Are you looking to enter the crypto space but don’t know which coin to invest in or what exchange to join? There are many factors to consider when making a cryptocurrency investment. You want to protect your personal information and your investment while still getting the most out of each exchange you make. Here are some key things to consider when exchanging and investing in crypto.
When you first join the crypto world and begin exploring your coin options, it’s essential to look at the whitepaper of each coin you are considering. All cryptocurrencies have a whitepaper that outlines the reasons for the design of the token and the unique rules and features of the token. Some features to look for include the benefits to holders, such as reduced exchange fees, decision-making power, and the token’s ability to self-regulate through market fluctuations.
Cryptos are particularly trendy and growing in popularity worldwide. One great way to learn about each coin’s unique benefits and drawbacks is to join a digital community around the currency. Platforms like Reddit and other social media platforms are great avenues for learning from other investors and understanding the latest in the crypto space. Because crypto value does not fluctuate with traditional fiat money inflation, public opinion and trust in each coin is an integral component of that coin’s value. The stronger the community around the coin, the better that coin will typically perform.
The security of an exchange is an important aspect to consider when investing and making crypto trades. There are centralized and decentralized (DEX) exchanges. Though both types of exchanges are on blockchain networks that already provide inherent security and anonymity, each exchange has its own security measures to protect your user info and investment. Though centralized exchanges will boast high security, their very nature makes them a higher target for hackers than decentralized exchanges.
Fees & UX
Fees and user design are other important factors to consider when selecting the proper crypto exchange for you. Typically, DEXs are less user-friendly than other exchanges, though new exchanges such as the FTT DAO, created by FTX, combine decentralized principles with easy-to-use features of more centralized exchanges. DEXs use automated smart contracts to make exchanges between holders, which means there are no intermediaries to charge additional exchange fees as there are in centralized exchanges.
Many exchanges will provide users access to trade various cryptocurrencies through their single platform. Like FTX, which offers discounts to those users buying FTT and exchanging their native token on the platform, they also allow access and trade using other popular cryptocurrencies so you can manage multiple investments through a single platform. Further, the exchange you select should offer a comprehensive resource and knowledge base to help users understand the crypto space and their investment opportunities.
Liquidity is essential for investors who want to be able to pull their investment anytime they want. An exchange with high liquidity will be able to support investors who pull their coins at any moment. Crypto value changes rapidly; the more trades happening on an exchange, the more likely you will sell or buy at the best price. The most popular exchanges are typically those with the most significant trade volume and liquidity.
The FTX exchange, for example, is backed by Alameda Research, one of the largest liquidity providers in crypto. Selecting the right currency and exchange for your trade is essential in a successful investment. Do your research and choose an exchange that’s easy to use and offers beneficial features for its users.