The Banking Executive Magazine - November 2022 Issue

How To Pick The Best Crypto Exchanges? Investopedia Ranking Investopedia selects best crypto ex- changes based on fees, supported coins, wallets, as well as other crite- ria. depending on the exchange and the level of verification required. Investopedia selects best crypto ex- changes based on factors such as supported assets, fees, payment methods, and security. Ranking by trust score Some platforms, like www.coingecko.com , ranks crypto currency exchanges by trust score. HOW CRYPTO EXCHANGES WORKS When users set up an account with a crypto exchange, this enables them to buy and sell cryptocurrencies like bitcoin (BTC), ether (ETH), litecoin (LTC), polkadot (DOT), dogecoin (DOGE), and other coins. Depending on the exchange, users can purchase crypto using a fiat currency like the United States dollar, or trade one form of crypto for another. To begin trading, users need to fund their exchange account (sometimes called a wallet). It is generally rec- ommended that users set up their own crypto wallet for greater secu- rity. Users can then view the trading prices of different crypto. The ex- change does not set the prices; they are determined by the market, and most exchanges reflect up-to-the- minute pricing, although there can be slight differences among ex- changes owing to the fact that cryp- tocurrencies are decentralized. Users can then place a buy order to purchase bitcoin, ether, etc., and the order is added to the order book along with other buy and sell orders. Depending on which type of plat- form is being used (an exchange, in- vesting app, or cash app), the view of Exchanges and online brokers gener- ally charge fees for their services. Unlike traditional markets, where many fees have declined in recent years, crypto trading typically costs more. It is not uncommon to see fees as high as 5% per trade or more, for example, although many can be much lower: 0.5% or less per trade. PROS AND CONS OF CRYPTO EXCHANGES Some of the pros of using a crypto exchange include: • It is easy and convenient for new users. • It allows purchasing and selling of crypto in a somewhat regulated en- vironment. • Some exchanges provide users with tax forms, making it easier to calculate crypto taxes. Some of the cons of using a crypto exchange include: • It is vulnerable to hacking, fraud, or theft. • If the exchange goes down, users can not access their funds or place trades. • Individuals who use the custodial exchange wallet do not hold their private keys. ISSUE 167 NOVEMBER 2022 the BANKING EXECUTIVE 13 Table3. Investopedia choice of best crypto exchanges according to selected criteria Best Mobile App: Crypto.com Best for Security: Gemini Best for Altcoins: BitMart Exchange Best for Low Fees and Best for Experienced Traders: Kraken Best for Bitcoin: Cash App Best Decentralized Exchange: Bisq Best Crypto Exchanges Of 2022 Source: Investopedia Table 4. Ranking crypto exchanges by trust score 1 2 3 Coinbase Exchange; Centralized Bybit; Centralized FTX; Centralized 10 10 10 $2,204,292,705 $1,274,797,001 $917,674,351 $2,204,292,705 $1,274,797,001 $1,703,093,920 # Exchange Trust Score 24h Volume (Normalized) 24h Volume Source: www.coingecko.com