Cryptocurrency is the next big thing in retail investor trading. The big players have been quietly investing in these commodities for many years, but others in the United States and all around the world are starting to get in on the excitement as well.
Whether you’re just taking your first steps into the world of crypto trading or are in search of a new cryptocurrency exchange to take your game to the next level, learning about best practices and new developments in the industry should always be on tap. If you’re an investor who’s still growing in the world of cryptocurrency, then this guide is for you.
A Brief Overview: Crypto and Fiat Commodities
The first thing you’ll need to know is that cryptocurrencies are a decentralized commodity asset. They are complex financial instruments that serve a dual purpose, unlike their fiat cousins. Fiat currencies are the ones that you’ll find in your wallet when you hit the town or go on vacation to a new country. The U.S. Dollar, Mexican Peso, or Japanese Yen are all fiat currencies. This means that they’re issued and—more importantly—backed by a central authority. Governments print money and assign value to the paper and metal products of the nation’s Federal Reserve, rather than pegging the value to another commodity asset, such as gold.
Cryptocurrencies differ from this mission in that their value is based in a decentralized Blockchain. Blockchain technologies are a new development, stemming from the Bitcoin proof of concept in 2009. This “immutable ledger that facilitates the process of recording transaction and tracking assets,” has unlocked many other applications as well. Google Docs is made possible with the same peer-to-peer validation method.
The Right Cryptocurrency Exchange
Cryptocurrency isn’t a tangible asset in the same way that a single dollar can be physically held in the owner’s hand. Instead, crypto is traded through the use of an exchange. There are many out there, but finding the best Crypto exchange for your unique needs will take some exploration. Cryptocurrency exchanges vary in their inclusion of built-in amenities. Traders prioritize a variety of different aspects of the marketplace in their own ways, so finding the right exchange for your needs is more about your own personal approach to the crypto marketplace than anything else.
Security
Security is a highly important feature in any crypto exchange. Coinbase, Gemini, and Kraken all boast excellent security ratings and are constantly in motion to head off any emerging threats to client accounts. Hackers have targeted crypto exchanges for many years due to the high net worth that’s contained within the average exchange’s collective client holdings. Prioritizing security is a common theme among serious cryptocurrency traders.
Low Fees
Some people want to ensure that they’re paying the lowest fees on the market. This concern is often a high priority for high volume traders who are constantly reshuffling their holdings to take advantage of rapid price changes. The more trading you do, the more a fee structure will matter over the long run for your portfolio. Binance and others offer a reduced fee rate when trading with the native exchange-created token. This is a great way to reduce the overhead on each one of your trades.
Interest Earning Potential
Some exchanges, like Binance and BlockFi, offer their users the ability to stake the liquidity of the market and earn interest in the process. This is a great way to leverage cryptocurrency holdings for those who want an alternative to their low-interest savings account. The option to include interest earning opportunities is a must-have for many crypto traders.
Finding the perfect cryptocurrency exchange begins with you personalized needs. Look to your own strategy for guidance on choosing the right place to conduct your transactions.
