When first entering into the world of cryptocurrencies, you will be met with a whirlwind of new terms and concepts. Trying to keep all of these organised in your head while remembering what they all mean can quickly become an overwhelming task. Among the first concepts that you are likely to encounter is that of exchanges. These are, as you may have guessed, the platforms on which currencies, both crypto and regular, are exchanged.
There are a plethora of different exchanges operating today, and new ones are popping up constantly. Many of these exchanges are currently unregulated, although regulation is being introduced in countries around the world, and so there is still a degree of risk on the part of the user. The potential pitfalls of these services were highlighted when one of the most prominent of them, Mt. Gox, was hacked, resulting in the theft of all their Bitcoin and bankruptcy for the company.
When you are looking for the right exchange for your needs, these are the most important things for you to consider.
Location, Location, Location
The legal and regulatory status of cryptocurrencies, and the associated exchange platforms, varies around the world. It is therefore best to choose an exchange which operates in the same region as you. This will help you to avoid any potentially nasty legal surprises in the future.
Another reason you want to be certain of where the exchange you use is located is that, should they suffer a security breach and your money is lost, it will be very difficult to even attempt to recoup your losses if you do not know where the exchange is operating. Knowing where the exchange operates will also allow you to react to any regulatory changes that might affect you in the future.
It is easy to find reviews online for any product or service that you could imagine, cryptocurrency exchanges are no exception. Once you have put together a short list of potential exchanges that are suited to your needs, you can then begin to vet them properly. You should always err on the side of caution with any exchange that you aren’t certain about. This is because, in the past, there have been cases where the owners of seemingly legitimate services have absconded with customer’s funds. This is an inherent risk with dealing in cryptocurrencies.
Cryptohead are a consistently reliable site for reviews, guides, and other news relating to the world of cryptocurrencies. For an example of the level of detail that they offer in their assessment of services, check their Coinspot review.
Check the Fees
As a general rule of thumb, the more secure exchanges will make you pay for the privilege of extra security. You will tend to pay more fees in exchange for more guarantees of your funds. It is up to you how much of a risk you want to take with your cryptocurrency, but we would advise playing it safe. The extra hit you take in fees is nothing compared to the potential devastation of losing all your money.
Cryptocurrencies are very much in the spotlight right now. A whole new generation of investors is breaking into the world by way of cryptocurrencies. In order to trade them safely, you will need to choose an exchange. Make sure to thoroughly vet any service before handing over any money.