Most cryptocurrency investors need to use different platforms to purchase cryptocurrencies. These platforms are known as the cryptocurrency exchanges and the cryptocurrency investors need to learn how they work.
There are several cryptocurrency exchanges present in the market however investors should only use verified and reliable options. In this article, the reader will learn all about cryptocurrency exchange based on their performance and rankings.
What is a Crypto Exchange?
Before listing the top cryptocurrency exchange platforms, it is necessary to discuss what a crypto exchange is. A cryptocurrency exchange is like a marketplace where several types of cryptocurrencies are listed.
In most cases, these cryptocurrency exchanges operate in the form of websites, applications, desktop apps, and other interactive programs. Users can download or open crypto exchanges on their devices and create their accounts.
Most cryptocurrency exchanges allow their users to hold, buy, sell, swap, borrow, lent, stake, and trade digital assets.
The cryptocurrency account holder may purchase cryptocurrencies using fiat currencies. Cryptocurrency exchange account holders can also use them as custodial service providers. Cryptocurrency exchanges list selected cryptocurrencies based on their research and market analysis.
The person using one cryptocurrency exchange can benefit from linking their account with other crypto services providers such as yield farmers or liquidity pools etc.
Types of Cryptocurrency Exchanges
Depending on several factors, cryptocurrency exchanges can be divided into various types. Some of the most useful classifications of cryptocurrency exchanges are given as under:
Decentralized exchanges are the type of crypto trading platforms that are not registered with any government financial regulators. It means that the users do not need to perform any account verification activity such as KYC or AML.
The users can register a new account using their emails and do not have to provide their official identification documents for trading approval. Therefore, decentralized exchanges allow users to perform trading under an assumed name or ID.
The DEX users usually trade low market cap coins and tokens that are not listed on centralized exchanges. DEX users have full custodial control of their digital wallet holdings. The DEX account holders may also earn additional income by participating in liquidity pools, staking, yield farming, etc.
DEX usually charges smaller transaction and service charges. DEX users can access DeFi services available on a wide network of different blockchains.
Centralized Exchanges are under the supervision of a government financial regulator. They acquire service licenses from government agencies and are under obligation to report their financial progress with the state.
The account holders on Centralized Exchanges or CEX are required to provide documents for registration and verification. The users must submit their national identification particulars to trade on these exchanges.
On the other hand, CEX users may be able to purchase cryptocurrencies easily using fiat currency. In most cases, the CEX digital wallets are responsible for storing the private keys of their account holders.
CEX has smaller slippage ratios for high-liquidity markets. The users of CEX platforms can also contact customer services agents to get help in case of any mishap. The users on CEX can participate in various types of cryptocurrency trading options without leaving the platform.
A Hybrid exchange is a type of cryptocurrency exchange that offers some features of both centralized and decentralized exchanges. Therefore, in some cases, the hybrid exchanges may prove to be better in comparison to both CEX and DEX.
However, the users must perform detailed research on all aspects and features. The ideal hybrid cryptocurrency exchange is a network that is regulated and requires a user verification method for registration. In this manner, the chances of hacks and other security threats reduce significantly.
Meanwhile, a hybrid exchange may offer its users non-custodial digital wallets, which means that they have full control of their cryptocurrency reserves.
Non-custodial or self-custodial exchanges are the ones where the account holders have complete ownership over their reserves. It is important to note that every cryptocurrency exchange offers digital wallets for their users to perform trading. The users who purchase cryptocurrencies can store their reserves in a digital wallet to manage them easily.
Every digital wallet has a public and private key combination for secure login. With Non-custodial wallets, the account holder has both private and public keys granting them full control over their digital assets.
Custodial Exchanges are the platforms that reserve the private keys for all their digital wallet accounts. Therefore, the full control of the holdings for the users is not under the control of individual account holders. In recent times, many cryptocurrency traders have become skeptical about custodial exchanges and moved their reserves to self-custody accounts.
Origin of Crypto Exchanges
At present, more than a hundred cryptocurrency exchanges are operating around the world. However, the first-ever cryptocurrency exchange is traced back to 2010. The exchange in question was titled Bitcoinmarket.
It was first mentioned by a pseudonymous user named dwdollar on a popular cryptocurrency forum. The forum in question Bitcointalk is the same place where Bitcoin’s mysterious founder Satoshi Nakamoto has posted several comments and ideas.
When Bitcoinmarket was launched, Bitcoin users had to pay 333 Bitcoins for one USD. Another very popular cryptocurrency exchange of the early crypto days was Mt.Gox. It was one of the largest cryptocurrency exchanges in terms of market cap and the trading volume for a few years.
