A cryptocurrency trading platform is an exchange platform that allows cryptocurrency traders to buy one digital currency for another or to convert one digital currency to fiat currency. Virtual cryptocurrency platforms were created following the launching of Bitcoin, the first decentralized cryptocurrency, in 2008. In the early days, those exchange platforms strictly dealt in the trade of exchanging cryptocurrency for fiat money, and vice versa.
Tips for Choosing a Cryptocurrency Platform (Source: Cryptoknowmics)
However, after the development of other cryptocurrencies, several other exchange platforms were created specifically for exchanging one digital currency for another. The regulation of those exchange platforms differs from country to country. In 2018, the United States Securities and Exchange Commission announced that exchange platforms must register with the SEC according to Federal Securities law.
Choosing the Right Cryptocurrency Platform
With about 300 cryptocurrency platforms available globally, choosing the right cryptocurrency platform can have the desired effect on the success of your trades. Here are the factors to consider before choosing your exchange platform:
- Safety and Security – A cryptocurrency trader should be concerned about the safety of the platform he intends to trust with his data and digital assets. Unlike physical assets, digital assets are almost impossible to recover once they are gone. Therefore, the trader should make sure that the exchange platform he entrusts his digital assets with is secure enough to prevent their loss. He should also check if the exchange platform has security measures like two-factor authentication, cold storage asset reserves, etc.
- Reputation – While this may not necessarily guarantee the safety of your digital assets, the reputation of a cryptocurrency exchange platform helps ensure that you can trust it to a larger extent compared to relatively unknown ones. A highly reputable platform would have earned its name based on the quality services it offers its users. Therefore, the reputation of a platform should be considered when choosing the right cryptocurrency exchange platform.
- Transparency – Several fraudulent platforms are designed to take advantage of gullible traders. Therefore, you must watch out for red flags while choosing a cryptocurrency platform. Even if possible, know the physical address of the exchange company before you register. If it does not provide its address, then you should probably not choose that platform. Being transparent is necessary to gain the trust of traders. If an exchange company has a physical address, then you can address any issues that you have physically. But an exchange company that does not have a physical space may be illegitimate.
- The Type of Currency You Want to Trade – Some platforms only offer a few digital currency options to their traders. Several popular cryptocurrency trading platforms focus on popular cryptocurrencies like Bitcoin, Ethereum, Binance coin, etc. If you aim to trade unpopular altcoins, you may want to choose an exchange platform that offers the type of coins you are looking for.
- Fees and Commissions – Beware of the commission that some exchange platforms charge. Before you choose your preference, check their commissions and decide if they are favorable to you. While some exchange platforms charge based on the size of your transactions, others charge based on the level of activity. You should choose the one that you are most comfortable with.
- Research – Before you choose the right cryptocurrency platform, you should carry out extensive research. Dig into the history of the platform and ask traders for information about it. This way, you can avoid choosing exchange platforms with bad reputations.
- Technology – A good exchange platform should be equipped with good technology and infrastructure to handle the volume of trades by its users. The exchange platform should be fast enough to roll out multiple orders and give its users the best experience.
Cryptocurrency Trading Bots
Cryptocurrency trading bots help to constantly monitor the market for sudden price changes. Accordingly, they react based on the pre-determined rules fed into them by the respective traders using them. Yes, a cryptocurrency trader whose goal is to succeed in his trading must spare no effort to choose the right platform. However, after he has done so, he may also want to use a trading bot to maximize his potential earnings in the market.
A cryptocurrency trading bot is needed to handle a cryptocurrency trader’s repetitive tasks, thereby helping him to saving time and effort. The bot is also available every minute of the day to monitor sudden changes in the prices of cryptocurrencies and to take advantage of the volatilility in cryptocurrency markets.
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