Properties of a good online exchange
What are the properties of a good online exchange?
Properties of a good online exchange: In this article prepared by Flashift software team, we intend to provide explanations regarding the features of a good online exchange.
Online exchanges are a transfer tool used for currency transactions and services among market participants.
These tools have a system that is used to enable the exchange of items.
Currency is the most common means of exchange that is accepted as a standard by all parties to settle economic transactions.
Now we want to know what features these exchanges should have so that they can be trusted?
In the rest of this article, we will mention some important features of these exchanges.
Security is one of the biggest problems in the cryptocurrency industry.
Exchanges are at constant risk of hacking, fraud and currency dumping schemes.
This is why one of the most important things to do before choosing your online currency exchange is to do your research.
Word of mouth and online reviews are some of the ways to help you choose a legitimate and safe platform.
Some of the other cryptocurrency security exchange features that you should check out include:
Two-factor authentication – also known as 2FA, is a method of verifying your claimed identity using a combination of two different factors:
1) Information that is registered in the system (such as your password)
2) The code they send you (like a 6-digit code). the number they send to your mobile phone or email address for the second verification step.)
Hardware wallet for most funds:
A hardware wallet is a physical device that stores your funds offline, so the risk of online hacking is less.
Proof of Reserve
This requires the exchange to be audited to verify that the total funds held by the exchange match the amount required to cover an unknown pool of customer balances.
Supporting of Cryptocurrencies
There are thousands of different cryptocurrencies that you can invest in other than Bitcoin.
When you have decided to invest in your chosen digital currency, you must first make sure that your exchange supports that currency or not.
Without sufficient liquidity, your prices and transaction speed may be compromised.
Once you’ve decided which base cryptocurrencies you want to buy, you need to make sure that your exchange offers enough liquidity and trading volume to make your transactions quick and easy.
Liquidity also means that you are able to buy and sell without the price of the cryptocurrency being affected by major market drivers.
The more buyers and sellers, the more liquidity there is.
The best way to measure an exchange’s liquidity is to look for its latest trading volume.
Coinmarketcap.com and bitcoincharts.com are two cryptocurrency information websites that provide and rank exchanges based on volume and liquidity.
There are so many ways that exchanges charge their clients that it would be great if they didn’t.
But as you know these exchanges are not charities and charging fees to customers is exactly how they make money to stay in business and thus one of the key features of a cryptocurrency exchange to consider.
The most common way exchanges take a small percentage of the amount you trade.
Most exchanges charge less than 1%.
In order to stay competitive, some exchanges go even further by lowering their fee percentage to around 0.2%.
Often times, there is a sliding scale that reduces the commission percentage as the user’s monthly transaction volume increases.
While paying less may seem attractive, remember that it’s better to prioritize security and liquidity over fees.
Because if you don’t pay any transaction fees and then lose all your capital in a hacker attack, your investment will defeat its purpose.
Depending on where you live, you may find a particular exchange that works better for you in your country than another exchange that is more popular internationally.
Things like the fiat currency they accept, and the fees they charge locals compared to international customers are things to keep in mind.
Additionally, the location of the exchange dictates the rules it must follow.
Many countries do not have specific regulations regarding digital currencies.
However, if and when they begin to do so, it could significantly impact your ability to participate in the market through exchanges in those countries.
You can join the cryptocurrency conversion investment group on Flashift to get information about the latest currencies, how to convert on Binance and Coinbase exchanges.
For more information about converting currencies in Coinbase and Binance exchanges, you can read our similar articles about How to convert BTC to USDT on Binance and Convert Litecoin to dollar on coinbase.
We advise you that as the fourth point of the IDDA technique, you should calculate your risk tolerance before deciding on the right investment strategy for your stock portfolio.
Don’t forget to complete your due diligence on risk management before developing your investment strategy.