Both Mt.Gox and Bitcoinmarket are now defunct platforms. Bitstamp is the oldest cryptocurrency exchange in the world operating since 2011 out of Slovenia. It is still operational and works with 5000 institutional clients in addition to retail users.
Top Cryptocurrency Exchanges of 2023
The New Year has just started and cryptocurrency investors are naturally concerned about shifting their cryptocurrency reserves to a safe and secure exchange platform. Here are some of the top-performing cryptocurrency exchanges of 2023 that are likely to maintain their service quality:
Binance is the largest cryptocurrency exchange operating in the world by market cap. It is a regulated exchange and has a user base of 90 million around the world. The trading fees on Binance are relatively small in comparison to other global exchanges. Binance offers a separate trading platform for its users hailing from the US called Binance US.
Binance has partnered with several corporate and national crypto projects. It has also created a blockchain called Binance Smart Chain or BSC with a core coin called BNB and a stablecoin named BUSD. Here are some of the pros and cons that Binance account holders must keep in mind:
- There are around 65 cryptocurrencies listed on Binance for its US customers.
- The trading fees and service charges for Binance are low.
- There are a host of trading options and order methods that are available for Binance users.
- Binance mandates user verification for every account holder.
- Binance has issued Proof-of-Reserve to confirm its liquidity and it has been verified by CryptoQuant.
- Binance US is more restricted in comparison to its global platform.
- The user interface of Binance needs time and skill to understand and operate.
- There are no digital wallet services available for Binance users and it holds the private keys.
- Binance has faced issues with regulators in several countries.
Coinbase is the second largest cryptocurrency exchange in the world by market cap and it is based In the USA. Coinbase is a regulated cryptocurrency exchange and it is also a public limited company that is listed on NASDAQ.
Coinbase stock gained considerable traction among fintech traders. Coinbase works with some of the biggest financial enterprises in the world such as Ark Invest. Coinbase offers premium trading services for trained and experienced users with a separate platform called Coinbase Pro.
- Coinbase is great for users who are only getting started and have limited experience.
- Coinbase has listed a huge variety of cryptocurrencies on its forum.
- There are several opportunities on Coinbase for users to earn cryptocurrencies.
- Coinbase Pro users can benefit from lower prices in comparison to Coinbase.
- The transaction fees on Coinbase are relatively higher.
- Coinbase suffers from Customer Services Issues.
- Coinbase’s altcoin reach is comparatively limited.
Kraken is another big cryptocurrency exchange that operates out of the USA. It started as a trading platform that was reserved for Bitcoin users only. However, at present, there are more than 120 crypto listings available on Kraken.
Kraken offers spot, futures, and market value trading options for its users. Kraken is regulated by FinCEN and Kraken Bank is regulated by the Wyoming division of banking.
- Kraken offers more than 120 cryptocurrency trading options for its users.
- The user interface of Kraken is minimalistic and easy to understand.
- The liquidity on the Kraken exchange is relatively higher which makes it a safer choice for investors.
- Regular users of Kraken have to pay higher fees in comparison to KrakenPro users.
- Kraken has suffered some hacks resulting in loss of funds for account holders.
Crypto.com is one of the most popular cryptocurrency exchanges around the world and it is known for its branding. The account holders of Crypto.com can dabble into a vast variety of crypto investing options such as staking, wallets, NFTs, and other built-in projects.
Crypto.com has listed more than 250 unique cryptocurrencies. It has also issued a local coin known as Crypto.com coin named CRO token.
- The list of supported cryptocurrencies on Crypto.com is among the more diversified options.
- The trading fees on Crypto.com are transparent and offer discount options.
- The users on this exchange can contact customer services or work with brokers to learn about crypto products and trading options.
- The trading fees on Crypto.com are high unless users invest in CRO tokens.
- The customer support on Crypto.com is often listed as poor.
- Trading Fee discounts are difficult and cannot be redeemed with ease.
Uniswap is one of the most popular decentralized cryptocurrency exchanges in the world. Cryptocurrency investors who wish to take advantage of the ETH DeFi services often utilize Uniswap. All Ethereum dApps projects get a listing on Uniswap and it is therefore an ideal place to get into a new viable token before others.
Uniswap is also affiliated with centralized exchanges to offer a decentralized trading alternative for users. There are two Uniswap platforms namely V2 and V3.
- Uniswap is decentralized but it is based on the Ethereum blockchain.
- Uniswap users can gain access to several passive income options such as liquidity pools, staking, etc.
