The current world crisis happening all over the world impacted the economic strength of the globe due to the Covid pandemic resulting in a tragic health crisis, which affected the economic climate and brought it to its knees.
Since the last global financial crisis happened in 2008, the financial debt has gradually increased every year. The repayment situation is becoming almost unrealistic due to the shortage of fiat currency flow in the system.
Suddenly, we witnessed the emergence of cryptocurrency and blockchain technology from scratch, which could be legally used to overcome the flaws of the current financial system.
Eventually, cryptocurrency worked in exactly the same way it was devised to do. It provided an alternative to the regular fiat currency, which was moreover decentralized, digitally accessible, and available to a large stratum of people with decent internet and a smartphone.
In this lockdown period, as people had a lot of time to kill and also wanted some non-traditional ways to earn money, the craze of cryptocurrencies like Bitcoin and Ethereum came in trend due to which it happened to be an excellent opportunity for investing.
If that’s the case, why should you remain outdated with your investment methods!!
If you want to start investing in cryptocurrency, remember the following factors to choose your exchange.
1. Availability in your country
It sounds preposterous, but not all crypto exchanges are available worldwide for legal judicature. This is mainly due to financial regulations that primely govern the crypto market.
Before engaging in this market, make sure you contact your trading platform and bank about the acceptance of your fiat currency and deposit exchanges supported in your country.
And mind that availability of exchanges in any countries keeps on changing. As The Money Mongers reported recently Binance halted their operations in Malaysia and suspended margin trading and derivatives offerings in few European countries.
2. Available cryptocurrencies
Most of the exchanges allow investors to buy/sell/trade globally recognized cryptos such as Bitcoin, Ethereum, USD Tether, and Litecoin.
However, if you want to invest in some lesser-known cryptocurrencies, you must check whether the exchange allows trading in that crypto against your fiat currency.
You also must have apt liquidity to trade those cryptos whenever you want to, with international standards, and the platform must be trustworthy in terms of the authenticity of their transparency and trade mechanisms.
3. Trading fees
This is an essential factor to consider because every time you buy/sell/trade, a percentage of your investment or transaction is deducted by the platform/bank/currency exchange. The trading fees should be nominal and competitive to sustain your assets even if you trade in high numbers.
The slightly high fees can compound themselves with time to eat up your significant sizable amount, which you wouldn’t possibly notice. It affects intraday traders the most as the fees are directly proportional to the frequency of transactions.
Furthermore, you should also keep a check upon the spread fees as these can range up to 5-6% and are undisclosed directly by exchanges and can eat up your shares by adding up with the trading fees.
The cryptocurrency market is new compared to the traditional financial investment options, which are being trusted for decades, so it has not yet gained trust among people regarding safety and guaranteed returns.
Various new exchanges were victims of scams, thefts, data breaches, and hacks in the initial phases as the blockchain technology was made quite transparent to avoid illegal transactions via the dark web.
Millions of funds were compromised and lost in several hacking activities that occurred in the past, which certainly makes it difficult to rebuild trust in the cryptocurrency domain.
You must run a background research check about the exchange you wish to engage with and find if it was associated with any security breaches or reprehensible fraud.
Moreover, you should not keep your digital assets acquired for the long term and keep it flowing between the business and your hardware wallet.
Security of your data and funds is the main priority for the safe and efficient working of the exchange. The majority of the exchange platforms have centralized fund storage, which means the platform’s reliability depends on the security measures taken by them.
You should be able to read all their security and precautionary clauses on their website, and it should at least offer features such as:
- Cold Storage Wallets for almost every client.
- Easy transfer between exchange and hardware wallet.
- SSL Site Security Certificate.
- Multi-layered verification for withdrawals.
- Two-factor authentication.
You must also read the reviews and ratings of users socially and engage in browsing public forums to get to know the shortcomings of the exchange.
With the current scenario still being dominated by different financial investment options and the Covid crisis, cryptocurrency is a great retreat in global markets to purchase your first crypto, which can be Bitcoin, Ethereum, etc.
As beginners, it’s a tedious task to purchase safe and legitimate crypto; that’s why it’s necessary to consider these five main factors when proceeding with it.
Editor’s note: Our publications do not offer investment advice. R&AN’s goal in publishing articles like this is only to provide information for individuals who wish to pursue investments at their own risk in the future.
Thank you for the tips. I feel rather unsafe by going through the KYC process. Binance, for example, is a reputable exchange place that had its KYC data leaked two years-or so ago. If you’re looking for DeFi portfolio tracking, try using the App at https://www.dexfolio.org/