Additionally, you will learn some of the factors to consider when choosing a trading platform, including the security policies to safeguard users’ assets, payment methods supported, services offered, and several others. The five crypto exchanges featured in this post are great performers across all ranking factors that determine a great cryptocurrency trading platform.
What is a cryptocurrency exchange, and how does it work?
A cryptocurrency exchange is a trading platform that allows anyone to buy, sell or trade digital assets. Most crypto exchanges support Bitcoin and Ethereum, the leading digital currency assets by market capitalization. The rest of the digital assets are selectively available across the hundreds of trading platforms in the market. Each exchange has proprietary listing policies that affect the assets made available for buying, selling, or trading on their platforms. Cryptocurrency exchanges allow users to deposit funds (could be fiat money or digital assets) and exchange them for other digital assets. For instance, a user could deposit USD into a crypto exchange and buy Bitcoin. They could then trade the Bitcoin for numerous other digital assets supported by the platform. They could even swap the Bitcoin back to USD and withdraw their funds. All these are functions of a cryptocurrency exchange. However, as you will learn later on in this article, the role of most crypto exchanges has expanded. Now you can also invest, learn, stake, store, and even lend your assets through a trading platform.
Types of crypto exchanges
Cryptocurrency exchanges can be classified into two broad categories:
Centralized and Decentralized
A crypto exchange can be categorized as either centralized or decentralized, depending on its operator. If operated by a single entity such as a company or an individual, it is regarded as a centralized cryptocurrency exchange (CEX). If, on the other hand, there is no single entity responsible for the platform’s operations but rather several distributed entities coming together, then this is a decentralized crypto exchange (DEX). Most of the leading crypto trading platforms in the market are centralized, which gives them some distinct advantages over their decentralized counterparts. However, depending on your needs and level of technical know-how, you may find that you prefer the DEXes over CEXes.
Cryptocurrency exchange vs. Crypto broker
The term crypto broker is often confused with a crypto exchange, and it’s easy to see why given their overlapping concepts. However, these two terms do not refer to the same thing. The two are similar to the extent that they are both platforms allowing for the buying and selling of cryptocurrency assets. Buyers and sellers can create accounts in similar ways. However, with a crypto exchange, buyers and sellers interact with one another. The platform charges a trading fee for facilitating the asset exchange. Prices are determined by market valuations. On the other hand, a crypto broker also allows buyers and sellers to transact on its platform. The difference is that they don’t interact directly with each other. Instead, the broker sells to and buys from the respective parties. The prices are determined by the broker who buys at a discount and sells at a premium compared to the market prices. Crypto exchanges are ideal for small trades, while brokerage platforms are ideal for large transactions. This is because, with exchanges, the platforms aim to match buyers and sellers while brokerages act as either buyers and sellers of the assets. Brokerage firms often support fewer digital assets, have limited geolocation coverage and payment methods. In contrast, crypto exchanges offer broader support for digital assets, payment methods, and geolocation coverage. Finally, crypto brokerage platforms are more strictly regulated as compared to exchanges. This makes them more secure and trustworthy, therefore appealing to the institutional client. Crypto exchanges are often less regulated, especially the decentralized variants. Because of this, they appeal to a retail clientele.
Cryptocurrency exchange features and services
Trading crypto assets on exchanges may be the most popular application of these platforms, but it is not the only one. Initially, these exchanges started as trading platforms. However, as crypto assets evolved, so did the exchanges. They now serve a wider variety of clients, offering increasingly more services to satisfy a continually evolving clientele. Here’s a rundown of some of the services offered by leading cryptocurrency exchanges:
Trading – this is the exchange of assets between two parties. It could be the exchange transacting with the client (i.e., a broker platform) or clients transacting with one another (i.e., an exchange). All cryptocurrency exchange platforms offer trading by default. Staking – in the digital economy, staking involves maintaining a minimum required balance of a given asset in your wallet to earn the right to validate transactions on a blockchain network. This is possible through the Proof of Stake (PoS) consensus mechanism used by several blockchain networks, including Ethereum – the second largest blockchain network by market value. Some crypto exchanges introduced ‘staking-as-a-service’ to cater to clients who are willing to ‘lock’ their assets within the trading platforms for a given period. In return, they get a share of the staking rewards. Storage (custody) – cryptocurrency exchanges can also act like banks and maintain custody of their customers’ assets. These are called wallets, and most exchanges offer these services. We do not recommend keeping your assets within trading platforms, especially for long periods. Exchanges such as Coinbase have branched out to offer more specialized storage facilities to institutional clients such as funds and family offices. Lending – not a popular service, but some trading platforms such as Binance and KuCoin allow their clients to lend out their assets to other clients. The concept is similar to how a bank savings account works. In return, the lenders get interest on their (lent) savings. Educating – the blockchain concept is more technical than most would prefer, but, given the level of interest in the market, most cryptocurrency exchanges have opted to offer learning resources. Anyone can easily find these free educational materials and get up to speed on the new asset class. Exchanges providing these services include Coinbase, Kraken, and Binance.
