Choosing a crypto exchange is crucial for an investor, but the exercise can be daunting for most people. This guide deconstructs some factors to consider when picking a digital asset trading platform. It looks into the best options available according to various factors such as geographical availability, features offered, ease of use, cost, and security. Read on to find out which platform best suits your crypto trading needs.
The growing popularity of digital assets has caused an increase in the number of places that people can buy, sell and trade these new assets. Cryptocurrency exchanges are now the most accessible places to acquire Bitcoin, store it or even lend it, among other uses.
However, over the last few years, investing in cryptocurrency has proven to be a very risky venture, with traders getting scammed out of their crypto or the platforms getting attacked and losing customer funds. To benefit from investing in crypto, you have to choose your platform wisely to ensure that your pick is secure, cheap, and available in your jurisdiction.
Most of the leading crypto exchanges will probably serve the needs of average investors. Expert traders and crypto enthusiasts will likely demand a little more from their preferred trading platforms. As a result, these exchanges are improving and iterating on their products and services to remain competitive, keep their users, and attract new clients.
In this guide, we will consider what makes a good cryptocurrency exchange. You will also learn how to choose a trading platform and which exchanges in the market are ideal for your particular situation. Since different platforms offer different features, products, and services, it’s worth considering what matters to you and which exchange can provide it.
What to Look for When Choosing a Crypto Exchange
Whether a crypto trading platform is good is subjective, but here are some common factors to consider when deciding which exchange to use. Most of these apply regardless of the type of exchange, so they can be applied across the board.
The safety and security of digital assets are crucial factors, especially in trading platforms, since history has taught us not to be too trusting of crypto exchanges. Some exchange operators have scammed their users through exit scams, while others have fallen victim to massive hacks losing access to their customers’ assets. Either way, it’s essential to ensure that the platform you are considering has invested enough in the security of its systems and provided enough safety tools to its users to secure their accounts.
A good crypto exchange is available in your location. If you reside in the United States, you want only to consider platforms that you can access, such as Coinbase, Kraken, Gemini, or Binance America (Binance.US). It is counterproductive to be looking into the services and products offered by global-focused exchanges that are prohibited from serving your jurisdiction.
Over 15,000 and 11,400 digital assets are listed on the popular crypto market data aggregators CoinMarketCap and CoinGecko, respectively. Most of these assets are low-cap (low market capitalization) coins and tokens, but it shows that the digital asset space has grown tremendously.
As a crypto investor, you want to ensure that your favorite crypto exchange supports whichever asset you are interested in buying or trading. You also want to ensure that the asset can be traded against a preferable asset such as Tether (USDT) or Bitcoin (BTC), two of the most popular base assets.
The cost of performing a transaction might not be a huge factor if you trade less frequently and do so in large sums, but fees play a significant role in profit margins for active traders. You could save huge sums in fees by choosing one exchange over another.
Liquidity is a measure of how easy it is to convert an asset into cash. This factor is important because you want to choose a platform with high trade volume for the particular asset you are interested in buying, selling, or trading. Crypto prices are very volatile, making it very important to ensure that you pay attention to the platform’s liquidity you choose to trade a certain asset. The faster it is to get into or out of a position, the better.
Supported payment methods
As a crypto investor, you need to consider which payment methods are supported by a trading platform because, at some point, you will need to buy or sell your crypto. You want to choose a platform with a wide selection of on and off-ramp methods, but this is not as important as the other factors stated above.
Features, products, and services offered.
Crypto exchanges have evolved in functionality from just offering buying, selling, and trading features. Now, they need to offer more features to compete effectively in the market. Platform users demand services such as staking, lending, mining, investing, custody, non-fungible token (NFT) marketplaces, among several others. If you require some or all of these features, you want to choose a platform that offers them or plans to add them.
Additionally, with the growing popularity of mobile phones, most platforms have opted to create mobile interfaces to allow their users to trade on the go or check on their positions from anywhere. It’s a great feature to have but not one that will necessarily make a trading platform good. If you need mobile features, it’s worth checking that your preferred candidates offer it and on which platform.
