Choosing where to buy is just as important as deciding what you're going to buy.
This goes from buying a potion to buying your new Lambo once you get crypto rich.
Do you really want to buy the strongest potion from the annoying potion seller who won't respect or sell to you?
My potions are only for the strongest and you're clearly--
Buying cryptos is different.
You need to know where to get the best deal
and how to have the most options to choose from.
And by the deal, I'm not referring to the price of the coins,
but all the features and benefits they will have to offer.
As you'll see, choosing an exchange goes beyond prices.
Today, we're going to take a look at that.
And I'm still wondering why I talked about buying potions.
Let's get it
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Alright, guys.
Today, we will be looking at some important aspects you need to keep in mind when choosing or joining an exchange,
as well as going through a basic explanation on how they work.
So let's start by looking at what an exchange is and how they work.
Exchanges are platforms that allow their users to trade cryptocurrency with one another,
as well as to work as a fiat gateway by allowing the conversion between fiat and crypto.
Exchanges operate by charging fees for their transactions,
and that allows exchange to pay for the cost of running,
or, in the case of decentralized exchanges, rewarding liquidity providers.
Before the introduction of crypto exchanges,
you would have needed to mine your own crypto or find someone interested in trading or selling directly.
This means that crypto investing was overly complicated, if not impossible, the early days.
This has changed now, as you can open an app or a website and buy as much crypto as you can afford,
as the exchange will work as a broker.
Exchanges use what are called a trading pair
to allow traders to exchange coins between the two types.
USDT/BTC, ETH/DOT, and BTC/ETH are examples of trading pairs.
They are basically saying that you are trading the second coin for the first one.
So USD/BTC would mean you're actually acquiring dollars by giving up Bitcoin.
Exchanges will have a difference in prices on the same trading pairs,
as the price is set by their own algorithms based on user activity.
Users have a direct impact on the same prices by buying and selling them,
as this translates to basic economic theory in the form of supply and demand.
An investor might be able to get a better deal for the same price by changing exchanges,
but the profit might not be much,
and it adds the trouble of considering fees.
However, there are cases when an increase in gains might be worth the extra research and trouble.
It really depends if you consider it to be worth it or not.
Now, let's talk about some basic things you should be looking for in an exchange.
I say basic because choosing an exchange is like eating an orange.
Don't choose an exchange just by its skin,
You have the skin,
then the sweet sweet innards--
but by those sweet innards that come in the form of features.
These will vary depending on what you are looking to trade and on your specific situation.
First thing to consider is your geographical location restrictions.
Crypto acquisition has become more regulated as time has gone by,
which means exchanges had to adapt to regulation.
Depending on your location,
you will not only have access to different exchanges
but also to the services they provide.
For example, certain payment methods like PayPal or bank transfers might be available for one country but not for another,
which is something you have to know to acquire crypto.
What will you get in return for joining an exchange where you can't acquire crypto or trade legally after all?
If anonymity is important to you,
you also want to check if a “know your customer” or KYC verification is required by the exchange.
This would mean you have to provide personal information to access all of the specific services.
For this reason, make sure to check if the exchange you're considering is available in your country
before spending any more effort researching it.
You really don't want to find out it is not available for you after you decided it is the right one.
Second thing you want to consider is the exchange's trustworthiness.
I’m not referring to trustworthiness only in the sense of being trusted by many or well known,
even if sometimes they come hand in hand.
I'm referring to how much you can trust the exchange when it comes to having liquidity,
a variety of coins, security, trading volume, and trading pairs.
It is about how much you trust this exchange,
and is it the one you've been looking for when it comes to trading?
I know, I know. This is the purpose of the video,
but I'm not here to tell you which exchange to use,
but how to determine it.
Yes, more trust will come too after selecting the exchange,
but there are objective ways to evaluate the general trust in the exchange beforehand.
As you are probably a beginner,
if you are watching this series,
I can recommend you to use CoinGecko’s Trust Score.
CoinGecko rank exchanges based on objective criteria,
like trading volume, web traffic, and a number of coins that are supported,
and trading pairs available.
So the ranking might be a good place to start.
Third, let's look at the type of exchange.
You might have heard the terms decentralized and centralized exchanges.
The names themselves also provide a hint on the difference between them.
Centralized exchanges are run by companies who manage and profit from it,
while decentralized exchanges operate as a peer-to-peer exchange.
Centralized exchanges are easier to use for beginners in most cases.
They bring a sense of security as the company has accountability for issues with the platform,
usually having more advanced features and having been part of the crypto world for longer.
On the other hand, decentralized exchanges remove single points of failure when it comes to security.
They're usually faster and with less downtime due to decentralization,
have lower transaction fees and have more coins to trade.
Decentralization, in the case of exchanges, is just like any other decentralization,
has pros and cons.
I wouldn't recommend newbies to use DEXs until they have a better understanding of crypto and have acquired security practices,
as while there are security mechanisms in place,
they're a great place for scammers and poor-planned projects to trick investors.
However, they're also the best place for finding hidden gems and investing in recently launched projects.
Now, let's look at the features.
Different exchanges have different features when it comes to trading.
The option for leverage trading,
fiat exchange, insurance cards,
charting and analytical tools,
two-factor authentication, etc, etc.
are just some of the multitude of features that you might be looking for.
This is where your personal taste comes in.
What are you looking for?
Are you looking for the most secure exchange?
The one that provides you with the most amount of data without the need to use other platforms?
There's not much I can offer you in this aspect,
as that depends entirely on what you are looking for,
but I will say that you really should have an idea of what your priorities are,
as there is no one-fits-all exchange out there.
Sure, it might not make a difference now that you're starting,
but think long-term.
Last but not least, there is the social aspect.
This might not be important to many,
but I think that exchanges have a good sense of community and are a great incentive to continue in and learn about the crypto world.
A strong social media presence will allow you to keep updated when it comes to features and opportunities.
An official Reddit will allow you to interact with other users.
Recurrent events and competitions will open the doors to new opportunities and giveaways to get back to users
to show that crypto really cares about your situation and satisfaction.
Sure, this might be a little crazy to say,
but as a beginner, a big community means the exchange is trusted, loved, and supported by many.
This translates to more benefits for the user base, more liquidity, more trading pairs.
Community matters, guys.
The crypto world is more than just about getting money and using dApps.
But now it's your turn.
What are the things you look at when considering an exchange?
What is your favorite exchange?
Let me know down below in the comments.
I hope you enjoyed this video.
If you did, please make sure to smash the Like button and hit Subscribe to become a member of the BitSquad.
Thank you so much for watching.
Have a blessed day.
BitBoy out.