With so many exchanges now offering Bitcoin, you need to be sure you choose the right platform to trade for your security. We have formulated a complete guide that explores which are the most secure exchanges, what makes a secure exchange, and how to use them. Find everything you could need below to help make your decision on where to buy Bitcoin.
With so many choices of exchange these days it is crucial that you choose one with its security in mind so your investments are as safe as they can be. We have put together a table of the most secure exchanges of 2023 for you so you can easily see who performs best where:
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What Is a Cryptocurrency Exchange?
A cryptocurrency exchange is a platform and interface that enables its users to buy, sell, trade, and often store, crypto-based assets and financial products. You can access an exchange online, usually via your browser, a desktop application, or in some cases using your mobile. You deposit fiat currency into these platforms and then you are able to buy cryptocurrencies with that pool of capital.
Once your assets are secured they then will either go up or down in value depending on how they perform in the market, which is all stored and logged on the exchange’s order book - this is one of the core differences with a broker as the prices are being set by the market itself and not a centralized entity.
Generally, on a cryptocurrency exchange, you can perform the same activities as you can with a broker, but in a slightly more direct fashion.
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What Is the Difference Between Cryptocurrency Exchanges and Brokers?
Crucially, the key difference here is that an exchange is linking together buyers and sellers who are the actors setting the prices. Offers for cryptocurrencies are logged using an order book and this sets the live costs of an exchange’s assets.
Brokers on the other hand are a more centralized trading option; they set the prices of the assets that you trade and therefore charge fees for their services, but mostly for enabling the trade (commission fee). An exchange makes its money through maker and taker fees - this action represents a trader either taking liquidity from the exchange’s pool or contributing more to it.
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Brokerages are also perhaps understood as more trustworthy, especially big institutions like eToro. They have been in the financial market a long time and are only adding cryptocurrency to their available products rather than building a platform around them. You will also notice they offer alternative cryptocurrency products.
What Is a Centralized and Decentralized Exchange?
A centralized exchange is simply a traditional exchange. It is owned by a company, for example, Binance or Coinbase, so there is a good level of trust and security between the exchange and its users. Usually, centralized exchanges will be regulated in some way by financial regulating bodies and can even include insurance packages for their users.
As a result, users inherit this right of personal financial protection but are also obliged to share personal information to adhere to certain financial regulations, for example, KYC (Know Your Customer). There is a clear relationship between a user and the parent exchange when looking at the makeup of a centralized exchange.
A decentralized exchange (DEX) on the other hand is an exciting new concept that has grown out of blockchain technology; it offers the same core features as its centralized counterpart (buying, selling, and trading cryptocurrency) but instead, there is no sense of ownership or control over the exchange. A decentralized exchange utilizes smart contracts to ensure that its trades and business are appropriately respected; it is made up of distributed ledger protocols and applications that result in a trading platform with zero centralized ownership. As a result of this, users may not have to share any personal information with their interface and have the unique opportunity to trade in a completely invisible fashion. Equally, they will receive minimal to no financial protection and very little support to conduct their trades.
Ways to Buy Cryptocurrencies on the Exchanges
Here is a list of ways in which you can buy Bitcoin safely on an exchange:
Transfer funds directly from a bank account linked with your chosen platform. One of the most expensive ways to deposit funds but very convenient and accessible to beginners.
Connect a wallet to your platform that already has crypto funds. By far the cheapest method but can be difficult for beginners.
Third-Party Payment Methods:
Connect your account to some supported platforms and top-up your exchange wallet; some examples are Paypal, Apple Pay, Google Pay, and Skrill.
Use your credit/debit card to directly buy Shiba Inu. Can incur some fees but is extremely convenient and you are also susceptible to interest rates when using a credit card.
What Are the Safe Cryptocurrency Exchanges in 2023?
The biggest and most popular exchange on the market. Binance is now a huge global enterprise that offers its users good levels of comparable security, a high range of assets, and some of the cheapest rates on the market today.
Coinbase is close second to Binance and many users prefer it due to its usability and dual function with Coinbase and Coinbase Pro. Good for beginners has a good range of assets and is globally available.
A platform that has been in the crypto space for a long time and has provided a consistently good service. The Kraken platform, like coinbase, also splits into two separate services called Kraken and Kraken Pro - Kraken Pro has very competitive fees and is for the more experienced trader.
One of the top choices for more experienced traders. KuCoin has a very high range of tradable cryptocurrencies and a good range of advanced trading tools.
What to Consider When Choosing the Safe Crypto Exchange?
When assessing whether an exchange is safe or not there are a few simple criteria you can consider to help you make your choice:
A platform’s history - Has it been hacked before? Are there bad reviews?
Security features - Does it have 2FA? Are there special login procedures?
Hot or cold storage - Are your funds stored online or offline?
Regulation - How regulated is the platform?
Region - Is the platform you're using based in your region?
Transparency - Where is the exchange’s HQ? Is it a respected business?
How to Get Started With Cryptocurrency Exchange?
Step 1: Sign up for an account
Step 2: Verify your identity
Step 3: Deposit funds
Alternative Ways to Buy Cryptocurrencies
Person-to-person exchanges offer great rates as they have no middle man; it's best to think of this as swapping rather than trading.
The most centralized way to sell you cryptocurrency. The broker sets the price for sales and charges a commission for facilitating them.
Some ATMs are now specially designed for you to buy and sell Bitcoin
Some places allow for person2person trading, and of course, you could do this privately with family or friends.
Your security when trading Bitcoin should always be one of your paramount concerns. You can minimize risks by choosing a popular exchange that has good security features and a high liquidity pool. You also want to look out for platforms with good levels of regulation.
Moving on from exchanges, brokers offer perhaps a better degree of security because of their history within financial markets but could come at a cost. We are now also seeing new ways of interacting with Bitcoin but remember to always do your research to ensure your transaction is as secure as possible.