Those just beginning to learn about cryptocurrencies and the workings of exchanges for Bitcoin and other coins will be best served if they begin their education in trading and exchanging cryptocurrencies with one of the exchanges that was expressly designed for beginners.
Cryptocurrencies are quite complex, and the exchanges for them can also be complex, especially for those who don’t have prior experience trading assets such as stocks, commodities and currencies. Better to start with the simple exchanges and get some experience when your own money is at risk.
Is a Beginner-Friendly Cryptocurrency Exchange a Necessity?
Because of the background in programming and cryptography, a basic understanding of technology is critical if you want to understand how blockchain technology, and the cryptocurrencies created from the blockchain, works.
When you’re talking about Bitcoin you can get away with trading with just that basic knowledge. You do need to understand how markets work though.
If you have an understanding of how forex trading works you’ll have a leg up on others, because cryptocurrency trading is quite similar to forex trading. But those who are new to both blockchain technology and trading assets v=could easily throw their hands up in frustration if they have to deal with a complicated cryptocurrency exchange experience.
That’s one good reason to begin with an exchange that was designed for those starting out with both cryptocurrencies and with market trading. By keeping the exchange platform simple you can ease into the process of trading, and understanding the technology behind all these strangely named cryptocurrencies.
How to Recognize a Beginner Friendly Exchange
While each cryptocurrency exchange has its own unique features, there are some common basic features that make them suitable for beginners in the cryptocurrency markets. They were made with the aim of bringing new people easily into the cryptocurrency sphere.
The more slowly you’re able to ease into cryptocurrency trading as a beginner the better off you’ll be in the long run. Trading without knowledge or experience is a recipe for disaster.
One of the first things to look for in a beginner friendly exchange is a clear, easy to understand user interface. You should be able to look at the exchange platform and easily be able to see what you need to do to buy or sell a cryptocurrency.
If important information and trading tools are hidden behind nested menu structures you aren’t on a beginner friendly cryptocurrency exchange.
Consider that cryptocurrency prices change much faster than those for traditional assets like stocks. If you have to think about how to place a buy or sell order you’ve probably already lost money.
Another sign that you’ve found a beginner friendly cryptocurrency exchange is the tour presented after registering with the exchange. These beginner’s tours are a hallmark not only of a beginner friendly exchange, but also of an exchange that cares for its customers.
If the exchange provides such a walkthrough it’s highly recommended that you take the tour and learn all you can before investigating on your own. The tour could share some useful information that’s immediately useful to you and to your trading experience.
It’s also almost certain that you’ll be using the platform wallet in most cases. Make sure that the wallet is as easy to understand and use as the exchange platform itself is. These wallets are where you store your Bitcoin or other cryptocurrrencies, and a mistake made in sending your coins from here could mean lost coins. How to use the wallet should be immediately obvious to you.
Another awesome feature to look for is a demo account, where you can practice trading without actually risking any of your own capital. If you’re planning on doing any trading between cryptocurrencies to make profits it’s crucial that you have a strong strategy. It’s equally important to have a tested strategy, and you can only do this if the exchange offers a demo account.
Even if all the above is part of the exchange, as a beginner it’s almost certain that you’ll have some questions. And if you do a responsive support team will be the most important feature of all. Receiving quick, concise and accurate answers to any questions you might have can save you loads of frustration.
Considerations for Choosing a Beginner Cryptocurrency Exchange
With all the above out of the way, here are some concrete things to look for when choosing your first cryptocurrency exchange:
Fees: It doesn’t matter what exchange you choose, there will be fees involved. That’s how the exchanges make their profits. These fees cut into your profits, so make sure you fully understand all the fees you will be exposed to on any given exchange.
KYC and AML Requirements: Any safe and secure exchange is very likely to have extensive identity verification requirements as part of the Know Your Customer and Anti-Money Laundering regulations present in nearly every country. While your privacy is important, typically the safest exchanges are those with extensive KYC and AML requirements.
Exchange Rates: Exchange rates should be fair and within industry standards. Think of the exchange rate as another fee; the higher it is the more you should question trading with a given exchange. This is especially true in cryptocurrency trading, where exchange rates should be nearly identical from one exchange to the next.
