee in the case of inactive accounts.

Deposit Fee

This fee is charged when the user deposits money or coins to the crypto exchange to initiate the buying or selling. Deposit fee amount depends totally on how the user has transferred the money, whether through payment service providers, Mobikwik, a crypto wallet, UPI, Net banking or bank transfers.

Trading Charges

Trading charges are the most important part of the fee mechanism in a crypto exchange. These types of fees are levied as a flat percentage of the amount of crypto that a trader buys or sells. Another way an exchange may charge the trading charges is according to the type of orders placed, such as makers and takers.

All exchanges have trading charges that vary. They may range from almost 0%  to 0.25% in most of the exchanges. However, it is important to note that certain exchanges claim to charge the user zero fees; one must look carefully, that if they are charging in the form of a spread — the difference between the rate of buying or selling the crypto. Usually, this rate is higher as compared to the trading fee.

Withdrawal Fee

Some exchanges charge the user on the withdrawal of money into fiat. Withdrawing money happens when a user places a sell order on the exchange and then the funds reflect in his or her wallet. The user here can withdraw money fully or partially, into their registered bank account, for which he or she may be charged. The user also has the option of making a withdrawal in coins, that also has a cost attached.

How Do You Open a Crypto Exchange Account?

It is a similar process to opening an account with any of the crypto exchanges. Once you are done selecting an appropriate exchange, all you need to do is follow the steps below to open a trading account:

• Download the app of the exchange you have selected and create an account.
• Fill up the necessary information like email ID, name and contact details.
• After verifying the email, the user receives the mail on the same ID for KYC details.
• Verify the address on your email ID.
• Complete the KYC process.
• Set a strong password.

Note: Never share any passwords of your app, wallet, or exchange, as it is difficult to recover them

How Do You Buy Crypto Tokens?

Once you are done creating an account in the exchange of your choice, it is fairly simple to buy the crypto tokens of your choice.

• Sign in on the app
• Transfer INR funds to your wallet.
• Choose the token you would like to invest in
• Select the amount you would like to invest.
• Place your order

Conclusion

Similar to any investment, make sure you have done your thorough research. It is important that you consider your investment goals and the current financial situation before investing in a crypto asset. Crypto is an extremely volatile market, which means you should invest carefully and only invest the amount you are comfortable with.

Investing in your favourite crypto is extremely simple and safe on CoinDCX. All you need to do is download the CoinDCX App on your smartphone and enter the required details. Once the verification is done. Just fund your wallet and buy your desired crypto.

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