A Complete Guide to Cryptocurrency Exchanges for Beginners

Posted by John Kammy on January 9th, 2021

So you have heard about cryptocurrencies,  especially after the unbelievable market growth it caused worldwide in the last few years and was in news all the time. Whatever the coin may be, the first thing everyone wants is to get knowledge about cryptocurrency and to own it. This trading is done on platform ‘cryptocurrency exchanges’.

Now, choosing a cryptocurrency exchange to purchase can be a formidable and difficult process. Ultimately, there are more than  200 cryptocurrency exchanges today, with 24-hour trade volume in the billions.

And probably the most important tip before you start. Don’t trade with money that you can’t afford to lose! Really. Beginners do a lot of stupid things, like an investment of the whole savings. And the stupidest one is borrowing the money from family and friends and invest that into the bitcoin, litecoin, ripple etc. So please, always think the option that you could lose everything if you don’t know what are you doing.

If you are looking to trade in digital currencies then you should know about top crypto exchanges, list of cryptocurrencies and crypto exchange rates.

1.)What Is A Cryptocurrency Exchange?

A crypto-currency exchange is any mechanism that operates with other assets dependent on the trading of cryptocurrencies. Like a conventional financial exchange, the central function of the cryptocurrency exchange is to enable the purchasing and sale of these, as well as other, digital assets. It is also often known as Digital currency exchange (DCE).

A cryptocurrency exchange, or a digital currency exchange (DCE), is a company that enables clients to swap cryptocurrencies or digital currencies for other properties, such as traditional fiat money or other digital currencies.

2.) Different Types of Exchanges

Fiat – Crypto Exchanges

These exchanges allow you to buy a cryptocurrency directly using your fiat currency (a government-issued currency like US dollar or Pound). These are most popular with new users who are yet to explore the crypto market because it offers easy access to the cryptocurrency of their choice without much difficulty.

The issue with these exchanges is that they have little support and they offer less number of choice of coins. It is used as just an entry point by beginners.

Crypto – Crypto Exchanges

These exchanges allow you to trade a cryptocurrency for another cryptocurrency. It means first you need to buy a cryptocurrency on a fiat–crypto exchange and then transfer it to the wallet of the crypto – crypto exchange and then trade for the coin which you want to buy in the first place.

This is done by experienced traders who are actively trading between coins to profit quickly or want to buy smaller less known coins.

Peer-to-Peer Exchanges

In these exchanges, a buyer is matched with a seller and they exchange currency at their own agreements. Like one of the exchange Localbitcoins, where they match a buyer with a number of sellers, where the buyer has the option to choose the best price of the selection.

Also, they normally offer an escrow service( a financial arrangement where the third party holds and regulates the payment of the funds for two parties involved in a given transaction ) so that there is reduced risk for both buyer and seller.

Brokers

In these exchanges, you can buy cryptocurrencies from brokers directly. The brokers set their own prices which could be higher or lower than the market price. Here you need to be careful before trading with the

3.) Finding The Best Crypto Exchange

Now you know the different type of exchanges and you have made the decision to get into the crypto world,

So it is very much important to find the best exchange to make the most out of this business. Before you start trading, there are some criteria you must check on these platforms to identify the most suitable for you. Let’s go through the most important ones.

How do Crypto Exchanges work?

Crypto swaps set currency prices, both coins, and tokens. The pricing of a cryptocurrency typically depends on the seller’s and buyers’ behavior, although there are other variables that can influence the price.

Different crypto exchanges will have different choices and functions. Others are made for traders and others are designed for the prompt trading of crypto-fiat. Crypto exchanges, which are designed for daily traders, allow you to purchase crypto and sell it with fewer commissions than on crypto-fiat exchanges. Trading platforms also demand fees for cash withdrawal from the portfolio.

Crypto exchanges basically operate similarly to standard stock exchanges. The difference is that traders buy and sell assets, shares or futures, at a stock exchange to benefit from their changing prices, whereas traders use cryptocurrency pairs to benefit from the extremely volatile currency rates on cryptocurrency exchanges.

4.) Basic Functions of Exchange

Basically, a crypto exchange consists of the following functions: Register/Login, Exchange market, Deposit and withdrawal, News and announcement section, and support.

First you need to register yourself with a valid email id.