What to look for when choosing a crypto exchange
There are over 300 crypto exchanges listed on the crypto data aggregator Coinmarketcap, with several more not yet on the list. That is a lot of exchanges in the market to consider. Each platform is unique in its operations, interface, selling proposition, and target audience. So how do you narrow down on the best cryptocurrency exchange to trade your coins? Let’s go over some of the most important factors to consider when choosing a trading platform that will match your needs.
Coin support
More than 4,200 cryptocurrencies are currently listed on Coinmarketcap (and over 12,000 in total as of September 2021). Most of these are not supported in any major trading platform. Even some notable coins in terms of market value may not be listed in big exchanges. Therefore, it’s crucial to take into account the crypto assets supported on the platform you’re considering.
Security (reputation)
The safety and security of your assets are paramount. Over the years, billions of dollars worth of cryptocurrency have been stolen from platforms leading some to close down. Some of the leading crypto exchanges have taken out insurance covers for their customers’ assets to counteract this. However, this is just a recovery solution. What is more important is that the platforms take active measures to ensure that they do not lose customer assets in the first place. The exchange should also adopt best practices when it comes to handling digital assets.
Liquidity
The liquidity of a digital asset is a measure of how easy it is to convert it to cash or other digital assets. You can quickly assess this factor by checking the daily transaction volume on the platform under consideration. A high trade volume means that it will be easy to buy, sell or trade a given asset of interest. A general high trading volume means that you have a broader selection of assets to trade. The reverse is also true. A low trade volume makes it hard to buy, sell or trade an asset.
Regulation and compliance
The presence of financial industry standards and policies is significant, but especially so in the blockchain sector. The blockchain field has been around for over a decade but has grown rapidly in that period leaving regulators struggling to keep up. In several countries worldwide, regulators have implemented initial policies to govern the operations of blockchain-related companies. It is noteworthy and possibly a red flag if a trading platform you’re considering does not comply with any industry regulations already in place.
Payment methods
How can you deposit and withdraw funds from the exchange? Does it support bank transfers? Credit or debit cards? PayPal or your favorite payment method? What trading pairs are also supported on the exchange? Consider whether you can trade EUR, USD, GBP, or a local currency in your country. You could also consider the costs of deposit and withdrawal while you’re at it. Payment services such as credit cards are more costly compared to bank transfers.
Ease of use
This factor may not be possible to test before opening an account; however, you can interact with most trading platforms without creating an account. You can browse around and see how easy it is to find what you need. You should also consider the account creation process. Is it easy and straightforward? Does the platform require you to verify your identity? Not all exchanges comply with KYC regulations. At this point, you may also consider whether the customer support is functional. Search for user reviews online before signing up.
Convenience
The ease of using the exchange is an important consideration. Nowadays, most platforms have mobile and desktop applications on top of the conventional web interface. However, not all exchanges have this level of convenience. Even the ones that offer these options could have a poor implementation of the apps. So make sure to download the applications and play with them and see whether you will like the experience of using them regularly. Do you need access to an API (application programming interface)? The API allows you to extract data from your account to display it onto a third-party platform such as a crypto trading bot. Most exchanges offer API support. If you need to use the API, consider its functionality. What data can you access remotely? The security of the API is also another crucial consideration. Do you have permission to withdraw funds through the API? Is this a setting that can be changed? Check all the API functionality settings to see whether you will have the control you need.
5 most trusted crypto exchanges to buy & sell digital assets
#1 Uphold
The multi-asset exchange Uphold, which operates out of New York, has established a unique market for trading digital and physical assets. With a single Uphold account, traders have access to 50 US stocks, over 200 cryptocurrencies, four precious metals, and 27 national currencies, allowing for seamless cross-asset trading. Customers are able to trade directly among different asset classes, including Bitcoin utilizing embedded payments when they take advantage of the ‘Anything-to-Anything’ trading experience. Uphold streamlines the crypto buying process by connecting to seven different blockchain networks and accepting payments from debit and credit cards in 36 different countries. The platform’s “one-step trading capability” enables consumers to swap any asset, such as Bitcoin, for another crypto. In addition, users may participate in a 0% staking commission campaign that will run through January 5, 2023. Uphold’s online website and mobile app (available in the Apple App Store and on Google Play) allow investors to easily make purchases, sell assets, and deposit and withdraw funds from their accounts. Finally, the platform uses a number of security measures, including storing 90% of the cash in a cold storage facility and keeping an insurance policy that safeguards the currency that is kept on the platform against any potential security breaches.
