The interest in Bitcoin trading continues to soar year after year, and so are the influx of traders into the various trading platforms. Sadly, most Bitcoin trading platforms leave negative marks on users and potential traders with numerous concerns. Many traders have been left helpless after losing all their funds, and others having their deposits locked up. A typical example is the defunct Mt.Gox and many other popular trading websites. It is true that anything can happen to any exchange platform at any point in time: however, the risk of losing everything can be managed. This article will introduce you to how to choose the best platform for Bitcoin trading.
Security – Better safe than sorry
Security should be the first thing to consider when choosing a trading platform. The reason is simple: the platform will demand your personal information including your name, address, taxpayers identification number, credit card information and other sensitive details. This indirectly gives them access to a part of your financial and private life, so providing all these details to the wrong platform will go a long way to affect you. Also, you should be concerned about security because the platform will host all your trading deposits and millions of others. It is important to check whether the platform uses cold storage or hot storage to store assets. Though cold storage has its demerits, it is a more secure way of storing assets from the reach of hackers.
In the context of security, it is also important to check whether the exchange is insured or not. To be honest with you, most of the trading platforms are not insured. Just a few of the popular ones like Gemini and Coinbase are insured. This can help recover a part or all of your lost assets if the company undergoes a breach of physical security, cyber-security, and employee theft.
Most importantly, consider choosing a platform which web address is HTTPS instead of HTTP. Ensure that there is a two-factor authenticator verification and email confirmation for logins.
Setting up a trading platform is easier than you think. Why? Because all you need is a domain name, web hosting, and some funds. This has made way for many fraudulent and unregistered platforms to enter the industry. To decide on which trading platform to choose, first go through the site to see if there is any physical address other than its P.O.BOX address. After that, verify whether the platform is genuinely registered. Try as much as possible to know the founders and the team behind the platform. If all these appear to be missing, kindly advise yourself. One simple way to find all this information is to search on Google. The cryptocurrency industry has a lot of information on the search engine for laymen to find whatever they need to know.
Location – Can given crypto platform operate in your country?
Due to the circumstances surrounding cryptocurrency regulations, it is advisable to check whether your country is eligible to use a considered trading platform. Most of the exchanges or trading platforms restrict users from some countries, mostly the United States. Although some of them may accept users from some States in the U.S., a number of them restrict traders from many other States. In this situation, some traders try to play smart by using VPN. This is very dangerous as locked-up funds would be near impossible to retrieve.
Fees and Rates of trading platforms
Fees and rates are very important criteria for choosing the best platform for Bitcoin trading. Some trading platforms charge traders for maker and taker fees. Most of the big trading platforms have a low fee compared to the emerging ones. Also, rates of Bitcoin and other cryptocurrencies vary from exchange to exchange. Mostly, the rates of Bitcoin is determined by the trading volume or the interplay of demand and supply on the various platforms. This makes the rates different among trading platforms. In terms of fees, Binance is recommended.
Moreover, it is important to note that the minimum withdrawal amount of Bitcoin and other assets are higher on some trading platforms than others. This matters because depositing 0.003 BTC and being told you need to issue a minimum withdrawal request of 0.005 BTC is very frustrating.
Liquidity and Locked in Feature
Trading platforms with high liquidity guarantee fast transactions compared with those with low liquidity. It is very frustrating to wait for hours for a buyer to show interest in a proposed sell order. The longer the order stays and waits for buyers, the more likely the seller battles price volatility. Note, liquidity varies with pairs. BTC/ETH may have high liquidity than ETH/BTCP.
Also, check whether the platform offers locked in feature. Locked in feature ensures sellers get the exact price for their sell order regardless of the change in market price.
In addition, trading platforms should be user-friendly and have efficient live chat or email support system.
Disclaimer The views, opinions, positions or strategies expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of CoinGape. Do your market research before investing in cryptocurrencies. The author or publication does not hold any responsibility for your personal financial loss.
This author could be anybody, but he/she is not a member of staff coingape.com and opinions in the article are solely of the guest writer and do not reflect Coingape’s view.