Top 12 Factors to Consider When Picking Bitcoin Exchange Platforms

Finding the right platform for trading Bitcoin requires knowing your options. Here are factors to consider when picking Bitcoin exchange platforms.

Bitcoin has exploded in popularity over the past several years. What was once a niche subject for tech enthusiasts has quickly become a regular discussion for everyday people.

That’s why it’s no surprise that countless people are now buying Bitcoin. It’s what led to a record high of the cryptocurrency of almost $70,000.

With how vital picking Bitcoin exchange platforms are to your crypto trading journey, you need to do your due diligence to find the right ones. Below are 12 essential things to consider when making your choice.

1. Deposit Options

The right deposit options are a must for a cryptocurrency trading platform. Not every website offers an easy way to deposit money. If you want a pleasant experience, you need to work with a website that makes things easy.

Here are a few standard deposit methods to consider:

  • Direct deposit
  • Debit card
  • Credit card
  • PayPal
  • Other third-party payment methods

Consider which method is easiest for you and look for a platform that meets those needs. Otherwise, you’ll struggle to make deposits and purchase Bitcoin. It may also lengthen the time your deposits take to hit the platform.

This is a problem if you’re on a timeline to buy Bitcoin and want to make a purchase immediately.

2. Verify the Platform’s Legality

Legality is something you must consider when looking for Bitcoin trading platforms. Unlike a few years ago, there are now many regulations in the crypto currency industry. A crypto currency exchange needs to follow your local rules to operate legally.

The rules for this will change based on where you live. Determine what rules an exchange needs to follow to operate in your area.

For many countries, this means getting KYC verified. This means getting identification information from customers before allowing them to trade on the platform. Governments need this information for tax reasons.

Most platforms will also tell you directly which countries they can operate in. Look into this information before signing up for a platform.

3. Look for Insurance

The government backs the traditional stock market. If you’re a victim of fraud or something similar, you can recover some or all your money.

The same isn’t true with crypto currency. Since it’s still unregulated, you can’t take advantage of government resources if something bad happens. You’ll lose your money if you make a mistake or the platform you trade on loses your holdings.

However, some exchanges try to take advantage of this by offering insurance for their clients. They build a fund for situations that put client funds at risk. You may not have coverage for all your holdings, but you’ll probably get some form of protection.

In other cases, you may be able to pay a premium for coverage with a monthly fee.

See which companies offer insurance and their reputation for backing customers. The more a website does to protect its clients, the better.

4. Look at the Number of Crypto currencies

Even though you’re signing up to a trading platform to purchase Bitcoin, that may not be the only coin you want to buy. At this point, there are countless cryptocurrencies on the market worth buying.

That’s why examining the cryptocurrencies on the trading platforms you use is important. At the bare minimum, you should see the top cryptocurrencies on the market. If you are interested in smaller cryptocurrencies, check to see if you can find them on a trading platform.

You may also want to occasionally trade to a stable currency if you have a Bitcoin trading strategy of buying low and selling high. Be sure the platform you use has one to safeguard your holdings from price fluctuations.

Unfortunately, you may not be able to access every coin on an exchange. You may need to branch out to smaller services to buy the cryptocurrency you want. In other cases, you’ll need to send your holdings to a DeFi exchange and trade directly on the blockchain.

5. Trading Fees

Cryptocurrency normally has a trading fee when you send it on the blockchain. That fee gets used for transaction verification, which means miners will get a cut of the fee from a mining pool.

However, those same fees don’t exist on trading platforms. Because of the way they work, you won’t be sending transactions to different wallets when trading on an exchange.

But that doesn’t mean there are zero fees. Most exchanges have fees for every transaction, even if they aren’t as much as on-chain transaction fees.

Those fees will be different based on the exchange you use. Look at the different fees on your platform options to see which one has the best rates.

These rates can impact your Bitcoin trading strategy if you make several trades, so calculate them into your total cost equation.

6. Verify Security Procedures

Security is a big deal on financial websites. You’re trusting a company with your financial and personal data, so you want them to protect your information. On top of that, you’re letting them hold on to your cryptocurrency assets with their wallets.

It’s a big problem if a company doesn’t take security seriously. The cryptocurrency market has tons of hacks, so you can’t afford to take it lightly.

Look for any information you can find to see how a company handles exchange platform security. Any reputable website should tell customers the ways it keeps them safe.

One way to see if a website takes this seriously is if they offer two-factor authentication. This method of authentication requires a secondary code after you enter a password. Unless you have the device this code gets sent to, you won’t be able to access an account.

