Cryptocurrencies are the latest craze to sweep the finance world, with Bitcoin (BTC) dominating the headlines while Dogecoin nails the punchlines.
As the number of cryptocurrencies on the market continues to expand, investors have more options than ever before to exchange their hard-earned cash for decentralized digital money. But how do you actually go about trading your favorite cryptocurrency?
The internet is filled with horror stories of hackers swindling traders of their gains from poorly protected cryptocurrency exchanges, making it all the more essential to carefully choose a secure crypto trading platform before you make your investment. That said, which of the many cryptocurrency exchanges is the best choice for you?
There’s a myriad of factors that will influence your decision: security, ease of use, fees and the number of coins available for trading all play a part in helping you determine the best crypto exchange for you. To help you find the cryptocurrency trading platform that meets your needs, here are five options to choose from that will suit a variety of cryptocurrency investors:
It should come as no surprise that Coinbase, one the most popular crypto exchanges in the world, tops this list. Coinbase will go public via a direct listing in the next few weeks, and with a $100 billion valuation, the anticipation surrounding the company’s debut is mounting. While investors will soon be able to get a piece of the Coinbase pie, crypto traders have been using Coinbase since 2012, and the exchange has only gotten better with age.
A user-friendly interface, straightforward onboarding process and a free $5 just for opening an account make Coinbase an excellent place for new traders to get started. Advanced users will enjoy Coinbase Pro, which provides more powerful tools for power users looking to dive into cryptocurrency trading. Coinbase even provides users with a wallet, albeit a hot wallet, opening the door for potential attacks – though George Chrysochou, global marketing manager at Financer.com, notes that Coinbase is one of the most reliable exchanges, keeps very high-security standards and has never been hacked.
With 46 different types of digital currency and altcoins supported on Coinbase, users have a good range of options to choose from, though the list is by no means extensive. In addition, users will want to watch out for high fees tacked onto their trades, part of a labyrinthine fee structure across the Coinbase site. Plus, Chrysochou notes that users don’t own their own private keys on Coinbase, and slow email support plus limited privacy may turn some users off. But these are relatively minor cons to an otherwise strong list of pros, and it’s easy to see why Coinbase has become the crypto exchange of choice for many, many people.
Another incredibly popular crypto trading site, Binance has only been around for the last three years but has quickly taken the crypto market by storm.
Based out of Hong Kong, Binance is an international exchange that supports more than 200 different cryptocurrencies. The website is very intuitive and straightforward, allowing users to switch between a basic and advanced version of the site at will as they progress in their crypto trading careers. While new cryptocurrency traders will find Binance simple to use, ultimately it might be best for crypto day traders – very low fees, strong charting tools and an easy-to-use mobile app allows for fast, simple cryptocurrency trading. It’s apparent why Binance has become one of the largest cryptocurrency exchanges in the world.
Note that Binance doesn’t allow you to exchange U.S. dollars for cryptocurrency, though it does accept credit and debit cards – there’s a U.S.-based site for American users, but it offers more limited options than the main site. In addition, Binance has been hit by cyberattacks in the past, most recently in 2019 – though the site does have an insurance fund to cover any losses. That said, Binance is a secure trading platform that offers a number of powerful tools for users who want to invest in different digital currencies on the blockchain.
You may not think of Robinhood when you think of cryptocurrency trading, and for good reason. The mobile app known for commission-free stock trading – and for prohibiting users from selling GameStop (ticker: GME) and other “meme stocks” in recent months – is a stock-first app, but in 2018 Robinhood began to roll out cryptocurrency trading as well. In the years since, Robinhood has slowly built up the crypto side of its app, allowing users in select states to trade a mere seven cryptocurrencies, including Dogecoin.
While that’s a small pool to work from, it’s plenty of selection for users just beginning their crypto journey. With the company’s mobile-first mindset, Robinhood has built an incredibly easy to use app, and no fees for trading mean the barriers to entry are extremely low. As for security, “Robinhood utilizes cold wallets to store your cryptos, meaning that the majority of users’ funds are held safely offline,” says Edmund McCormack, founder and CEO of DChained. “However, in the event that a hack were to take place, they are underwritten by Lloyd’s to cover any cybersecurity breaches.”
You should know that Robinhood doesn’t allow users to remove their coins and put them into a wallet of their choice. In fact, Robinhood doesn’t let users utilize their coinage for payments – it is strictly a trading app. Clearly Robinhood lacks the bells and whistles of its bigger, better established competition, and advanced users would be better served elsewhere. But it has all the essentials for a cryptocurrency rookie, and it might just be the best crypto exchange for new traders to start with.
Founded by the Winklevoss twins in 2014, Gemini has established itself as one of the most trusted names in crypto. The two stars of Gemini were Bitcoin and Ethereum, but today the exchange allows users to trade 26 different cryptocurrencies on its site, including Gemini dollars, a U.S. dollar-backed stablecoin. Gemini is predicated on legitimacy, and the site was founded with regulation compliance as a top priority. Gemini is a fiduciary and the site is FDIC insured, and as you might imagine, this means security is paramount for Gemini.
Gemini is well-known for its safety, with most of the coinage on the exchange held in cold storage, and the site has never been hacked. Plus, according to McCormack, Gemini has “an extremely responsive customer service branch, usually getting back to email inquiries within a few hours.”
McCormack notes that “Gemini’s trading fees are a bit higher than Coinbase Pro, but less than Coinbase itself.” Fees are charged on a sliding scale depending on frequency of trading, encouraging power users to utilize the platform more often but leaving one-time buyers paying an above-average fee. The site itself is straightforward, though the mobile app isn’t as intuitive as some of the competition, and the site doesn’t accept debit or credit card payments to fund your trading. That said, if your primary concern is safety and security for your crypto, trading via Gemini is an excellent choice.
Kraken has proven itself to be a trusted, secure crypto exchange ever since its founding in 2011.
With 56 coins available for trading on the site, Kraken’s selection is smaller than some but it makes up for that with excellent features that experienced crypto traders love. Though the site has basic features for newer traders, Kraken’s Pro site is where it truly shines. Advanced tools like margin trading and crypto futures are sure to attract power users, while the ability to stake your coins will appeal to set-it and forget-it users. As for security, Kraken has its own in-house proprietary custody solution and doesn’t rely on any third-party service, according to Kapil Rathi, CEO at CrossTower. In fact, according to Rathi, 95% of all deposits on Kraken are kept in offline, air-gapped, geographically distributed cold storage.
Kraken’s maker-taker fee schedule system is confusing at best, and it often leaves users holding the bag for larger fees than they’d find elsewhere unless they’re actively trading during a 30-day period. In addition, as Rathi points out, Kraken’s exchange has been known to go out during periods of high volatility. In addition, Kraken was singled out by the New York Attorney General’s office in 2018 for compliance issues. That aside, Kraken is one of the oldest and safest exchanges available, and it’s a great pick for anyone looking for advanced crypto features.