Types of Cryptocurrency Trading Platforms
There are two types of cryptocurrency platforms:
- Centralized exchanges
- Decentralized exchanges
Let’s take a closer look at each to help you decide which of the two types will work for your specific needs.
1. Centralized exchanges (CEX)
Centralized exchanges are trading platforms run and owned by a single entity or a company. Most cryptocurrency exchanges are centralized, such as Binance, Coinbase, FTX, Kraken, BitMEX, and Gemini.
Typically, since centralized exchanges have an entity behind them that runs the platform, they usually have to comply with regulations such as KYC (know your customer) and other local policies in jurisdictions they operate. If you have to undergo identity verification, that is a clear sign that the platform is centralized.
The benefit to centralized platforms is accountability because the company running it is often known, which deters most operators from stealing or engaging in malicious behavior.
2. Decentralized Exchanges (DEX)
Decentralized exchanges or DEXes are crypto trading platforms run and operated by diverse and coordinated entities or individuals. Essentially, no single party makes the governance and policy decision on how a DEX operates.
DEXes differ from CEXes in profound ways other than as defined above. For instance, with DEXes, there are no accounts, and users only need to link their wallets to the platform to start trading. No accounts mean no KYC compliance.
Typically, DEXes suffer from slow upgrades and poorer user experiences, contributing to the lower user count than their centralized counterparts. Because they are slower and often offer a clunky interface, only experienced users and those with heightened privacy concerns take to them.
Benefits of using DEXes include circumventing KYC regulations, self custody of private keys, and the convenience of using them. Creating an account can take a very long time with centralized exchanges, and a potential user can be blocked or barred from using a platform. With DEXes, it’s almost impossible to censor a user, which means these exchanges can be used by anyone residing anywhere in the world.
Best Crypto Exchange for Beginners
Cryptocurrency novices or those new to the blockchain scene have specific needs that help define which trading platform is right for them. A few characteristics that describe them include:
- They are easily overwhelmed with features.
- They are still learning about the various blockchain projects and accumulating new vocabulary.
- They are more prone to making critical security mistakes and falling for scams.
- They are generally excited and willing to experiment with everything from NFTs to spot trading.
- They are attracted to familiar interfaces.
Best Option: Coinbase
Coinbase is a US-based cryptocurrency exchange that launched in 2012 to offer Bitcoin buying and selling services. It was launched as a crypto brokerage provider but has since morphed into a trading, staking, custody, learning, and wallet platform.
It currently ranks as the leading crypto trading platform in the US by volume and coverage, being a highly regulated company.
Why Coinbase stands out
Here’s why Coinbase is the best crypto trading platform ideal for beginners:
- It has a beginner-friendly interface that is easy to use and navigate.
- The exchange has a mobile app on Android and iOS platforms, making it easy to trade or follow the cryptocurrency market performance on the move.
- Coinbase supports popular payment methods such as credit/debit cards, PayPal, and bank transfers, making it easy to buy and sell crypto.
- The San Fransico-based company is highly regulated, making it more trustworthy and safer to use.
- Coinbase has not suffered a major security incident meaning that it prioritizes systems security and the safety of its users’ funds.
- It supports over 130 crypto coins and tokens and more than 390 different trading pairs ideal for beginners looking to experiment with different assets.
- The exchange offers several features, including a learning section with the incentive to earn, a staking section for passive income, and a custody section for those investors looking to store massive amounts of crypto safely.
- It has a standalone pro-oriented trading interface called Coinbase Pro, ideal for those beginners who would like to expand their trading skills with more advanced trading and research tools.
Worthy Alternative: Robinhood
Robinhood is a traditional asset investment platform that recently started offering cryptocurrency trades for assets including Bitcoin (BTC), Ethereum (ETH), Dogecoin (DOGE), Litecoin (LTC), Ethereum Classic (ETC), Bitcoin Cash (BCH), and Bitcoin SV (BSV).