Supported payment methods
ACH/Bank transfers and Google Pay deposits free of charge (US users only); Apple Pay; Bank transfers (such as SEPA, wire transfers, etc.); Users have bank connectivity to Uphold in 36 countries via debit/credit card payments with Visa and Mastercard; Other cryptos.
Fees
Uphold trading fees are competitive, with the platform charging a small spread every time you trade. There is a $1 transaction fee on all transactions between assets where the amount transacted is under $100 in value. There is also a 2.49% fee on deposits that are made via a debit card and a 3.99% fee on deposits that are made via a credit card. When you withdraw to an external crypto wallet, network fees apply, which are passed on to the receiver at a cost, and the amount you pay depends on the network’s congestion level at the time.
Binance
Binance was created in 2017 by Changpeng Zhao (CZ). Initially based in China, Binance had to relocate headquarters to Japan and later to Malta in search of a favorable regulatory environment. Binance is currently the largest cryptocurrency exchange in terms of trade volume, a title it has maintained since 2018. Additionally, it is the leading crypto-to-crypto trading platform supporting about 340 digital assets and more than 1,100 trading pairs. The exchange has had to create localized outfits in some countries to adhere to specific local financial regulations. For instance, in the US, it launched Binance America (Binance.US); in Singapore, it launched Binance Singapore. It also ventured into India and bought WazirX, a leading local peer-to-peer (P2P) crypto trading platform.
Services and Features
Binance has the most comprehensive features list of any crypto trading platform. Here are some of them:
Trading – spot, margin and derivatives trading, OTC and P2P; Staking – supports coins such as Binance Coin (BNB), Polkadot (DOT), Matic, EOS, Cardano (ADA), Tron (TRX), IOST, Tezos (XTZ), and Dash, among others. Investing – through Launchpad, investors can crowdfund for new blockchain projects. Learning – learn everything about blockchain and cryptocurrencies in the Binance Academy. Lending – lend your crypto to other Binance users or borrow to facilitate your crypto trades on Binance Savings. Storage – Store your cryptocurrency in Binance’s affiliate wallet service Trust Wallet or simply keep your coins within your Binance account.
Geolocation and Payment Methods
Binance is a global services provider with affiliate services such as Binance America, Turkey, and Singapore, catering to specific countries and regions. The exchange started as a crypto-to-crypto exchange platform but expanded its payment methods to accept fiat deposits and direct fiat purchases. Here are the payment methods supported on the platform:
Crypto deposits Payment cards (both Visa and Mastercard) Direct bank deposits or wire transfers for popular fiat currencies like USD, GBP, EUR, etc 3rd-party integrations with services such as Simplex, BANXA, and Koinal 60+ payment methods supported on the P2P platform.
Fees
Deposits – free to deposit. However, the payment method provider may charge a transaction fee. Withdrawals – dependent on the network fees for each respective coin/token. Check the withdrawal fee schedule here. Transaction fee – up to 0.1% depending on preceding 30-day trade volume. The higher it is, the lower the fees. There’s also a 25% and 10% discount on the spot and derivative market trades, respectively, for fee payments made using BNB coin.
Coinbase
Established back in June 2012 by Brian Armstrong and Fred Ehrsam, Coinbase is one of the oldest cryptocurrency exchanges in the market. It is also one of the largest and most trusted virtual assets trading platforms. The company is headquartered in San Francisco, California. Coinbase can be considered both as a broker and an exchange. It caters to retail and institutional investors alike through its Coinbase.com and Coinbase Pro properties. The former will have you covered for retail sales and purchases or trades of low to medium quantities. For more advanced traders looking to exchange their assets through the spot market, they can use the Coinbase Pro interface. Coinbase is a highly regulated exchange that has sought to adhere to all financial regulations in every market to which it has expanded. It holds the highly coveted BitLicense issued by the New York Department of Financial Services (NYDFS). Its subsidiary in the UK – CB Payments Limited – also has approval from the UK Financial Conduct Authority to offer services to Great Britain residents. It also adheres to EU financial policies. All these and several other licenses allow it to operate in over 100 countries across the world.