It also pays to look for any previous security incidents a platform has had. One problem at the beginning of a site’s history may not be a big deal. But if you see a pattern of problems, it’s a sign to take your business elsewhere.

7. Look at the Interface

The interface can get complicated depending on how many options you add to a trading platform. However, you may not want to use all those features. Being able to buy and sell Bitcoin may be all you need.

But some websites don’t do enough to make things easy. They cram a bunch of features on a screen and call it a day. If you aren’t used to looking at financial dashboards, you may have difficulty buying Bitcoin.

Look for examples of a platform’s website before sending them your money. You don’t want to go through a giant hassle whenever you want to make a transaction.

It also pays to look for documentation on how to trade on each website. This information will help you better understand how trading on these websites works.

8. Learn About the Customer Support

In the perfect world, you won’t need to contact customer support on a cryptocurrency exchange. You’ll be able to deposit money, make trades, withdraw your earnings, and call it a day.

Unfortunately, things don’t always go as planned. Things can go wrong on even the best-run cryptocurrency exchanges. You don’t want to be left in the dark when this happens.

See if you can find any information about a website’s customer support before signing up. If a platform doesn’t do a good job, you should be able to find plenty of information online from unsatisfied customers.

Keep in mind, though, that a few issues here and there may not be a big deal. What you don’t want to find is a pattern of problems that persist over time.

9. Check Withdraw Options

It’s not always easy to withdraw your money from a cryptocurrency exchange. It may not be a big deal if your exchange follows all the rules and allows you to connect your bank account. You can make a direct deposit to get your holdings in this situation.

But things may not be as simple in other situations. If you can’t withdraw cash directly to the bank, you need to have the options available.

You also need to be able to withdraw your cryptocurrency to your private wallet if you want. Many people don’t want to hold their cryptocurrency on exchanges because it isn’t as safe as a private wallet.

As a result, people withdraw their holdings to a hardware or software wallet. When you do this, nobody can access your holdings unless they have your private keys and seed phrases. This protects you against any problems an exchange has.

Another reason to do this is if you want to withdraw to a Bitcoin ATM and get cash. Check out Byte Federal to learn more about Bitcoin ATMs.

10. Product Options

Trading isn’t the only thing you can do with cryptocurrency. Many popular trading platforms now operate similarly to stocks and other financial products.

This means you have more options when making bets on cryptocurrency. You can do things like trade on leverage, short a cryptocurrency, perform other common financial maneuvers, and have a dual asset investment.

There are also options that make regular buying and selling easier. Take stop losses, for instance. You can tell an exchange to automatically sell your holdings if it falls below a certain amount to protect yourself from a total loss if a coin crashes.

Not every platform has these options. If you want to expand your trading activity in the future, you probably don’t want to switch platforms.

You can check the feature section on a website before you sign up. Make sure it has all the platform features you want today and in the future.

11. Watch the Liquidity

Liquidity refers to the amount of volume a cryptocurrency exchange has. Exchanges work by holding on to two sides of a transaction. If you plan to trade Bitcoin for Ethereum, for instance, your order goes to a book where there’s demand for that trade.

However, some exchanges don’t have much liquidity. This is especially true if you’re trading smaller coins. There may not be enough volume to get a buyer or seller for your trade.

This is a problem if you want a quick sale. You may end up stuck with Bitcoin or another cryptocurrency if you use an exchange without enough liquidity.

One of the best ways to avoid this is to look at the total volume of trades on a platform. If many people are using a service, the chances are good that there’s enough liquidity to handle your needs.

12. Read Customer Testimonials

Learning about an exchange’s reputation is a step you shouldn’t skip when looking for a place to trade Bitcoin. You can find all the right things on the platform’s website, but once you sign up and start trading, you find that things aren’t as they appeared.

It’s essential to learn from previous customers to avoid this problem. You can find many review websites online dealing with other customers’ experiences with trading platforms.

Use those reviews to learn everything possible about your platform options. A bad review here and there probably isn’t a big issue. But if you notice a pattern of problems, it points to a problem with the website.

You can also talk to people you know who invest in cryptocurrency. If they know more than you, they can likely point you in the right direction and help you sign up for a reputable website.

Don’t Take Picking Bitcoin Exchange Platforms Lightly

A Bitcoin exchange is one of the most important things to use when buying Bitcoin online. However, there are many options for exchange platforms, and they won’t all be good.

But there are things you can look for when picking Bitcoin exchange platforms. Use the guide above to look through your options to find the best exchange platform you can.

Are you interested in more financial tips that will help you put your cash to use? Check out the blog to learn more.

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