Crypto Exchanges: What to Know and Who to Trust

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Investing in cryptocurrencies has really picked up from everyday people, but it is still a relatively new concept for the majority of people. Picking one of the right crypto exchanges the first time can really help you in the long run. Ultimately, it depends on the capital you plan on using and the type of coins you are looking to buy. Additionally, it is important to factor in how long you plan to hold your assets.

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Coinbase

Common Crypto Exchanges

Coinbase Inc, ($COIN) just recently went public, showing incredible revenue periods of $100 billion. This exchange is one of the most well known places for crypto buyers, especially new ones. While Coinbase tends to lack in the variety of coins you can buy, there are other benefits. Coinbase is insured by the FDIC, meaning all cash balances you have will be replaced if something goes wrong (up to $200,000). Another exchange that does this is Gemini. If I had to choose between the two, I would choose Coinbase every time, due to reliability. The customer service of Gemini has been known to be spotty. Binance is the last of the exchanges I will mention which is covered by the FDIC. One major perk of Binance is that it often has lower fees than most exchanges. Unfortunately, U.S. residents currently cannot open Binance accounts.

BlockFi is another commonly mentioned crypto exchange, however it resembles more of a bank. This is because the exchange is focused on providing interest to investors holding crypto on their platform, interest that accrues daily. This is similar to what a bank does as the more money you have in, the more you will benefit from the interest. However, a major downside of BlockFi is it is not insured by the FDIC. If something goes wrong, your money goes with it. Another downside is that BlockFi really lacks in the different coins you can buy. For U.S. investors, Coinbase and Gemini have a fairly small list, but BlockFi’s list is even smaller.

The Risks of Variety

If you are in search of buying the next crypto and don’t want to settle for the popular ones in the Top 20 of coinmarketcap.com, you probably should venture away from the exchanges I have already mentioned. Instead you should look at exchanges such as Metamask or Pancakeswap, which have almost every coin you could think of. There are probablu 100,000 different cryptos, and some of these can be scams or imitations of other coins. When using these exchanges, it is important to make sure you are using the correct address before you buy. To ensure you have the right address, you should copy the coin’s address from coinmarketcap.com and then paste it into the transaction on the exchange. Once this is done, you will be able to safely buy whatever coin it is you are wishing to purchase.

These exchanges tend to come with a hefty fee, but the fee is not a percentage of the purchase amount. That being said, if you want to buy $5,000 worth of Bitcoin the fee might be $65, but if you buy $50,000 worth the fee is still $65. On exchanges such as Coinbase, your fee moves higher the more money you spend.

Maximizing Security

Investing in cryptocurrency brings financials to a more decentralized feel, but theft can still occur. To counteract this, some exchanges give your wallet a seed phrase to exponentially enhance security. A seed phrase is a series of AI generated words that need to be used in a specific order to get into your wallet. Without these list of words, you cannot get in, so you must keep it safe! Metamask uses a 12 word seed phrase and Ledger uses a 24 word phrase. Ledger is GREAT for security, but I do not believe it is great for buying and selling cryptos. I would suggest buying on other exchanges like Coinbase, and then transferring it to Ledger.

In general, it is important to keep some level of privacy of how much crypto you have and possibly which ones you have too. While the transactions for crypto are safe, your holdings can never be 100% safe from theft. If the wrong person ends up with your password or seed phrase, things can go downhill fast. If you have any questions about exchange, feel free to comment or DM us!

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