The platform is ideal for crypto beginners giving them a familiar interface to trade other conventional financial instruments such as stocks, commodities, ETF (Exchange Traded Funds), and Options. The platform has over 13 million users already, which proves its popularity.
Robinhood makes it easy to start buying and selling cryptocurrency, claiming a sub-five-minute signup process. Additionally, the platform charges zero commission fees, provides great security, cold storage for digital assets, and insurance against unfortunate security incidents.
Best Global Cryptocurrency Exchange
For a cryptocurrency exchange to be considered a global platform, it needs to offer its services to customers in several countries. Our worthy recommendation in this category is the platform that covers the widest geographical location and offers a comprehensive suite of products and services.
Best Option: Binance
Binance is a relatively young trading platform compared to some other crypto exchanges in the market. It was launched in 2017 by its current CEO Changpeng Zhao (CZ), through an ICO and has since seen tremendous growth in customers and products offered.
Currently, Binance is an ecosystem inclusive of a blockchain network, a mining pool, staking services, lending, spot, futures, OTC and P2P trading, and an NFT marketplace, among others. It also offers a standalone crypto wallet called Trust Wallet for people who prefer to control their private keys.
Why Binance stands out
Binance is a leading global exchange because:
- It supports customers from several countries, and thanks to its remote-first nature, it has been able to avoid regulatory limitations.
- It offers trading for more than 400 coins and tokens in over 1,500 markets.
- It is one of the cheapest trading platforms, with fees starting from 0.1% without discounts and 0.075% with discounts. The more someone trades, the lower the fees they will pay.
- Like Coinbase, Binance also offers a learning section called Binance Academy, where its users can learn about various blockchain concepts.
- Binance began as a crypto-only exchange but has slowly added several payment options to allow users to buy and sell crypto using upto 100 different fiat currencies.
- The exchange can be accessed through several interfaces, including web, desktop, and mobile making it easily accessible to anyone regardless of their favorite platform.
- Binance is a secure platform offering multiple tools to its users to secure their accounts. In addition, it maintains an insurance fund dubbed #SAFU to reimburse customers in case of a security incident.
Worthy Alternative: FTX.com
FTX is another relatively young crypto exchange available worldwide except in highly regulated markets like the United States. It was co-founded by Sam Bankman-Fried (CEO) and Gary Wang (CTO) in May 2019.
Like Binance, FTX has also grown tremendously in a very short amount of time to offer a rather comprehensive list of products and services. Notable features available to FTX users include spot, margin, derivatives, OTC and leverage trading, staking services, prediction markets, and an NFT marketplace.
The exchange keeps on adding to its product list, making it more competitive to a wider user audience. It offers a mobile app for Android and iOS platforms and hefty discounts for heavy traders and large stakeholders of the native FTX token called FTT.
North America-based customers have access to a local FTX subsidiary dubbed FTX America (FTX.US) that only offers services to residents of the United States. This subsidiary supports up to 24 digital assets in 54 markets (trading pairs).
Best U.S.-based Cryptocurrency Exchange
The United States market is highly regulated, meaning that any platform seeking to operate here must comply with all financial regulations locally and internationally. Our recommended trading platform for this category is not only one of the most compliant exchanges, it is also one of the most recognizable names in the industry.
Best Option: Coinbase
Coinbase is one of the oldest crypto trading platforms not just in the United States but the world over. It is also one of the few companies with the necessary licenses to operate in all but one US state. It holds the highly coveted NYDFS-issued BitLicense, which allows crypto-related businesses to carry on business within the state of New York. The only US state Coinbase is yet to serve is Hawaii.
The San Francisco-based crypto exchange had enjoyed a long history of menial to none security incidents. However, between March and May 2021, the exchange reported a data breach in which 6,000 accounts were affected. According to the exchange, hackers took advantage of a flaw in Coinbase’s SMS Account Recovery process, allowing them to steal funds from the affected accounts.
Why Coinbase stands out
Here’s why Coinbase is the best option for US residents:
- It is highly regulated and compliant with local, national, and international regulations, allowing it to operate in most of the US States.
