Finding the Best Investing In Cryptocurrency Exchanges
One part of the investing in cryptocurrency challenge, which is actually a good thing, is that there are so many cryptocurrency exchanges to choose from. There are literally hundreds of crypto exchanges, some excellent, some good, and some that are best avoided.
Newcomers to buying bitcoin and other alternative currencies need to know which crypto exchanges have been around, have decent reputations, accept multiple forms of payment, maintain safe storage of your assets, allow for easy transfer to best hard crypto wallets, provide supportive customer service, don’t charge high transaction fees, and offer interest on account balances.
Step one is connecting with cryptocurrency exchanges that suit your needs. Here’s how to do it.
Understanding the Crypto Exchanges Challenge
Identifying the top crypto exchanges when investing in cryptocurrency is the most important part of the puzzle, but it’s not the only piece. Because along with hooking up with the crypto exchange that’s perfect for your style of buying, selling, investing, and trading, you need the basic info to round out the cryptocurrency picture.
What are the other puzzle pieces, the data you must have to make informed decisions about your foray into the fast-paced world of cryptocurrency? In short, everything you need to get started is below.
Our team of researchers has put together an objective, no-holds-barred, warts- and-all list not only of the very best exchanges but also the most enlightening FAQs on the topic.
Getting the Crypto Exchanges Solution
We started out by asking ourselves, ”What if there was a one-shot resource for people who are investing in cryptocurrency for the very first time?” That concept was our template and got us heading in the right direction.
From there, we pushed the envelope a bit and settled on the idea of reviewing all the top exchanges and scouring the internet to see the most common questions people ask when they want to buy cryptocurrency or when they’re just thinking about investing in cryptocurrency.
So, we got down to work and built the ”best exchanges” list from the ground up, and finished it off with an up-to-date FAQ on the topic for newcomers. In all, our research uncovered very common problems potential crypto investors face.
Our Investing In Cryptocurrency Top-5 List of Crypto Exchanges
Ranking and reviewing crypto exchanges is sort of like trying to figure out what are the best cars. People have different tastes and preferences, so the simplest way to
go about investing in cryptocurrency is to choose five out of the huge number of candidates, each one of which offers a nice set of features that would satisfy the vast majority of investors.
Here’s our top-five list, which is based on dozens of criteria we used to sift
through more than 110 online exchanges.
Investing In Cryptocurrency Exchanges #1: Binance
This highly trusted leader in the exchange space offers a vast number of coins tochoose from and boasts the largest daily trading volume of all existing exchanges. Binance has been around only four years, which is astounding considering how far they’ve come and how they have dominated the market. They even created a proprietary coin, ”Binance Coin” which is a success in its own right.
Binance is one of the few exchanges that allows users to buy crypto with regular (fiat) money and ordinary credit cards. The platform is simple to use, too. Access choices include a user-friendly app for mobile devices, desktop computers, tablets, and essentially any path via its website. Overall rating by our staff: 98 out of 100 points.
- They offer full support for credit cards and debit cards from traditional banks.
- Signup is a breeze and you pay nothing for making deposits.
- Transactions at Binance are lightning-fast, which is not the case with every exchange out there.
- Fees for making withdrawals are higher than average.
- If you prefer to hold your alt-coin private keys, you’ll have to go
somewhere else because Binance keeps all user keys in their own possession.
Investing In Cryptocurrency Exchanges #2: Coinbase
If you like an exchange with massive trading volume and an excellent reputation, Coinbase could be your new home. They’re one of the largest exchanges in existence and offer sophisticated security measures for all account holders.
For nearly a decade (which is ancient in the alt-exchange business), Coinbase has been one of the easiest, fastest places to purchase bitcoin. Their management team has spend a great deal of time teaming up with dozens of large corporations in an effort to establish the credibility of crypto and the Coinbase exchange.
Overall rating by our staff: 94 out of 100 points
- Transparent listing of coin prices and easy-to-use, clickable buttons when you want to make a purchase or sale.
