Best cryptocurrency exchanges and what makes them special

Cryptocurrency exchanges are a representation of the fundamental component of the crypto community; they allow everyone access to cryptocurrencies round-the-clock.

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This is truly a unique proposition, especially since the stock market, the forex markets, and the likes, operate only during standard working hours.  Anyhow, there are broadly three ways the public can access the available coins and tokens: 

1. Initial Coin Offerings

Simply put, ICOs are similar to what IPOs are for stocks. They represent the first issuance of coins by the project. For this, investors need to possess capital, which can be in the form of Bitcoin or Ethereum, to receive ICO coins. This process of acquiring coins was popular till a couple of years ago. As of today, it is rarely used. The reason for this decrease in use is the regulatory complication and lack of market participant interest. Also Read: How to make cryptocurrency exchange?

2. Mining

Mining can be understood as a process where people participate in validating transactions on the blockchain. This, evidently, demands the bandwidth to store the entire blockchain and computing hardware. All of these factors increase the initial costs required. In exchange for miners’ validating the transactions and securing the blockchain, they are awarded with fresh coins. 

3. Purchasing through an exchange

For this, users can simply register to any one of the many exchanges, and start their purchasing journey, using their cryptocurrencies or fiat-currencies. Evidently, using a cryptocurrency exchange is the simplest way one can get hold of cryptocurrencies, as mining is complex and costly, and ICO has its fair share of legal troubles.  With that clarified, let’s look at some cryptocurrency exchanges (SEVEN OF THEM!) that are doing good in 2020; you might want to check them out!  Also Read: Stablecoin Development Guide

Best cryptocurrency exchanges in 2020 

In no particular order, here are seven best cryptocurrency exchanges in 2020. These are not only the cryptocurrency exchanges with higher trading volumes, but also stand true on the factors that are required for an effective crypto exchange (more on that later).  Here:

1. Binance

Binance has been leading the list of best crypto exchanges since three years now. Especially if you talk about liquidity and trading volumes, Binance is one the best cryptocurrency exchanges with higher trading volumes.  It was introduced in 2017 and has constantly grown since. Aside from the smooth UI and UX, Binance also offers one of the lowest trading fees - making it the ideal choice.  To add to that, it also offers discounts for its native token, BNB, holders. It supports all the major languages, and has a top-notch customer support staff as the user issues are resolved quickly. Other than trading cryptocurrencies, you can also long or short bitcoin on Binance Futures, earn interest through Binance Savings, and trade options as well.

2. Coinbase and Coinbase Pro

Coinbase is a US-regulated cryptocurrency exchange with high trading volumes. It is one of the most renowned global brands in the crypto ecosystem. Coinbase and Coinbase Pro are perhaps the most prominent cryptocurrency exchanges that accepts fiat-currency. This is a commendable feat considering the difficulty in securing licenses and authorization from different countries.  The UI of this platform is extremely user friendly, and allows even the beginners to easily navigate the exchange. One of its most impressive features is that it offers insurance coverage for funds in the event of theft or loss -- this is a feature that very few exchanges offer.  Coinbase, in collaboration with Circle inc., issued a USD-backed stablecoin by the name of USDC -- and it has grown to be highly popular in the DeFi circle. 

3. eToroX

eToroX is the brainchild of eToro, the world’s largest social trading platform, and is probably the youngest mention on this list. eToroX is regulated by the Gibraltar FSC and offers a vast array of crypto trading pairs as well as a suite of tokenized fiat currencies. The purpose of this is to help users attain greater diversification. The user interface of eToroX is customizable and allows users to lock the profits they make in a range of currencies and commodities backed stablecoins, including GBPX, AUSDX, EURX, RUBX, or even precious stones like gold and silver.  On the security front, eToroX has a team of top security experts, as well as it leverages the industry best practices such as multisig and cold wallets. Liquidity on eToroX is very good, and constantly improving. 

4. Kraken

One of the largest fiat-accepting cryptocurrency exchanges, Kraken is a prominent exchange that accepts a wide variety of fiat currencies such as USD, CAD, Yen, and GBP.  The security measures in Kraken are robust and well known, and it utilizes cold wallets and proprietary authorization. Another important feature of Kraken is the low fees that it offers for using the platform. Kraken comes with a Futures Market where you can perform trading with leverage of up to 50x.

