The first step to getting started with digital currency is knowing how to buy Bitcoin. However, there is much more to it than just purchasing the world’s most famous cryptocurrency.
Knowing exactly which Bitcoin exchange to choose is crucial. Because you will be investing money into Bitcoin, it is important to decide on a trusted and reliable place from where to buy it.
So—how can one choose the best Bitcoin exchange?
The general “best” Bitcoin exchange is a concept perceived differently by different people. Since it is a very “fluid” category, one that depends on various factors, you must find the one that best suits your requirements.
The quality and usage of Bitcoin exchanges are determined by security, country or region, needs, trading volume and so much more.
In this guide, we are taking you through the most crucial steps in our checklist. We highly recommend reviewing these top items before making the final decision on which Bitcoin exchange you are going to use.
Keep in mind; these are just suggestions that should help you make the right choice. The risk of things changing either on the market or on the part of the exchange is always there. Therefore, it’s important to do your homework and educate yourself on the topic as much as you possibly can.
Often described as an anonymous currency, Bitcoin is a go-to for all those who desire to remain unidentified online. But, because the cryptocurrency is pseudonymous, achieving complete anonymity with Bitcoin may be impossible.
This, however, does not mean you should not pay attention to the level of obscurity an exchange offers. If being anonymous is important to you, then you need to check which systems and laws the exchange follows.
Such identification makes it easy to know who exactly the buyer is, thus, if you aim to stay unknown, make sure you check the policies of the exchanges you are considering.
The way of purchasing Bitcoin is directly related to privacy levels. Because of this, you need to be careful about the payment method. Bitcoin can be purchased with cash, PayPal, wire transfer, credit cards and other payment methods. However, keep in mind that some of these options will instantly jeopardize your anonymity.
For instance, paying via PayPal or credit card is probably the least private way to purchase Bitcoin. On the other hand, purchasing it via cash transactions is a completely different story.
Carefully read the terms and conditions of the exchange and make a note on which payment method they allow or recommend. Later, accordingly, decide whether that exchange is good for you or not.
Although this is not a significant indicator of the quality of the exchange, it is good to know how long after the purchase your Bitcoins will be delivered.
Additionally, don’t forget to check whether the exchange offers “locked in” pricing or not. Because of the fact cryptocurrencies’ prices fluctuate frequently, this kind of pricing is very advantageous. With such an option, you will be charged the price of the Bitcoin in the moment of your purchase, regardless of how many days later the Bitcoins will be delivered.
The fees mostly vary from exchange to exchange. On top of the regular Bitcoin transaction fees, there are exchanges that charge additional fees. Therefore, pay attention to the exchange’s rules as well. Choose an exchange that charges fees you can afford to pay within your own means.
In many countries, Bitcoin is still an unregulated currency. The reasons why governments around the world are constantly seeking ways to get a degree of control over the transactions made with digital currencies are basically limitless. Starting from money laundering, to terrorism and drug trafficking, the majority of legal systems worldwide do not have any laws regarding digital currencies. Which, ultimately, is why you need to know the basic information about the exchange, such as the location, who leads it and its target market.
In the countries where cryptocurrencies are controlled, there are a variety of regulations and laws the exchanges follow. What you need to do is check if there are any exchanges based in the country you live in, because this way you will be able to best understand the rules and requirements. If you cannot find any exchanges located in your country, make sure to find an exchange that follows principles you approve of.
Order Book Volume
Publishing order books is not something that all exchanges do. However, most of the exchanges that, in fact, have a decent customer base, have no problem broadcasting their order books. Not publishing their order book does not necessarily mean the exchange is not legitimate, but it can serve as a great example of how advanced the exchange is.
The reasons why some exchanges do not publish their order books is because they have a small volume compared to other exchanges, or because they have not developed that function yet. Either way, the order book volume will help you better understand the exchange’s liquidity due to the shown numbers of buy and sell orders.
It is up to you whether you are going to try a smaller exchange, or play safe and go for bigger exchanges.
The security of a particular exchange is one of the most important parameters and has a huge role in selecting the right Bitcoin exchange.
Since digital currencies formed a brand new market, a whole another wave of skilled and creative hackers appeared. Exchanges, logically, are something the hackers regularly go for, as some of the sites do not offer much advanced security.
You don’t really have to be an expert to know if an exchange has good security or not. Small things, such as protocols and authentication, can reveal a lot about the security of the exchange.
For instance, if you are looking for a safe exchange site, you should be looking for an HTTPS site. Seemingly unimportant, but actually crucial, HTTPS is a way safer protocol compared to HTTP. You can determine whether or not a site uses HTTPS by looking at the search bar on your browser. If the URL starts with HTTPS, the site is generally safer to use.
Another feature you should pay attention to is whether the site offers two-factor authentication logins. Such characteristics should not be overlooked.
Transparent exchanges have no problems sharing audit information on how to validate reserves of Bitcoin, or disclosing cold storage addresses. The act of proving an exchange is not running a partial exchange, and that it can, in fact, cover all exchange sales of Bitcoin, is very important.
Here is where Bitcoin audits come as evidence of the exchange’s liquidity, which helps the customers trust that exchange more.
As mentioned earlier, you need to be familiar with some basic information about the exchange. This necessary data includes finding information about the creator of the exchange, its reputation and the market they focus on.
Similar to any other type of business, it is significant to know the reputation of the exchange you are considering. Here, you can use good old ways of checking different forums, feedback and customer reviews. We highly recommend visiting the r/btc subreddit and the Bitcoin.com forum. If you are unable to find any information related to the exchange, you can freely ask others to share their experiences and opinions on the topic.
Knowing more about who founded the exchange can also serve as a great lead to the reputation of that exchange. If the people who founded the exchange have opted not to share any information about who they are, as well as prove their expertise, this is a warning sign. On the other hand, if the exchange’s founder is vocal and known to the public, users can get to know them more easily, and therefore trust their exchange.
Even though these are all the crucial points a trader needs to know in order to make the right choice, always be creative in your research. You can also come up with additional ways to get to know an exchange before you take part in it. Minor mistakes can drastically change your life, therefore, be extremely careful with your decisions.