- When you sign up, you can earn some free alt-money by reading articles on their educational pages.
- They”re constantly adding more alt-coins to their offering so account holders can diversify their portfolios.
- You’ll need to provide several documents to establish your identity when you sign up, more than most other exchanges ask for.
- Fees are not low, but to be fair, they’re not high either. The point is that some of the other big exchanges offer much lower fees.
Investing In Cryptocurrency Exchanges #3: eToro
The eToro exchange is well-known all over the world for their vast menu of digital products and services. However, they’ve only recently entered the U.S. market, so are not as common of a name to people in the states. One of the best things about eToro is that they offer a simulator account for newcomers. That way, you can practice buying and selling alt-coins (with fake money in a face account) just to get the feel of using the platform.
They’re always running one or another kind of special. The current one is a $50 cash giveaway to everyone who opens an account and buys/sells $1,000 or more in any alt-coin before the end of August, 2021.
Overall rating by our staff: 92 out of 100 points
- One of the few exchanges that allows you to ”copy trade”’stocks, commodities, and crypto alongside experienced users.
- Account balance requirements are very low compared to competitors.
- They allow three kinds of trading, unlike most ”crypto-only” exchanges. Namely, you can use your account to buy and sell corporate stock shares and commodities. Note, however, that currently U.S. users can only trade crypto.
- Their menu of tokens is much smaller than you’d expect from a major playing in the crypto exchange niche.
- In the U.S., you can’t trade stocks or commodities, and residents of nine states cannot use eToro at all.
Investing In Cryptocurrency Exchanges #4: Gemini
Gemini has made a name for itself as one of the best exchanges for people who value transparency and account security above all else. That doesn’t mean they ignore other features it takes to be a top crypto exchange. In fact, beyond their obsessive attention to security, they are the only place where you’ll get insurance (via the FDIC) on your dollar-denominated deposits.
They currently support more than 25 alt-coins, including dogecoin, and add new ones on a regular basis. New accounts receive $10 just for trading more than $100 in crypto. Gemini is based in the U.S. and pays 7.4 percent interest on your holdings of their proprietary coin, the Gemini Dollar.
Overall rating by our staff: 91 out of 100 points
- The Gemini interface is fully app-based and extremely simple to use.
- Depending how you store your holdings, the exchange offers some of the highest interest rates around.
- For U.S.-based account holders, Gemini operates in all states, so
there’s never a problem with transactions or transaction time regardless of where you live in the U.S.
- Generally, their pricing is high compared to competitors and fees are the same. With the high level of security, you get higher costs of doing business with Gemini.
- Gemini is not renowned for excellent customer service.
Investing In Cryptocurrency Exchanges #5: Crypto.com
One of the alt-coin sector’s models of success, the exchange has perhaps the most memorable domain name going. But their inclusion on this list is not about looks or luck because they offer a huge menu of services for beginning and advanced investors and traders.
Since their debut on the scene in 2017, Crypto.com has worked hard to do two things: build a top-notch exchange and create widespread adoption of alt-currency by offering a credit card based on cryptocurrency. They’re known for having one of the most agile and adaptable mobile apps in the business.
Overall rating by our staff: 88 out of 100 points
- They regularly offer discounts in which you can get coins for about half off.
- Extremely user-friendly site that is ideal for newcomers and experienced alt-coin traders, investors, and speculators.
- Staking rewards are higher than usual, meaning you can earn about five percent on ”of staking” and up to 20 percent if you lock your holdings into the site’s soft wallet for a certain period of time.
- The exchange is only four years old and has not proven itself as have some of the other major players in this niche.
- Frankly, the offer of a 20 percent bonus for staking makes some folks a little bit curious about the long-term viability of the exchange.
Investing In Cryptocurrency Answers to Best Exchanges FAQs for First-Timers
Below you’ll find short, clear answers to the 10 most common questions we hear from newcomers to the alt-coin market.
What is cryptocurrency?
