Cryptocurrency exchanges

Exchanges are systems that facilitate the buying and selling (i.e. trade or exchange) of one cryptocurrency to another.

Cryptocurrency and bitcoin exchanges

Choosing an exchange to use

A good exchange will have these features:
Feature Benefit
Responds quickly and reliably to your buy and sell requests Ensures that your buy and sell requests are performed when required. You don’t want requests to be missed, have or press the order button multiple times or for there to be a delay in the process (as the price can change quickly, so you might lose value in the trade)
Has enough liquidity to handle your buy and sell requests With some less popular cryptocurrencies, there might not be enough people buying or selling the volume of cryptocurrency that you want to buy or sell, at the time and price that you want to make the trade. This means that you might only be able to buy or sell part of what you want (e.g. $60 worth instead of $100 worth)
Inexpensive to use for your specific purposes

You might want to make few large trades or lots of small trades (e.g. 10 manual trades a day vs 500 automated trades a day).

You need to check the charges of the exchange to ensure it meets your requirements

You may also want one or more of these features:
Feature Benefits
To exchange between FIAT and cryptocurrency Allows you to trade ‘real money’ e.g. USD, EUR, GBP to cryptocurrency
Trading pairs for just the top cryptocurrencies, a large selection of cryptocurrencies, or specific less popular cryptocurrencies

Some exchanges (e.g. Coinbase and Coinbase Pro) only have the most popular cryptocurrencies available for trade.

Some exchanges (e.g. Binance) have a wide variety of cryptocurrencies available for trade.

Some exchanges (e.g. Yobit) have number of less popular cryptocurrencies (e.g. Maxcoin) available for trade.

An API, to enable automated trading with bots and other trading tools

An API allows external tools to perform actions on the exchange, such as buy, sell, read cryptocurrency prices, etc.

Examples of tools include those for manual trading via a custom interface, automated trading via bots, displaying cryptocurrency prices on a website, posting prices on a twitter feed, alerting people when a cryptocurrency reaches a set price, etc.

To trade with leverage Leverage involves borrowing a certain amount of the money needed to invest in something
The exchange to be decentralised Decentralised exchanges have several benefits, such as being more reliable (decentralised) and more secure (you hold your private key) and fewer fees, they also have some limitations (e.g. not being able to trade FIAT and generally have less liquidity than centralised exchanges)

Should I store my cryptocurrency on exchanges?

Centralised Exchanges

When you store your cryptocurrency on exchanges, you don’t own the private key. This means that there is potential for your cryptocurrency to be lost by accidental or malicious means. Therefore, it is recommended that you only store on them the amount of cryptocurrency that you will be using for trading. Remember that the safest place to store your cryptocurrency is in a cold storage device.

Decentralised Exchanges

With decentralised exchanges, because all transactions are performed on a peer-to-peer basis (i.e. between end-users computers, not on a central exchange system), you never keep cryptocurrency on a central exchange, instead; your cryptocurrency can be kept in your personal warm wallet or cold storage device.

How to securely log onto exchanges

See the security page of this website for advice on how to use exchanges in a secure manner.