When looking to buy and sell cryptocurrencies, you’ll need an exchange. These crypto exchanges are the cream of the crop. The very best.
What is a crypto exchange?
Simply put, crypto exchanges are places where traders go to buy and sell crypto.
Exchanges facilitate trading, and traders provide volume and liquidity.
Much like trading in stocks and shares, crypto exchanges allow users to buy and sell cryptocurrencies with one another. Usually through an order book system.
Types of crypto exchange
There are two key types of crypto exchange you should know about: centralized crypto exchanges and decentralized crypto exchanges.
What are centralized crypto exchanges?
Centralized crypto exchanges have a few key features. And have their own set of pros and cons.
- They’re centralized. The name says it all. Centralized exchanges are owned by a central authority.
- They often require KYC. Because they’re centralized, they’re usually regulated. Most regulated crypto exchanges require you to upload some form of ID.
- They own your private keys. Unlike decentralized exchanges, centralized exchanges have custody of your funds.
- They usually use order books. Traders post their buy and sell orders into an order book. When orders match, trades are executed by the exchange, which takes a fee for providing their services.
What are decentralized crypto exchanges?
Decentralized crypto exchanges often run on blockchains, powered by smart contracts. And again, have their own pros and cons.
- They’re decentralized. Living on blockchains, the core of the exchange is powered by smart contracts. And benefit no central party. Though, they are often maintained and updated by central parties.
- They often don’t require KYC. Because of the nature of their decentralization, KYC is often not required. Though KYC may be required by law, decentralized exchanges are a new type of exchange that seems to have grown in ignorance of KYC measures.
- They don’t have custody of your funds. In other words, you own your keys. You’re solely responsible for your funds. So if you get hacked, scammed, or robbed, there’s no insurance. You are the person at fault should things go awry.
- They’re usually AMMs. Most decentralized crypto exchanges are automated market makers. Having forked their code from larger projects like Uniswap.
What type of crypto exchange should I use?
It really boils down to you. Your risk appetite. Your privacy concerns. And your ethos around custody of your own funds.
As a general rule of thumb, if you’re new, go to a centralized crypto exchange. Learn more about crypto, and build your first investments.
As you become more advanced, venture into web3, and use decentralized exchanges. Especially if you’re looking for raw, low-cap cryptocurrencies that are yet to break onto centralized exchanges.
The best crypto exchanges
We’ll split this into categories depending on the use case.
Centralized crypto exchanges
These crypto exchanges require KYC, they’re centralized, and they have custody of your funds.
You will not get access to your wallet’s private keys.
But, they’re beginner friendly and have features for the most advanced crypto traders.
The largest crypto exchange by volume and liquidity. Hosts many hundreds of different markets.
A popular crypto exchange, with a host of smaller coins that are yet to bubble.
A simple-to-use crypto futures exchange.
They often run trading competitions and offer huge deposit bonuses for new users.
A large, public, crypto exchange.
They give away free crypto to new users when they deposit. And also have a learn-to-earn system, where you get paid to learn about new cryptocurrencies.
A secure crypto exchange with a great track record.
Decentralized crypto exchanges
This is where things get a little more technical.
But, you don’t have to KYC, and, you get full control of your funds.
The original decentralized exchange.
They invented the AMM model that we use across most decentralized crypto exchanges. LP holders provide liquidity and earn trading fees.
They run on Etherum, Polygon and Arbitrum at present.
One of the largest, earliest decentralized exchanges.
Famously launched a vampire attack on Uniswap. Though this might sound a little negative, they have numerous features aside from simply being a decentralized exchange.
They run on all main EVM chains.
The largest decentralized exchange on the BNB chain.
Pancakeswap is famous for its ease of use, farming, and additional features.
They only run on BNB, Ethereum, and Aptos at present.
4. Trader Joe
The largest decentralized exchange on Avalanche.
I’m a huge fan of Avalanche, hence why this made the list. Despite being quite a bit smaller than the other alternatives.
They only run on Avalanche at present.
There are numerous crypto exchanges out there that you can use. And there are two key kinds; centralized crypto exchanges and decentralized crypto exchanges.
- The best centralized crypto exchange is Binance.
- The best decentralized crypto exchange is Uniswap.