How is the concept of cryptocurrency explained in simple terms? The ‘crypto” comes from the fact that his digital kind of money is made safe and secure via the use of cryptography (Oxford dictionary definition of cryptography is ”the art of writing or solving codes”). That’s why it’s so hard to counterfeit alt-currency. Most every alt-coin uses a sophisticated blockchain technology system for verification and exists on decentralized computer networks. Don’t worry if you don’t understand the details. Most people without high- level technical experience don't, to be quite honest. The main concept you do need to understand is that crypto is impossible to counterfeit and is an intangible form of money not controlled by national banks or a single institution.
What is cryptocurrency?
How is the concept of cryptocurrency explained in simple terms? The ‘crypto” comes from the fact that his digital kind of money is made safe and secure via the use of cryptography (Oxford dictionary definition of cryptography is ”the art of writing or solving codes”). That’s why it’s so hard to counterfeit alt-coins. Most every alt-coin uses a sophisticated blockchain technology system for verification and exists on decentralized computer networks. Don’t worry if you don’t understand the details. Most people without high- level technical experience don’t, to be quite honest. The main concept you do need to understand is that crypto is impossible to counterfeit and is an intangible form of money not controlled by national banks or a single institution.
What's the deal on how to buy crypto with Paypal?
PayPal was one of the first mainstream financial entities to allow for the storage, purchase, and sale of bitcoin directly from its platform. After the company put its trust in bitcoin, other corporations and individuals began to take notice. Be able to buy crypto with PayPal was a big step forward in the general credibility of alt-coins.
Why does Elon Musk's name keep popping up when I do searches for ''cryptocurrency''
The Elon Musk cryptocurrency connection is interesting as a kind of lesson, not because of Musk himself. When the founder of PayPal and Tesla Motors, Elon Musk, speaks, people listen. He’s not just a business innovator but also a celebrity. You’ll see his name associated with alt-
coins because he likes to invest in them, talks them up during interviews, and at one time allowed consumers to purchase his cars with bitcoin.
What is "cryptocurrency mining''? Will I need software or tools?
Simply put, it’s the specific process by which fresh alt-coins are put into usable circulation. To mine new coins, users (miners) solve highly complicated math problems that help validate the blockchain network. You do need tools or software for cryptocurrency mining, but no pick-axes or helmets.
Modern-day blockchain miners use computer memory space to perform and store their math calculations. In the early days of cryptocurrency mining, just about anyone could use their home PC to mine, i.e., create, fractions of new coins. But now, unless you have high-end computers and plenty of open memory storage, you can leave mining to the very few people, and institutions, who do it for a living.
Why are some people so excited about something called "cryptocurrency staking"?
Cryptocurrency staking is a special term of crypto jargon that can usually be translated as ”interest”. Most crypto exchanges pay some form of interest on your holdings, based on where you keep your alt-assets. Most of the time, you’ll need to set aside (”stake”) a specified amount of your holdings in a special kind of wallet you can download from your cryptocurrency exchange. That amount acts as a sort of validation of existence for the network. For instance, if you store $5,000 worth of bitcoin in the exchange’s online wallet, you’ll typically earn more interest than if you store it in a hard wallet. The main thing to remember is that each exchange has its own policies about cryptocurrency staking, so be sure to read the details before you choose a place to park your alt-currency.
How much will I pay in a cryptocurrency tax on my holdings?
The cryptocurrency tax situation is in a state of flux, but right now the IRS considers the asset to be a form of property, on which you have to pay capital gains taxes, either short-term or long-term, depending how long you hold it. The best way to stay on the good side of the tax gods, no matter what country you reside in, is to keep meticulous records of your holdings, times of purchase, and times of sale. Fortunately, if you use a reputable cryptocurrency exchange, all those records can be accessed whenever you need them.
Will there be a cryptocurrency crash some day?
