The list of cryptocurrency exchanges and apps numbers in the range of about 450 to 500, each with unique selling points, differing features, costs, and ease of use.
Choosing which one is best is an overwhelming decision for a beginner to make, but this guide aims to help you understand what you should be looking for when sorting through your compiled shortlist of exchanges and apps.
Your first cryptocurrency investment app should be easy to use, the user interface clean and intuitive, so you understand exactly what you’re doing and don’t hit the wrong thing, or do something you didn’t mean to. The other stuff you don’t typically think about, like security, fees, and liquidity, should be researched as well to ensure your peace of mind.
Fees is first, as it’s the most important aspect for you to research, you do not want to be making incredible gains on your investment only for hefty, burdensome exchange fees to take a chunk of your profit.
Almost all apps will charge a small percentage fee when buying and selling crypto, as a guide, trading fees vary between 0.1% to 0.75% on average, with purchasing fees when using a payment card ranging also.
Ensure to look at if your app takes commissions too, for example, if you plan to stake any of your crypto, some take a commission of up to 25% on your earnings for the service, whilst others take nothing.
If you’re planning on taking advantage of the financial instruments available in the crypto space, make sure to check your app offers that, this will save you having to move your crypto to another app if you want to access them in the future.
Liquidity providing, margin trading, or lending are some advanced features available on apps which might not be very beginner-friendly, but staking, dollar cost averaging, and swapping are some basic features you’ll probably want to consider early on.
Ease of use
Using the app shouldn’t be complicated, it needs to be easy for you to operate, understand what you’re doing, and execute your trades simply. Luckily, most cryptocurrency investment apps have invested in their user interface and user experience, but make sure you research what that looks like, YouTube is a great resource for this.
The security of cryptocurrency assets is very different from a bank, and it will be your responsibility to ensure the safety of your crypto. That being said, crypto apps have come a long way in the past few years with the security of their products.
One of the most basic security features you’ll want to implement is 2-factor authentication, this comes as a standard feature on most apps now, so ensure this is offered. Other features include a pin login and a trading pin, which you can set up to enter when buying and selling crypto, both of these can usually be set to work with your phone’s Face ID or biometric authentication.
As with most beginners, you’ll probably leave your crypto on the exchange to start with, at least until you build up enough holdings to necessitate a more secure solution like a hardware wallet. If you plan to use the financial instruments we discussed above, your crypto will be on the app, and you’ll want to research how they store your crypto if you leave it on there.
Most major apps use a cold storage method, where a large amount of user funds (up to 98% for some exchanges) will be stored completely offline in encrypted hardware wallets and paper backups to mitigate the amount of funds lost if a hack does occur.
As part of your security audit, research your apps’ history of previous hacks. Whilst this isn’t an indication on what could happen in the future, it will show how resilient your chosen platform is too hacking, the fewer hacks, the better. If your favourite app has been hacked, don’t write it off completely, have a look at their response to it. Did they tighten security? Patch vulnerabilities? Most importantly, what did they do for their users who lost funds?
Another aspect to research is if your chosen app puts aside a fund in the case your crypto gets hacked or stolen. Some exchanges store a percentage of trading fees in an emergency insurance fund, so they’re able to compensate their users if ever funds get stolen.
Unless you’re trading hundreds of thousands of dollars per transaction, liquidity typically isn’t something you need to worry about, but it’s still important for a beginner to understand.
Liquidity refers to how quickly you’re able to sell your crypto, a good rule of thumb is, the more people using the app, the more liquid it will be. Research how many people use the app, this will give you an idea of the liquidity on the exchange, and how quickly you can sell your crypto if you need to.
B2Broker’s cryptocurrency liquidity provider service is an attractive and simple-to-implement option for brokers. B2Broker is a Prime Broker and practices Best Bid Best Offer (BBO). To minimize slippage, they involve dividing unmatched orders among multiple liquidity providers and cryptocurrency exchanges. These benefits include tight spreads, minimal commissions, fast market execution, rejections, and a powerful matching engine that processes tens of thousands of orders per second.