- Uniswap is truly decentralized and protects the personal information of crypto investors.
- The ARP (Account Receivable Purchase) and APY (Annual Percentage Yield) ratios for Uniswap are unclear and difficult to calculate.
- Uniswap can face issues on account of technical difficulties connected to the Ethereum blockchain.
dYdX is a decentralized exchange that is second to Uniswap in terms of popularity among investors. This exchange is also non-custodial and it has been operating since 2017. dYdX is built as a DeFi app on the Ethereum blockchain.
It can access off-chain order books with an on-chain settlement mechanism. In this manner, it can maintain transaction speed like CEX while maintaining security as a DEX platform.
- The user interface for the dYdX website and mobile applications are simple and user-friendly.
- The users of dYdX do not have to pay any gas because it is a layer 2 solution with exception of withdrawals and deposits
- It is an open-sourced and technically audited DEX that makes it secure for users.
- There is no need for KYC on dYdX.
- The margin tokens pairs on this exchange are limited.
- There are only 3 digital asset options for the swap option.
- If the interest rates on Ethereum drop to 0% it can become worthless.
Bybit is a crypto derivatives exchange and it offers a wide array of trading tools. The security on the platform is good and thus far it has not reported any downtime or technical lags. However, Bybit is not available for users who are operating in the USA.
Furthermore, it is more suitable for cryptocurrency traders who have extensive experience and training. The minimum account opening limit for ByBit is nil, which makes it easier for the users to get started.
- Bybit users can gain as high as 100x leverage on crypto trades.
- Bybit offers advanced cryptocurrency analytics tools that are ideal for investors.
- Bybit offers tutorials and guides articles for its users to help them educate.
- Crypto derivatives trades are often riskier than direct crypto trades.
- Bybit is not ideal for spot trading.
- Bybit can share the data of its users with third-party operators for marketing purposes.
Curve Finance is a decentralized and non-custodial exchange. It has introduced services like yield farming, staking, and stablecoin trading for crypto investors. There are around 48 listed cryptocurrencies on Curve Finance.
Furthermore, the TVL or Total Value Locked on Curve is estimated at around $5.21 billion. It is also based on the Ethereum blockchain and has been operating since 2020. The curve has extended support for not only Ethereum protocols but also several other blockchains using sidechains.
- The swap options on Curve Finance are versatile and offer a lot of options.
- The trading fees on Curve Finance are lower in comparison to its contemporaries.
- Since digital wallets on Curve Finance are non-custodial it grants full control to the account holders.
- The user interface for Curve Finance is complex and requires time to understand.
- The users must have prior experience and knowledge about crypto to operate their digital wallet and perform crypto trading.
- Curve Finance users do not get any access to customer care to resolve their issues.
BitFinex is an international cryptocurrency exchange that is operating out of Hong Kong. The exchange was founded in 2012 and it is known among cryptocurrency traders for its massive liquidity reserves that offer a vast variety of digital token trading pairs. BitFinex users may also take advantage of margin trading and utilize its in-house indicators to their advantage.
- This exchange supports more than 100 cryptocurrencies.
- BitFinex reimbursed all investors who suffered losses during a hack attack in 2016.
- The liquidity on BitFinex is often high and potent.
- BitFinex users can also perform trading using bank wires.
- The citizens of the USA cannot access this exchange.
- The trading fees on BitFinex are relatively higher in comparison to its counterparts.
- It is not a regulated exchange.
- The CS assistance is available only through email.
- The platform has been hacked twice thus far.
eToro is an inclusive and diversified cryptocurrency exchange. It not only offers cryptocurrency trading but users may also invest in CFDs, forex, stocks, and other low-cost trading options on eToro.
The users may also take advantage of the ETF trading option and which offers one of the most suitable cryptocurrency trading listings. eToro is known for Copy Trading services, where its users can mirror the trading activity of experienced investors.
- The stock and ETF trading on eToro are commission free.
- The account opening process is easy, quick, and simple.
- The social trading mechanism of eToro is ideal for beginners.
- The non-trading fees for various services are very high.
- The eToro account holders get access to only a single currency for a single account.
- The customer service for eToro has the potential for improvement.
It is a difficult decision to pick the best cryptocurrency trading platform. The best way for investors is to ensure that the platform has a reliable track record. On the other hand, it should be free from frequent hack attacks and must be diversified.
The trend of non-custodial wallets is gaining more popularity among investors. Crypto investors must also pay attention to the liquidity and transparency on the forum to ensure that there is nothing fishy happening behind the scenes.
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