Services and Features
Coinbase offers a variety of features, including:
Trading – you can buy and sell crypto through Coinbase.com and trade these assets on Coinbase Pro. Institutional customers can use Coinbase Prime to trade in large amounts. Staking – similar to Binance, Coinbase also allows its customers to earn staking rewards by holding specific assets within their accounts. So far, some of the assets supported for this service include Ethereum, Tezos, Algorand, Dai, and Cosmos. Storage – Coinbase offers its retail clients a mobile wallet and a web wallet to store their coins and tokens. The mobile wallet is called Coinbase Wallet. Individuals seeking a more long-term solution for keeping their assets can find that in the Coinbase Vault. Most recently, the exchange launched Coinbase Custody which is a custodian solution for institutional investors. Learning – Coinbase Learn is a service that offers educational and informational materials to Coinbase customers to get them up to speed on blockchain and cryptocurrency. Learners also get rewarded for participating in the process. Investing – Through Coinbase Ventures, the exchange invests in startup businesses creating solutions within the blockchain ecosystem. Business solutions – Coinbase also offers a payment integration solution that allows businesses to accept cryptocurrencies on their online stores. This is called Coinbase Commerce. Coinbase Card – crypto is becoming more applicable as a payment method, and Coinbase is now offering its customers the option to pay with crypto through a Visa debit card.
Payment Methods
Coinbase supports various payment methods to different customers depending on their location.
US Residents – Bank Account (ACH), Wire transfer, Debit card, and PayPal UK Residents – Faster Payments, SEPA Transfers, 3D Secure Cards, Instant Card Withdrawals, and PayPal. PayPal is only used for withdrawals but not deposits. EU Residents – Ideal/Sofort, SEPA Transfers, 3D Secure Cards, Instant Card Withdrawals, and PayPal for withdrawals. Canadian Residents – Debit cards for purchases and PayPal for withdrawals Singapore Residents – Only 3D Secure cards (debit and credit cards) supported Australian Residents – instant crypto purchases using Debit cards only. Customers based in other countries can’t buy or sell crypto. They can only exchange amongst the various supported crypto assets.
Fees
Coinbase is not the cheapest exchange to buy, sell, or trade crypto. However, its fees are competitive within the overall cryptocurrency trading industry. It charges a varying fee depending on the customer’s location and the chosen payment method. Here’s a brief rundown of the fees you may have to pay if you trade on the exchange.
Selling and buying – $0.99 to $2.99 for trade amounts between $1 and $200. Orders above $200 are subject to a variable percentage fee which ranges from 1.49% to 3.99% depending on location and payment method. Crypto conversions – <2% of the transaction value. Free Deposits – in the US through ACH bank deposits, in the UK through the Faster Payments transfer and SEPA transfers, and within the Eurozone through SEPA transfers.
Kraken
Kraken considers itself the “most trusted and best-rated cryptocurrency exchange in the market.” It is certainly the oldest surviving Bitcoin trading platform following its creation in 2011 by crypto entrepreneur Jesse Powell. It is based in San Francisco, similar to Coinbase. Kraken is a highly regulated platform offering numerous crypto trading pairs against multiple fiat currencies, including USD, EUR, GBP, AUD, JPY, and CAD. The exchange is available globally except in ten countries with unstable bilateral relations with the United States. These countries include North Korea, Cuba, Iran, Syria, and Iraq. Ten more countries have restricted payment methods, including Somalia, Namibia, Yemen, Lebanon, and Sudan. Despite its long-standing history, Kraken is yet to acquire the BitLicense from the NYDFS, which bars it from operations within the State of New York. Notably, residents of Washington State (WA) can’t use the service either.
Services and Features
Trading – Kraken is both a broker and an exchange allowing its users to buy, sell and trade numerous crypto assets. There are also OTC markets for high volume traders, indices, margin trading, and futures markets for derivatives traders. Staking – similar to Coinbase and Binance, Kraken offers its users a staking service supporting coins such as Tezos, Ethereum, Polkadot, Cosmos, Kusama, Kava, among other assets. Learning – Kraken provides in-depth educational materials from blog posts to long-form tutorials to help beginners understand blockchain technology and other topics related to the crypto economy. Storage – just like most trading platforms, Kraken also offers crypto and fiat storage facilities through its web wallet with an emphasis on tight security. Banking – this is a recently announced feature that is due to launch in 2022. Kraken received charter approval from the State of Wyoming, allowing it to create the “world’s first Special Purpose Depository Institution (SPDI).” Kraken is calling it the Kraken Bank. The exchange also notes that the Kraken Bank will be the “first regulated, U.S. bank to provide comprehensive deposit-taking, custody, and fiduciary services for digital assets.”