Reputation: You will find negative reviews of any exchange you search for online, but you should dig deep enough to get a good understanding of the reputation of the exchange among other traders and cryptocurrency enthusiasts.
Location: While the exchange doesn’t have to be physically located near you, it should have good support for your region. For example, there are a lot of exchanges throughout Asia, and while some support traders from all over the world, others are best suited to customers from their own country. Don’t trade with a South Korean exchange if it’s designed for South Korean traders – unless of course you are South Korean.
Cryptocurrency Exchange for Beginners: Security
One of the most important considerations in cryptocurrencies is security. Always consider the security measures and protections offered by any exchange before you begin using them. Many exchanges have been hacked in the past, and in many of these cases there were prior signs that security holes existed.
In case you weren’t aware, any funds that are being held in an exchange wallet aren’t really yours yet. That’s because you need the private key of any cryptocurrency to actually have ownership of it. Without the private keys you’re trusting the exchange to keep your asset safe.
One of the easiest ways to avoid a loss when using an exchange is to never keep more there than you are willing to lose.
Put it in your mind that any assets being held in an exchange wallet are at risk.
Stay safe and withdraw any coins you don’t need for trading and put them in a safe wallet, such as a hardware wallet or paper wallet.
Exchanges are for purchases and sales of cryptocurrencies, or for trading between cryptocurrencies. They are not for storage of your cryptocurrencies. That’s not what they’re intended for.
One other security measure that should be pretty much a given is 2-factor authentication. Make sure you use it and set it up properly using Google Authenticator or Authy. Do not link your mobile phone number to have codes sent to you via SMS as this has been hacked in several high profile cases, where hackers were able to get access to users mobile numbers.
Now, let’s take a look at some of the best cryptocurrency exchanges out there.
Coinbase
Coinbase is considered as one of the most trustworthy cryptocurrency exchanges, if not the most trustworthy. In addition, it’s also the largest cryptocurrency exchange platform in the world, with over 20 million active users, making it larger than stock brokers such as Charles Schwab and Fidelity.
Traders can buy and sell Bitcoin, Ethereum, Litecoin, Bitcoin Cash and Ethereum Classic from 32 different countries.
Cryptocurrencies can be purchased using a linked bank account, credit card and debit card. Coinbase has rigorous identity requirements, and imposes trading limits on users which are increased over time as the user buys and sells more cryptocurrencies.
Coinbase has an immpecable reputation among traders, but is also somewhat frowned upon by early adopters of cryptocurrencies as it is seen as being a centralized exchange and counter to the very mission of cryptocurrencies. Nonetheless, many people got their start in cryptocurrencies with a purchase from Coinbase.
Fees are reasonable, with a 1% transaction fee on exchanges. Your Coinbase account also gets you access to Coinbase Pro, where you can take advantage of trading fees as low as 0.1% as well as more advanced trade types such as limit and stop orders.
Binance
Binance is a newer exchange that has rapidly gained the love and trust of the cryptocurrency trading community thanks to its huge range of available cryptocurrencies, and the combination of a basic interface for beginning traders, and an advanced screen for those with experience in cryptocurrencies.
Having launched in July 2017, the exchange has rapidly climbed to the largest exchange, and its $1 billion daily trade volume is more than twice that of its closest competitor.
You can get registered and beginning trading immediately at Binance, even without account verification. And you’ll be able to make withdrawals of up to 2 BTC per day without account verification. Those needing higher limits can go ahead with the account verification process, which includes uploading both a copy of government issued photo ID and a “selfie” photo.
Fees are extremely reasonable, at just 0.1%, and you can reduce that even further if you own some of Bianance’s own BNB cryptocurrency.
LocalBitcoins
The LocalBitcoins site has been around since 2012, and has grown significantly, also adding increased security over the years. It’s a peer-to-peer cryptocurrency exchange, meaning you’re actually buying from or selling to real people.
In principle these exchanges are meant to take place between people living in the same areas, but thanks to global payment processing sites you can buy and sell Bitcoin globally on LocalBitcoins.
