Choosing a platform may seem easy, but it is not, given their large number. The large increase in demand for bitcoin, has led to the constant emergence of new platforms for trading in it and other cryptocurrencies.
Today, there are 300 bitcoin exchanges and therefore a great number of choices. But how should investors choose the platform they will use to avoid unpleasant surprises and be able to maximise their benefit from bitcoin or one of the thousands of other cryptocurrencies that exist and which are growing every month?
The advice of investors on choosing the right platform is as follows:
- Always be careful
The first thing investors need to keep in mind is to beware of scams. One of the first and most popular cryptocurrency exchanges, Mt.Gox, has collapsed, while others have been hacked. Thus, they must first make sure that the platform is legitimate and that it has a physical address. If there is no such address, the investor should avoid it for three reasons: First, transparency is often a sign of legitimacy. Second, if you do not know where the platform is based you will not have a good sense of the often-thorny legal consequences of your investment. And thirdly, if your account is hacked, it is much easier to deal with the exchange and the supervisors who may be involved if there is a physical exchange address.
- Do your research
Good reputation is very important, especially for cryptocurrencies and platforms. Take the time to research the platform you are considering using, learning what other users have to say about it and what the platform itself says, if there have been any security issues in the past, and if so, how they were addressed.
- Proceed with great safety
The harder it is to create an exchange account, the better. If opening an account is very easy, this indicates that the platform is not very reliable. What if your digital assets suddenly disappear? You will probably have more difficulty recovering your money in these cases.
- Acknowledge the commissions and exchange currencies
You may have found some exchanges with an excellent reputation and safety history. This is a good place to start, but now you need to consider how each platform will affect your investments on a daily basis. Two important factors that differentiate exchanges are the commissions they charge and the currency pairs they offer. Most exchanges provide some form of commission for your transactions, which may be proportional to the amount of the transaction or may depend on your level of activity or in some cases may not be related to either of these two factors. The issue of the pairs of cryptocurrencies offered by the platforms is also important.