A Cryptocurrency exchange is an online market place where cryptocurrencies can be traded for other assets, such as conventional fiat money or other digital currencies. It’s the equivalent of a bank or stock market. In clearer terms it’s the market place for cryptocurrencies, where the buying and selling of cryptocurrencies for fiat money or other digital currencies occurs.
As such we have various cryptocurrency exchanges ranked based on their trading volume. The most popular crypto exchanges include Binance, DDEX, Bittrex, Coinbase, Idex, Bithumb, Bitfinex, Kucoin, etc.
In order to trade on a cryptocurrency exchange, you need to first register an account by visiting the exchange’s website and there after you need to deposit funds to trade with on the exchange.
UTILITY OF CRYPTOCURRENCY EXCHANGES
- Trading cryptocurrencies.
- Storing cryptocurrencies.
- Swapping cryptocurrencies.
BASIC TIPS WHEN USING A CRYPTOCURRENCY EXCHANGE
- Always use a difficult but unique password for your cryptocurrency exchange account.
- Never disclose your password to anyone.
- Always enable two factor authentication in your exchange account.
- It’s safe not to leave your funds sitting on a cryptocurrency exchange as centralized exchanges uses a central wallet where everyone’s funds are stored and you do not hold the private keys to the wallet. Its safe practice to always withdraw all funds immediately after trading to a private wallet where you hold the keys to.
- Always check the minimum amount you are required to withdraw from any exchange without completing KYC before depositing funds, majority of exchanges are compliant now so withdrawing huge amounts without completing KYC is impossible.
- Do not access your exchange account on public computers.
- Do not back up private keys to your wallets on public computers.
KYC: Know Your Customer
Private keys: This is a combination of alphanumeric characters used to access your cryptocurrency wallet.
In our next article we will be taking a look at the types of exchanges, differences between the types of exchanges, etc.