How to Do Due Diligence When Choosing a Crypto Exchange in 2023

Choosing the right platform to conduct your exchange activities is very important when it comes to cryptocurrencies. It's important to consider a variety of factors, including supported assets, fees, payment alternatives, and security. We've taken all of these factors into account when compiling our list of characteristics to consider when choosing the best place to buy Bitcoin. According to leading cryptocurrency comparison service CryptoRunner, there are a few things to consider when choosing a crypto exchange.

Customer satisfaction

Consumer satisfaction should always come first when deciding which exchange to use. Following Cryptorunner's advice, the ideal approach to choosing a bitcoin exchange is to test and compare several platforms on how they handle their customer requests. Listening to consumers is the quickest and easiest way to ensure customer satisfaction across various exchanges.

Exchange Volume

Another important issue worth mentioning is the volume of exchange. With large trading volumes on exchanges, reducing the spread (the difference between the bid and ask prices) is vital. This becomes a hidden value if the business requires a larger trading volume. However, analysis shows that this is normal if you choose a major bitcoin exchange.

Security

Security should always be a priority when choosing an exchange to use. The cryptocurrency market is less tightly controlled than the stock market. As a result, security is now more of a personal duty. The data shows that cryptocurrency exchanges are used to trade rather than store Bitcoin or other cryptocurrencies.

Fees & Cost

Another aspect to consider is fees and costs. Fees are an important factor when buying and selling Bitcoin. However, all exchanges come with different costs and fees. This includes transaction costs, order fees (market orders are more expensive than limit orders), buy and sell fees (either as a percentage or at a set price), and more. Their costs and expenses, whether "low", "medium", "high" or "various", should be carefully examined.

Support

Customer support should also be considered when making this decision. Not every bitcoin exchange provides responsive and reliable customer support. Always ask if 24/7 customer service is available by phone, live chat, or both. Prior to this, many consumers had issues with the bitcoin exchange's customer support response time. Managing customer support becomes challenging when the number of new users grows rapidly. Because of this, cryptocurrency traders advise against using smaller exchanges.

KYC Rules

Know-your-customer or KYC standards were created to reduce fraud and money laundering on financial networks. Users must verify their identity on cryptocurrency exchanges that comply with KYC regulations. A copy of a government-issued photo ID, such as a passport or driver's license, or the sale of certain personal information is usually required. Exchanges that adhere to KYC norms should always be the first to verify, and those that don't should back down.

FDIC Protection

Although cryptocurrencies are not FDIC insured, several cryptocurrency exchanges provide FDIC protection for funds held in their USD systems. Affiliated banks usually offer this insurance. Cryptocurrency exchanges that provide FDIC insurance through affiliated banks should always be considered first when choosing their preferred exchange. This feature plays an important role in the security environment of the exchange.

Order Types

Different types of orders may be available on different cryptocurrency exchanges. For example, some brokers may provide limit orders that allow you to choose the highest price at which you will buy an item or the lowest price at which you will sell it. Others may not ship this order option. Exchanges with more order types are likely to offer better services than those that don't.

Over-the-counter trading

When a cryptocurrency exchange supports over-the-counter trading, two parties can make trades without using the business directly. People who want to buy or sell a lot of cryptocurrencies often use over-the-counter trading. Some exchanges provide this option to institutional traders or high-net-worth individuals looking to make large trades.

Financial aspects

Some exchanges provide valuable goods and services, such as co-branded credit cards that allow you to earn crypto incentives for recurring purchases, the ability to earn interest on crypto, and the ability to borrow money against your crypto holdings.

Other Benefits

A high balance of a certain asset or the introduction of a friend are two behaviors that are rewarded on several exchanges. Rewards can take the form of cost reductions or additional revenues. Exchanges that offer random rewards for random tasks should be used, as they are more profitable than regular exchanges.

Choosing the right crypto exchange can be more difficult than it seems. Many aspects present red flags for exchanges, necessitating a proper assessment before making any decision, given the recent collapse of exchanges, which resulted in the loss of funds by many investors due to fraud witnessed by the troubled FTX exchanges. However, with all these aspects that need to be evaluated when making a decision, choosing the right exchange is narrowed down to one's own preferences and taste.