Anything can happen like a cryptocurrency crash some day, but you have to keep things in relative perspective. In other words, what are the chances the stock market could crash? Its history since 1929 has shown that it’s susceptible to major corrections, some of which have had very bad results for investors. Crypto is an asset class that’s only 12 years old and has already made inroads with individual, institutional, and major corporate investors. Chances are, and this is just our opinion, cryptocurrency could grow into something like a hybrid of fiat currency and gold, representing both a store of wealth, a hedge against bad times, and a common form of everyday economic exchange.
What is better in looking at the debate between investing in cryptocurrency vs stocks?
If you’d prefer the potentially lower returns and damped-down volatility of the stock market, chances are you would not have read this far into an article about finding the best cryptocurrency exchanges. The cryptocurrency vs stocks question comes up a lot. In any case, place your capital wherever you prefer. The vast majority of people who own crypto also own other assets like stocks, bonds, options, futures, commodities, precious metals, etc. The stock market has its ups and downs but over the long haul it tends to return between five and nine percent per year to investors. Again, that’s just an average, but assets like bitcoin and ethereum, which are relatively new, come with the potential to deliver much higher returns than that, which is why people are flocking to the alt-coins in droves.
What's the consensus view on the future of crypto?
It’s changing. Just 10 years ago, you’d have been hard-pressed to find an investment guru at one of the major global banks who would give two cents for a wallet full of cryptocurrency. Nowadays, most of those same institutions own bitcoin and a portfolio of other leading alt-coins. National banks around the world are finally recognizing the existence of non-fiat money, at least to the extend that they’re happy to tax your gains on holding it. What does the cryptocurrency future look like? We don’t own any crystal balls, but you can get a hint by viewing the long-term price chart for the world’s biggest and most successful alt-coin, namely bitcoin. Since its debut in 2009, it has had a rocky, roller-coaster ride, but has slowly built up a massive value both in terms of reputation and the amount of the coin in circulation.
How can I avoid cryptocurrency scams I keep reading about?
There are two main ways to avoid cryptocurrency scams. First, use a reputable crypto exchange and follow their ”best practices” suggestions. Second, use one of the best hard crypto wallets for storage of your non-active currency. By non-active, we mean whatever amount you don’t need for day-to-day purchases, investments, and for earning interest on exchanges. Good news: many exchanges allow you to earn interest (or what they call a ”stake”) even on the crypto you store in a hard wallet. And, as part of those best practices techniques you’ll inevitably learn about, an important one is never to respond to unsolicited emails, texts, or other kinds of messages that purport to be from your best crypto exchange. Always make sure that when you communicate with your cryptocurrency exchange, you are the one who initiated the contact (like logging into the platform or contacting customer service).
Where to Find More Investing In Cryptocurrency Information
Does all this talk of alt-coins make you hungry for more information? The good news is that there are some excellent sites for learning more about the topic. Here are a few of our favorites. Just click on the included link within any of the listed resources to see more.
- For an updated list of the main cryptocurrencies available, Wikipedia has you covered.
- For a list of the top exchanges ranked by volume, click here.
- If you want to know about how the IRS treats cryptocurrency holdings, you could read the entire government document, Notice 2014-21, but it’s full of legalese and sleep-inducing accounting jargon. For a faster explanation, head over to Investopedia and learn everything you need to know in just a few minutes.
- Want to know all about the latest crypto scams? Check out the official U.S. website of the Federal Trade Commission.
- Feel like you need a quick ”definition refresher”? There’s a very good explanation about what cryptocurrency is at the Bankrate financial website.
- Finally, if you want to dig deep and learn all about the history of cryptocurrency, spend some time at The Balance and you’ll come away feeling like a crypto pro.
Now that you have all the tools at your disposal, you’re ready to buy the coins of your choice on an exchange that can help you with smooth, reasonably fast transactions. Who knows where the entire alternative currency market is headed?
No one can say for sure, but it seems like most everyone you meet wants to get in on the action, even if that means just buying small amounts of crypto as a hedge against inflation or a total economic crisis. It never hurts to hedge your bets and have something put away for a rainy day.
Good luck with your cryptocurrency adventure. We hope our exchange list, FAQs, and other information have helped you put all the pieces of the puzzle together.