5. Bitstamp

One of the oldest, and probably the longest running exchanges, Bitstamp, was founded back in 2011. It does not offer as many exchange pairs as the other exchanges on this list. As of writing this, Bitstamp supported BTC, XRP, ETH, LTC, and BCH.  Since it is one of the oldest platforms, it instils confidence in traders and trust on the security of their funds. Bitstamp has been through heaven and hell and managed to survive the most pivotal moments in Bitcoin history --  the market meltdown due to MtGox hack which saw nearly approximately 850,000 BTC stolen.

6. Gemini

Gemini was created by the Winklevoss twins, and is a regulated crypto exchange based out of the US where fiat deposits are stored in an FDIC-insured financial institution.  Though Gemini is not as diverse as Binance or Coinbase, it is different because it is a cryptocurrency exchange with high trading volumes because it has a robust trading system that attracts institutional traders.  This can be confirmed by looking at their discounts and offers which are mostly aimed towards institutional trading. Further, all of the withdrawals and deposits are completely free-of-charge. They even have a USD-backed stablecoin known as GUSD. 

7. OKEx

OKEx has constantly been in the top five exchanges since its inception, especially in terms of cryptocurrency trading values, with over 100 coins and tokens available for trading.  One of the unique elements of OkEx is that it provides leverage trading and futures trading. It is one of the first exchanges to offer a futures trading facility for the cryptocurrency market. The exchange has their own token called OKB. With the list of best cryptocurrency exchanges in 2020, let’s look at what makes them so special? What is common in all these exchanges that should be looked up to while building an exchange? Let’s look at the factors that determine the quality of an exchange. Also Read: Cost of making a Cryptocurrency Exchange

Here’s what makes the best cryptocurrency exchanges special

After studying the various cryptocurrency exchanges with higher trading volumes, here’s a list of some essential items that need to be checked in order to make a cryptocurrency exchange as special as the ones listed above:

1. Liquidity

In simple terms, liquidy is the ease of buying and selling in the market. For best efficiency, a cryptocurrency exchange needs to have higher trading volumes and participants in large numbers to trade the coins at a better price. This will also allow for instant trades. Exchanges with high liquidity offer more efficient price discovery, and allow traders to exit and enter with relative ease.  The most tried and tested method to ascertain liquidity is by looking at the daily trading volume and also at the order books, which track all the trading occurring in the marketplace. 

2. Security

Security is at the core of the entire crypto ecosystem and cryptocurrency exchanges aren’t any different. It is imperative for exchanges to implement effective security measures in order to safeguard funds and prevent data or token theft.  Some of the most common security practices include storing the funds in cold storage, doing a KYC process, or leveraging the multisig (multi-signature) technology. 

3. Trading Fees

Fees is one of the factors that is not overlooked by users. Especially for short-term traders, fees can play a vital role in choosing or not choosing a particular exchange. There are different types of fees associated with an exchange: 

• Trading Fees: The fees charged for every trade executed on the exchange. It is usually automatically deducted from the overall balance, which makes it hard to quantify the actual dollar amount since most trading occurs between crypto to crypto pairs.
• Withdrawal Fees: These are the fees that are deducted from the user’s account during the withdrawal process. It is either to an external crypto wallet or to the user’s bank account. Both, generally, carry a different set of fees. 

Exchanges like Binance, Bitfinex, Huobi, etc. offer discounts on trading fees when paid with their exchange native tokens. It is always wise to look at the fee structure of an exchange before deciding to trade on it.

4. Reputation

The reputation that a particular exchange holds in the market is important to consider. This is because bad reputation means not many people will participate in the exchange.  Generally, good benchmarks for the reputation are either the absence of bad news related to that exchange in terms of the exchange being hacked, compromised, or any other theft, or the total reviews given by its users. 

5. Ease of Use

For people to come to the exchange and make trades, the user interface should be simple and intuitive - built in a way to enhance the user experience, especially for those just entering the world of crypto trading. A good platform should be easy to navigate, with all the necessary features, tools, and information at the user’s disposal, easily accessible.  Conclusion With that, we come to the end of this post! We hope you enjoyed reading it, and learnt about different cryptocurrency exchanges, and what makes them good! If you have any questions, do reach out to us in the comments, or visit us at minddeft.com,