Payment Methods
Kraken offers a broad range of payment options to fund your account. These are dependent on your location. They include:
In the US – Fedwire, SWIFT, Etana Custody, and the Silvergate Exchange Network (SEN). Wire transfers are also supported internationally for USD deposits. In the UK – Faster Payments, CHAPS (Clearing House Automated Payment System), Etana Custody, and BACS – a bank-to-bank transfer system. Within the Eurozone – SEPA bank transfer, and Etana Custody. Wire transfers are also supported for EUR deposits. The rest – Kraken also supports various other account funding options such as bank transfers, PayID in Australia, and in-Person deposits in Canada.
Fees
Kraken charges varying fees for makers and takers on the trading platform and depending on the total preceding 30-day trade volume. Makers are parties that bring liquidity into the marketplace by placing orders, while takers take liquidity out of the marketplace by matching the orders. The fees on the platform are very competitive and some of the lowest in the market.
Instant purchases – buying or selling directly from the Kraken App attracts a fee of 0.9% for stablecoins and 1.5% for other assets. This fee rises to 3.75% + €0.25 whenever a customer uses a payment card instead. Trading fees – Kraken uses a graduated scale to calculate trading fees favoring higher trade volumes. Makers get better rates ranging from 0% – 0.16% while takers are charged between 0.10% and 0.26%. The other products, such as margin and futures trading, also attract varying fees. Check the Kraken fee schedule here.
Bittrex
Bittrex is a Seattle, Washington-based cryptocurrency exchange launched in 2014 by Bill Shihara, Richie Lei, Rami Kawach, and Ryan Hentz. The exchange initially launched as a crypto-to-crypto platform allowing its users to trade their digital assets for other digital assets. However, over time, the exchange has enabled crypto purchases using fiat currencies with the US Dollar. According to Coinmarketcap, Bittrex is processing an average of over $200 million worth of cryptocurrency trade volume every 24 hours. It ranks in the top 15 exchange platforms in terms of the trading volume. Bittrex’s forte is security. Despite its relatively long history in the market, the exchange has avoided any security incidents, a fete that most of its competitors cannot claim. This achievement can be attributed to its founders, who have combined fifty-plus years in the security field. The founders have, in the past, described their approach to exchange safety as “paranoid security.” Bittrex exchange is a popular crypto trading platform. The exchange has been seeking the New York BitLicense since 2015 but has yet to secure it. This means that it is not yet licensed to operate in New York as a virtual asset services provider (VASP).
Services and Features
Bittrex has limited services compared to other more popular crypto exchange platforms. So far, its customers can only access two services which are:
Trading – customers can either engage in spot or margin trading of 330 supported currencies across more than 650 markets. Storage – most exchanges, including Bittrex, provide a web wallet service allowing their clients a safe place to store their crypto. However, exchange wallets are not the safest places to keep your assets.
Payment Methods
Bittrex allows for two payment methods. These are:
Crypto deposits Bank account deposits for the US Dollar currency
Fees
Bittrex has a very competitive fee schedule. Like other exchanges, it also encourages liquidity creation by charging lower fees to makers compared to takers. Based on a preceding 30-day trading volume, traders on the platform are charged the following fees:
Makers – 0% – 0.5% of transaction value, Takers – 0.05% – 0.5% of the transaction value.
Lower fees apply as the transaction value rises. For the Makers, trade volume exceeding $60 million in any given 30-day period will attract zero fees.
Conclusion
There you have it, the five best cryptocurrency exchanges to trade your digital assets in 2022. We have shown you how to evaluate trading platforms to find one that suits you best. Several factors contribute to a safe and convenient exchange. We have also highlighted our picks of the leading exchanges in the market currently based on our identified factors. The exchanges are Binance, Coinbase, Kraken, Bittrex, and Uphold. Binance, Kraken, and Coinbase offer extra services outside just trading, offering more wholesome experiences. However, Bittrex and Uphold are also great alternatives. You can try any or all of these platforms and find out which one you like best.
Binance; Kraken; Bitstamp; Bittrex; Coinbase; Bitfinex.
Binance (0.10%); Kraken (0.20%); Bitfinex (0.200%); Poloniex (0.125%).
*Fees can be adjusted by the exchange operator without any prior notice.
Binance; Kraken; Bittrex; Bitfinex; Coinbase; Bitstamp.
