Digital Currency Exchanges
Becoming a Hodler of a cryptocurrency does not happen by waving a magic wand or snapping your fingers. A buyer of a digital currency needs to purchase it off an exchange which is easier said than done at times due to account opening process and the time it takes. Unlike the stock market with having only 16 exchanges where individuals can buy equities, there are over 100 plus digital currencies in today’s existence that covers predominantly the 1500 plus alt coins in the market. Not all exchanges are the same as some offer more coins than others as well as where they are geographically based. These 100 plus exchanges are spread all over the world with a majority of them not disclosing their addresses due to anonymity. Later, we will discuss what to look for when opening an account on a specific exchange as well as some precautionary measures an individual can after purchasing their digital coins.
The first question you should ask yourself when searching for exchanges to open an account with, are which specific currencies does the exchange support and do I plan on purchasing any of the supported coins listed on that exchange in the future? This is an important question to ask yourself because if you plan on purchasing multiple coins and that exchange does not support the coin, you will need to open accounts with additional exchanges. There are a few exchanges out there that offer most of the tradable crypto pairs, and one of those is Binance. The second point I look for when opening an account with a digital exchange is security and how much personal information do I need to supply to have the account opened. Most of the exchanges in the U.S. (Gemini, Coinbase, Kraken, and Bittrex) require the account opener to provide their social security number as the IRS is requiring this information for any exchange operating in the U.S. However, opening an account with one of the above exchanges listed in the U.S. in my opinion provides the most security and safety compared to an exchange outside the U.S. The third trait to look for when opening an account are the fees being charged by that exchange to make purchases and sells, as well as the cost of withdrawing digital coins from that exchange. Majority of the exchanges I have reviewed have these disclosed on their websites. Due diligence should be completed on exchanges as fees can differ substantially. Remember, the least expensive fee charging exchange is not always the one that should be chosen. A higher fee charging exchange may offer better tools, more liquidity, or information, which allows them to charge a higher cost. What payment methods are available on the exchange is another takeaway to note. Majority of the exchanges offer credit and debit card funding, however the fee charged for using those cards is substantially higher than funding from a bank transfer. Unfortunately, any exchanges listed outside the U.S, do not accept bank transfers. My experience in the past with wire transfers to outside domestic exchanges has not worked either due to banks advising they will not send a wire to an anonymous listed exchange. The best alternative I found is to open 1 exchange in the U.S. (I chose Gemini) and one outside (Binance due to the plethora of coins offered). You can use both of these exchanges in tandem by buying Bitcoin at Gemini, withdrawing it from Gemini into Binance, and subsequently converting your Bitcoin into the alt coin of your choice.
Lastly, I would like to show a comparison of the pros and cons of a few well-known exchanges. The table below should be used for comparison purposes only across different exchanges, all individuals should complete their own due diligence on the respective exchanges they plan to open and use for trading.
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