Choosing the right cryptocurrency exchange is a complex process. But first and foremost, investors need to look for a secure exchange. As cryptocurrencies grow in popularity, they are increasingly being targeted by hackers, and many major exchanges have suffered hacks that have cost them tens of millions of dollars.
While exchanges often compensate anyone whose coins are stolen through insurance, investors will probably want to avoid that situation in the first place, which is why it's important to minimize that risk and only invest in reputable exchanges.
Investors can further minimize security risks by spreading out their crypto purchases across multiple exchanges or by moving crypto from the exchange's default wallet to a secure “cold” wallet that is not automatically connected to the Internet (and therefore much harder to hack). You should still maintain your passcode, though, or you may lose access to your crypto permanently. When moving crypto off an exchange, you should also be aware of withdrawal fees, which often vary depending on the type of coin.
Also consider the cryptocurrencies available on a particular exchange: investors may be perfectly fine with only one coin on a cryptocurrency exchange if that is all they want.
But coin availability alone tends not to be enough when no trading is taking place: investors might ideally want hundreds of millions of pounds of cryptocurrency trading to take place every day to ensure they have enough liquidity and can easily trade coins for pounds when they need to.
If you are an advanced cryptocurrency trader, you should check whether your preferred exchange offers trading types such as limit orders, which allow you to prevent slippage by setting a hard price and your desired margin. Keep in mind that trading types, including the latter, are still evolving, so exchanges may change their offerings over time.
For those just starting to buy cryptocurrencies, it may be wise to look for an easier-to-use platform with thorough educational resources to help them understand this complex and rapidly evolving commodity, but ease of use does not mean there is less risk.
Also, don't forget about fees. Investors may be willing to pay a premium for a simpler interface if they are still learning the ropes, but higher fees will reduce their bottom line, especially as many high-frequency traders are looking to keep their costs down. Finally, don't assume that just because the website is accessible, the exchange is available in the UK.
