If you've done your homework on investing in cryptocurrency, you probably know that you need to choose an exchange to facilitate your transactions. Many are available to choose from, each employing a different fee structure, cryptos available to trade, and deposit mechanism. The list below details five of the most popular exchanges along with some of the pros and cons of each, enabling you to make an informed decision on which one you should use.
CoinBase, often recommended as a beginner's first cryptocurrency exchange because of how easy it is to use, has an extremely beginner-friendly interface. You can link a bank account or credit card to fund your transactions easily, and withdrawals may be paid to your bank or Paypal account, making cashing out hassle-free. Money deposited in your account is also insured, a feature that no other exchange can currently claim.
All of these conveniences come with trade-offs, however. The site charges transaction fees of up to 3.99% per trade on accounts funded with a credit card, and even bank-funded accounts are subjected to a relatively high 1.49% fee. CoinBase only trades in Bitcoin, Ethereum, Bitcoin Cash, and Litecoin, leaving more daring investors with limited selections. Finally, spending caps limit how much investors may spend on the site per week.
Investors interested in crypto is as a short-term investment opportunity, Gemini may be the exchange for you. The site charges minuscule transaction fees of a quarter of a percentage point per trade, with no added fees for deposits or withdrawals. This exchange also offers the convenience of linking a bank account to fund your crypto purchases with traditional currency. Users can start trading before their deposit clears, although they will not be permitted to cash out until it does.
The most significant downside is a stark lack of choice: only Bitcoin and Ethereum are available at the moment. There is also a $500 weekly spending limit that there is no way to work around, limiting the amount you can invest at a time.
Bittrex is a true cryptocurrency exchange with an interface that will feel immediately familiar to anyone who has traded stocks in matching pairs on a Forex exchange. It offers over 190 tokens to choose from, virtually ensuring that all altcoins are available. The site's fees are also very reasonable, matching Gemini's for most trades.
The most substantial negative for Bittrex is how intimidating a Forex system looks to somebody who has never used one. There is also no way to exchange fiat currency for crypto on the site, forcing users to have an account on another platform such as CoinBase or Gemini to purchase crypto for transfer to Bittrex.
BitStamp is sometimes referred to as Europe's CoinBase because it is the most popular, beginner-friendly exchange for the European market. Investments funded with a SEPA account have no deposit fee, a flat 0.90 EUR withdrawal fee, and affordable transaction fees. The platform offers affordable rates to users outside of Europe as well, but the greatest appeal here is for Europeans.
BitStamp has a fair selection, including Bitcoin, Ethereum, Ripple, and Litecoin. Users are advised to avoid their credit cards when funding their accounts. Transaction fees on credit card purchases range from 5% to 8% based on the amount of the deposit, and investors want no part of that.
Kraken offers 16 tokens to choose from, including Z-Cash, Monero, Ripple, and Dash as well as industry stalwarts such as Bitcoin and Ethereum. It has a Forex-style interface comparable to Bittrex but allows users to link a bank account to fund their transactions as well. Fees vary based on the trading pair, but most are less than .36%. This platform supports advanced trading options such as leverage trades, stop limits, and conditional closes that make it ideal for the expert crypto trader.
Deposits need to clear before users can start trading (about one to five business days), with no option to lock in current pricing. Users must also provide their legal name, date of birth, country of residence, and phone number to make bank deposits or withdrawals.
The lack of customer support is a failing across all cryptocurrency exchanges right now, so bear that in mind if you have a problem. While all of the platforms above are trusted in the space, many others are plagued by hackers or set up as Ponzi schemes. BitConnect recently closed down amid allegations that it was more of a scam than a legitimate exchange, so make sure that you research any site thoroughly before funding any account.