Some investors prefer to keep savings in dollars or gold and it is a conservative approach. But today many investors are thinking about diversification with the help of a new asset market – digital assets, or cryptocurrency.
But also, a new problem arises – the saving and management of these digital assets. Digital coins cannot be deposited in a regular bank or by using other usual storage methods.
Of course, for 2021, there is already a good infrastructure – cold storage, hardware wallets. But what to do when you need quick access to your assets? A cryptocurrency exchange is a great answer to this question. There are many types of them. To choose the right one, you need to know what characteristics to pay attention to.
In this article, we analyze the main approaches of the topic – how to choose a cryptocurrency exchange?
The regulation of cryptocurrency exchanges differs from country to country. Check, in which country the site is registered because there are some service restrictions. European exchanges are often blocked in China. Korean and Japanese operate with restrictions. The reason is simple – states prevent capital outflow from local markets. Traditionally, the safest cryptocurrency exchanges are American.
All cryptocurrency exchanges are divided into 2 groups:
- regulated – operate in their jurisdiction, according to the requirements of regulators;
- unregulated – offshore. They are operating in the “gray area”. Most often they do not have a bank account. In fact, they are a platform for exchanging cryptocurrencies.
We can’t say that the regulated ones are reliable and convenient, and unregulated ones are not. It is necessary to look also at other metrics.
A distinctive feature of regulated exchanges is a fiat gateway. It means, that the work is carried out not only with coins but also with fiat money. Therefore, you can conduct transactions of buying coins for dollars or selling them and receive money on your account. But such sites always ask for more documents for personal or company verification. And not all clients want to provide them.
Commissions and liquidity
These two metrics should be considered together. The commission is important both, for the withdrawal of funds, and for other operations.
Only after knowing the liquidity, we can understand how actively trading is, and the number of traders interested in supporting the turnover. This indicator depends on the location, jurisdiction, and popularity of the exchange.
One of the most important factors in choosing an exchange. If you have already heard about hacking precedents, then this threat still persists. Whatever advantages and favorable conditions are promised – safety is more important. A good sign is the presence of two-factor authentication and public press releases about the conduct of audit programs.
Manager and team
Reliable cryptocurrency exchanges do not hide the owners, CEO, or team members. The ideal option is if the website contains the address of the headquarters. The lack of this information is suspicious.
They are formed by users on such platforms as Reddit, Twitter, Bitcointalk (the oldest cryptocurrency forum). A user-friendly interface, speed of transactions, many currency pairs, and other positive aspects always get a good response. If there are a lot of positive reviews about the exchange, then you can trust it.
So, now you have chosen the best platform for storing cryptocurrency. And, at a certain moment, you start to think about how to make a profit from that digital assets. But trading on cryptocurrency exchanges doesn’t use the fundamental rules of analysis that are used in standard financial markets. Due to this, we have high volatility and a young unregulated market. A novice investor can lose his funds. But he can also win with the help of real professionals.
We, FOBS Asset Management, offer an alternative – our API management product. It makes it possible to make money in this highly volatile market. We have in our portfolio 15 strategies that work on each of the top 15 liquid instruments. This approach provides high risk-adjusted returns.
Contact us and your digital capital will start to work. But if you are an adherent of more traditional ways of storing cryptocurrency, then custodians (depository banks for cryptocurrencies), hardware wallets, or paper media (QR codes) are ideal.