There are literally dozens of different payment options on the exchange, and everything from bank transfers to Paypal to gift cards are accepted. You can even pay with good old fashioned fiat currency if you meet the seller in person.
Registering, buying, and selling Bitcoin is completely free, however LocalBitcoins users who create advertisements are charged a 1% fee for every completed trade. That doesn’t mean buying on LocalBitcoins is cheap. Sellers set their own prices, and these can be significantly higher than the market price.
The platform added security measures such as a reputation and ratings system for users, and an escrow system to ensure there are no scams happening on the site. It’s been working well, and complaints have been minimal.
As the name suggests, the LocalBitcoins site is only for buying and selling Bitcoin.
CoinMama
CoinMama calls itself the fastest and easiest way to buy Bitcoin and Ethereum, and we agree that it is fast and easy. Purchases are made with either a credit card or a debit card and go through very quickly. And CoinMama has far higher limits when compared with its biggest competitor Coinbase, allowing users to acquire up to $5,000 worth of cryptocurrency daily and up to $20,000 per month.
One handy feature is pre-designed purchase amounts of $100, $250, $1,000 and $3,000 where all you need to do is press a “Buy Now” button and those amounts are purchased. There’s no need for you to do the math to figure out what the corresponding cryptocurrency amount is, that’s all done for you by CoinMama.
Even account verification is quick. Simply upload the required documents and CoinMama reviews them and approves your account within an hour, and often much faster.
CoinMama got its start selling Bitcoin and Ethereum, but it has since expanded and now in addition to those two cryptocurrencies you can also purchase Bitcoin Cash, Litecoin, Ethereum Classic, ADA, QTUM, Ripple and Ethereum Classic.
CEX.io
Cex.io is one of the oldest cryptocurrency exchanges in existence, and has never had a single coin stolen by hackers. That says something about their commitment to security.
While the exchange was long only for Bitcoin and Ethereum, they have added a number of new coins more recently and offer Bitcoin Cash, Litecoin, Dash, Ripple, and others.
You will need to upload photo ID to confirm your account at Cex.io as they are regulated by FINCEN and adhere to all Know Your Customer and Anti-Money Laundering regulations. Purchases can be made using wire transfers, credit cards and SEPA transfers.
The platform will lock in any price entered for 120 seconds, which is convenient in the fast moving crptocurrency markets. They also allow for margin trading, but that’s not recommended for beginning traders. One downside to the platform is the fairly high fees, with Cex.io charging a transaction fee of up to 0.25%, but also charging deposit and withdrawal fees. You can see the full fee chart here.
Bittrex
If you’re ready for an exchange that isn’t strictly for beginners, but is highly respected in the crypto-community you might want to have a look at Bittrex. They are a good choice if you want to broaden your horizons somewhat, with dozens of cryptocurrencies to choose from when trading.
Note that all of the pairings on Bittrex are either BTC, ETH or Tether pairings. There are no fiat to crypto pairs. The closest you could get to a fiat pair would be to purchase Tether and then trade that against cryptocurrencies. We don’t really recommend that course however, as Tether remains a very controversial stablecoin.
Bittrex says it is designed for customers who demand lightning-fast trade execution, dependable digital wallets, and industry-leading security practices. While that may be true, the exchange was hacked for $18 million in Bitcoin Gold in September 2018.
Bittrex remains a good exchange, but it may not be the best exchange for beginning cryptocurrency enthusiasts. Perhaps consider one of the exchanges earlier in this list instead.
Best Cryptocurrency Exchanges for Beginners Conclusion
Choosing the right cryptocurrency platform can be a long, difficult and even frustrating experience. Finding accurate information can be a chore in some cases, but I hope the information we’ve provided here is accurate and helpful.
Remember to look at the fees, the reputation and the security of any cryptocurrency exchange before making a deposit or purchase. Also consider the verification requirements and the geographical service area of the platform.
Also remember you aren’t limited to using just one exchange. You can certainly use one exchange to purchase your Bitcoin, then transfer the BTC to another exchange to purchase other altcoins. Do whatever is best for your own situation and you shouldn’t come away disappointed.
Featured image by Muhammad Fauzi