- It supports several payment methods available to US residents, including bank deposits, wire transfers, credit/debit cards, and PayPal.
- It is publicly traded on the NASDAQ exchange, and stakeholders can keep track of its financial statements.
- The exchange has products that cater to the needs of both individuals and institutions.
- There is a pro interface for advanced traders with charts, order books, API access, etc.
- Coinbase is very secure, providing its users with necessary security tools such as second-factor authentication (2FA) and an insurance provision if the exchange suffers from a security breach.
- It has two intuitive mobile applications for its consumer and pro platforms, allowing its users to trade on the go.
Worthy Alternative: Kraken
Kraken is another San Francisco-based crypto exchange launched in 2013 by Jesse Powell. Initially, it offered trading services for Bitcoin and Litecoin against the Euro fiat currency, but over the years, it has added support for more digital assets and products, including staking, OTC, and derivatives trading. It now also supports most of the leading conventional currencies such as the US Dollar and the British Pound.
Professional traders have access to an advanced suite of tools called the Kraken Terminal and Cryptowatch. The terminal offers Kraken users advanced charting techniques, drawing tools, order books, and depth charts. Cryptowatch is a data aggregator which pulls API data from at least 25 crypto exchanges spanning over 4,000 markets.
Kraken is currently working on launching a first-of-its-kind crypto bank thanks to a license it received in 2020 from the State of Wyoming, allowing it to form the “world’s first Special Purpose Depository Institution (SPDI).”
US-based residents might want to consider Kraken because of the above reasons and more, including:
- It has extensive coverage across most of the US states.
- It can be accessed through the web and mobile, allowing traders to transact on the go.
- Highly secure platform with no security incident reported as of yet.
- It has a comprehensive resources section with crypto guides, podcast episodes, webinar sessions, and video tutorials.
- Provides adequate security tools to its users to secure their accounts, including 2FA, Master keys, and secure API creation and usage process.
Best Decentralized Cryptocurrency Exchange
So far, we have considered centralized exchanges and which are the best according to various criteria. This section will look into the leading decentralized platform for trading crypto.
DEX users have different needs from CEX users because the typical DEX user is a more advanced crypto user, pays more attention to privacy issues, and is more aware of their needs.
Decentralized platforms need to serve these needs with as minimal fluff as possible. So no extra unnecessary features such as learning sections, account signup processes with KYC, and ID verification.
Most DEX users need a vast selection of coins and tokens they can buy, sell, or trade. If they require other features, they can often just use centralized alternatives.
Best Option: UniSwap (V3)
UniSwap came onto the blockchain scene in November 2018, and at the time, most DEXes suffered from poor user experiences and clunky interfaces. It is easy to imagine why these exchanges had difficulty getting lots of users.
However, when UniSwap launched, it introduced a new concept of streamlining decentralized trading through automated market makers (AMM). Liquidity providers would deposit their assets with the UniSwap dApp, and these deposits would be used as swap assets for traders using the platform.
Previously, DEXes provided direct peer-to-peer trades where buyers and sellers swapped tokens from their wallets, kind of like barter trade, and this exchange had lots of limitations. Using liquidity pools makes the process faster, more predictable, and cheaper.
UniSwap only supports ERC-20 tokens, i.e., tokens created on the Ethereum network only. So far, over 470 assets and 930 trading pairs are supported.
Why UniSwap stands out
- UniSwap provides the deepest liquidity of all decentralized exchanges.
- The exchange has simplified the token swap process making it easier and faster.
- Supports trading of all Ethereum ERC-20 tokens, which form a majority of the blockchain tokens available for trading.
- The UniSwap protocol is open-sourced and permissionless, meaning anyone can connect a web-3 wallet and start trading. Security analysts can audit the underlying code to find any vulnerabilities, report them, and have the core developers fix them.
- It has a native governance token called UNI, through which project supporters can vote on governance and development issues.
