As retail investors rush to get into crypto, it’s back to trading fundamentals.
Studies estimate that 1 in 10 people will invest their stimulus checks in crypto. Which means there will be a huge number of people rushing into the crypto space with little idea of what to expect – thankfully, that’s exactly what cryptocurrencies were designed for. These tokens are purpose-built to give access to anyone, whether they are new to trading or institutional investors. As a private investor, there are a few things you should familiarize yourself with before investing. Especially if you want to keep your investment safe.
Understanding the basics of the market is a hugely important part of investing in crypto. The other thing that many investors may not initially pay attention to is how to choose the best crypto trading platform that suits both their needs and their ideologies. This is an often overlooked part of wise investing, and something that is surprisingly easy to do.
Why choose a crypto trading platform?
While there are still a few different ways to get your hands on some Bitcoin for yourself, crypto trading platforms and crypto exchanges still remain by far the most popular. This is largely because they are much more reliable than just about any other option. When choosing a crypto trading platform, you get access to a high level of security both when buying your coins and when storing them. Not only that, but crypto exchange platforms represent a enormous pool of demand. This means that everyone on a crypto trading platform is willing, happy and looking to deal with crypto – something you may not find anywhere else.
These exchanges also have access to a wide range of bitcoin, as many who use exchanges also want to sell them. That’s how they get names like “exchange” and “trading platform” because that’s exactly what they do. They facilitate the exchange or trade of cryptocurrencies. Since these are spaces where large communities of crypto enthusiasts can coexist, there are some other benefits to using them as well. For example, in certain cases and at certain times, some transactions can be rolled back if an error has occurred. This is something you won’t find on peer-to-peer networks. The tokens for purchase are also guaranteed. You will not easily find an exchange that does not produce the tokens you paid for.
What to look for
When you actually choose a crypto trading platform, there are some pretty important things that the one you choose will do: need have. There are also some things that you should definitely keep in mind, but which are not necessarily necessary. Choosing a crypto exchange is quite a personal goal. You need to consider how you want to invest, what you want to invest in, and examine your existing ideals regarding cryptocurrencies – or the reason why you want to invest in crypto in the first place.
For most investors, answering these three questions will automatically match the viable exchanges you can use.
How to invest?
Are you considering trading in large volumes, or smaller drops? Do you plan on HODLing bitcoins you buy, or is day trading or arbitrage more your style? Are you planning to invest in options? How you plan to invest gives you a much better framework for the investment options a particular platform should have for you.
What to invest in?
Do you want to invest in the big names, such as Bitcoin and Ethereum, or do you really want to diversify and explore the ever-expanding sea of altcoins? Keep in mind that not all exchanges support all cryptos, so if there is a specific token you want to buy, make sure the exchange of your choice offers it.
Why you invest?
Are you looking for capital? Do you want a solid store of value or protect your existing assets against currency deflation? Need to transfer money to friends and loved ones across the border? Do you just enjoy the idea of cryptos as a disruptive form of currency? Why you invest in cryptos will tell you where to invest. This is because certain centralized exchanges will not meet these requirements, while in others, decentralized exchanges may not provide the protection you need.
Once you know your initial motivation, finding a good exchange platform becomes much easier. All you need to focus on for the options you have now are these fundamental features:
- Does the platform offer good volume and liquidity?
- Does the platform comply with geolocation-specific regulations and rules?
- What are their trading fees?
- Are they safe?
The four basics represent the last four pertinent questions to ask to find that perfect exchange platform. If the platform you’re considering ticks all 7 boxes, then you’re good to go! Time to act.