Worthy Alternative: PancakeSwap (V2)
PanCakeSwap is Binance Smart Chain’s answer to Ethereum’s UniSwap. It uses the same concept of liquidity pools to make the token swap process more fluid. Additionally, since BSC is cheaper and faster than Ethereum, transactions on the PanCakeSwap are extremely fast and cost-effective.
Unlike UniSwap, which only supports ERC-20 tokens, PanCakeSwap has taken DEX trading to a whole new level supporting several coins and tokens, including Bitcoin, the flagship cryptocurrency. Trading of non-native BSC tokens is possible thanks to the Binance Bridge application used to tokenize (or wrap) any coin or token to be used on the BSC network.
For instance, Bitcoin can be tokenized into Wrapped Bitcoin (WBTC) to be used on BSC. In this example, the WBTC is a token that conforms to the BEP-20 standards and is issued on a 1:1 ratio. WBTC’s price tracks that of the actual BTC, and the underlying asset can be redeemed at any time.
PanCakeSwap supports over 3,000 coins/tokens, making up more than 6,000 trading pairs.
Best Overall Cryptocurrency Exchange
Most of the crypto exchanges highlighted above only shine in specific areas, such as UniSwap, which only shines in the decentralized arena. When choosing amongst several platforms for one that performs adequately across the board, we had to widen the requirements net.
We had to consider which exchange is highly secure, has the most features, is accessible to the most people, and is easy and intuitive to use for beginners and experts. Our recommendation checks most of the boxes.
Our Recommendation: Coinbase
Coinbase ranked first in two major categories: first for the best U.S.-based crypto trading platform and ideal for beginner traders. Here’s why:
- Coinbase is one of the most complaint crypto exchanges towards local and international financial regulations;
- The San Fransisco-based exchange is well established, having been in operation for close to a decade now;
- It maintains high-security standards and offers several tools for users to secure their accounts;
- Coinbase offers a highly intuitive user experience on its web and desktop interfaces;
- The exchange offers a range of products and services, including crypto brokerage, staking, spot trading, storage, custody, and a learning section;
- Coinbase offers support for hundreds of digital assets;
- It supports the widest range of payment options;
- Coinbase caters to both individuals and corporate institutions;
- It is publicly listed on the NASDAQ exchange, so its statements are easy to access and verify to know financial position;
- Coinbase is available in over 100 countries across the world.
There you have it; a breakdown of some of the leading crypto trading platforms in various categories. This guide discussed what to look for when choosing a trading platform to use for your crypto investment needs. We understand that the term ‘best’ is subjective, and in our research and presentation, we strived to be as objective as possible when choosing what to recommend.
We highly advise that you take the time when picking amongst the platforms we have highlighted above or others we did not mention. Always research before investing, and this applies both to your trading platforms and your favorite crypto projects.
Frequently Asked Questions
What is a cryptocurrency exchange?
A crypto exchange is a platform on which users can buy, sell or trade digital assets such as Bitcoin. Some platforms allow trades between crypto and fiat currencies such as the US Dollar, Euro, or GBP.
Which cryptocurrency exchange is best for beginners?
For cryptocurrency trading beginners, an ideal platform needs to be easy to use, secure and accessible through mobile and web. Additionally, the best crypto exchange for a beginner has to offer several various services and products, including a learning section. According to our ranking criteria, the best platform for inexperienced users is the US-based exchange, Coinbase.
Are cryptocurrency exchanges worth it?
There are several ways to invest in cryptocurrency, some of which involve using a trading platform such as Coinbase and others do not. Some wallets and applications support coin swapping, thereby bypassing a full-fledged crypto exchange. Whether a cryptocurrency exchange is worth it is highly subjective, and it all depends on the investor’s goals. Exchanges provide several services that one may not get otherwise.
How do you choose the best cryptocurrency exchanges?
First off, every investor needs to understand their goals and needs then they can choose from the available platforms that cater to those needs. Sometimes, they may have to compromise between needs to get the exchange that best suits them. Once they have their list of priority items, they can choose which platform fulfills all or a majority of them.