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Crypto Exchanges Review Methodology
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Opening an account with one of the available cryptocurrency exchanges or CFD brokers is a simple way to start trading or investing in cryptocurrencies. Crypto exchanges are marketplaces that allow you to buy, sell, and trade cryptos or digital assets. However, as the crypto market expands, so does the availability of exchanges and platforms offering trading services. Each platform varies in its offering, and not all of them can be deemed secure or even easy to navigate.
Given the many options available in today’s crypto market environment, determining which exchange, broker or platform is suitable for you can be difficult. To simplify this process, we reviewed and rated many crypto exchanges using criteria relevant to prospective customers. This guide explains our evaluation procedure.
Investing in cryptocurrencies, NFTs, Decentralized Finance (DeFi), and Initial Coin Offerings (ICOs) is highly risky and speculative, and the crypto markets can be extremely volatile. Consider to consult with a qualified professional before making any financial decisions, and only invest what you can afford to lose.
Choosing the Right Cryptocurrency Exchange for You
Choosing a suitable exchange is vital for those interested in trading or investing in crypto. Several factors will likely influence your decision. Using publicly available information about each trading place, we evaluated a large number of cryptocurrency exchanges and rated them based on various factors of importance to prospective customers.
We considered security features, fees, offerings, availability, customer service and other characteristics as part of our evaluation process. While we always strive to be as objective as possible in our reviews and ratings of each crypto exchange, determining which marketplace is right for you will depend on your individual needs and preferences.
Our Rating Process
To objectively evaluate each crypto exchange, we collected data on and compared those trading places across the following categories:
- Security
- Fees
- Offerings
- Availability
- Features
- Customer Service
Within each category, we considered numerous factors, such as the number of spot currencies and order types supported, trading/deposit/withdrawal fees, and more. We scored each factor and weighted the several categories in percentage breakdown.
We then assigned a weighting to those scores and established an overall 1-to-5-star rating for each exchange. One star being the lowest possible rating, and five stars being the highest.
Data Collection
Data collection was a key part of our overall evaluation process. We gathered data from company websites and media outlets to ensure we had the most accurate information possible to rate each crypto exchange objectively. Our research team collected a large amount of data points and weighted them to determine company ratings.
Security
For those participating in crypto trading and investing, security is an essential factor when choosing an exchange. With this in mind, we evaluated several eatures related to security, assigning a percentage weighting according to importance:
- Cold storage vs. Hot wallets
- Know-Your-Customer (KYC) standards
- Known security breaches
- FDIC insurance
Cold vs. Hot Wallets
We considered whether the crypto exchanges provided hot or cold wallets or a combination of both. Hot wallets or online wallets are connected to the internet and therefore more vulnerable, while cold wallets are offline wallets and therefore better in terms of security. In general, cold wallets are considered more safe and secure, but it is certainly easier to buy and trade cryptos using a hot wallet.
Exchanges that offered cold wallets or a combination of hot and cold wallets received a higher score than those only offering hot wallets or no crypto storage at all.
KYC Standards
Know-Your-Customer (KYC) standards were developed to help protect against fraud and money laundering on financial platforms. Cryptocurrency exchanges that follow these stringent KYC standards require that users verify their identities. This typically involves providing certain personal information and official government-issued documents.
Exchanges following KYC standards received a higher score than those lacking KYC compliance.
Known Security breaches
Certain exchanges experienced security breaches like hacks in the past and might be more vulnerable to further hack attacks than others. As a result, crypto assets held on exchanges are at risk. Therefore, 2-factor-authentication and other additional security features were taken into account.
FDIC Insurance
While cryptocurrency is not FDIC-insured, certain crypto exchanges offer FDIC insurance for US dollar amounts that are held on their platforms.
Fees
Fees can vary heavily and cut into your profits depending on which cryptocurrency exchange you are using. Given that fees are an important consideration for crypto traders and investors, we compared various fees across exchanges. We graded each exchange’s fees taking into account the following categories:
- Trading fees
- Deposit fees
- Withdrawal fees
Trading Fees
In our assessment of trading fees, we took into consideration spreads, maker fees, taker fees, and derivatives trading fees. We compared fees across each exchange and looked at an overall standard.
Deposit Fees
We also looked at crypto and fiat deposit fees for each individual exchange. We then assigned a total deposit fee score, depending on the fee structure of each crypto exchange.
Withdrawal Fees
Cryptocurrency exchanges may also charge withdrawal fees. We looked at each exchanges’ crypto and fiat withdrawal fees. We then combined the crypto and fiat withdrawal fee scores to develop an overall score.
Offerings
In our review and evaluation of each exchange, we further considered its digital asset offerings in terms of how many cryptocurrencies are supported by the exchange. We collected data on the below criteria and assigned a weighting based on importance:
- Crypto assets
- Derivatives
- Order types (trading pairs)
- Over-the-counter (OTC) trading
- Third-party trading bots
Crypto Assets
Some exchanges offer more cryptocurrencies than others. Those that offered a larger number of supported digital assets scored higher on our list, while those that offered a smaller number of assets scored lower.
Some exchanges may also not allow deposit or withdrawal features for certain crypto assets but offer them for trading on their platform. Taking this into account, we weighted a full availability of crypto asset features higher than those, where certain features were missing.
Derivatives
Derivatives are a contract between two parties – a buyer and seller – and the value of the contract is typically tied to an underlying asset. In the case of cryptocurrency, a derivatives contract’s value aligns with the value of an underlying crypto coin or token. There are a number of types of derivatives contracts that may be used for various purposes. As an example, traders may use a futures contract to speculate on the future price of a digital asset, and the contract could stipulate specific buy and sell commitments.
Evaluating the exchange platforms, we considered whether each crypto exchange offered derivatives trading, as well as the types available. Exchanges with several derivatives products received higher scores.
Order Types
Different cryptocurrency exchanges may offer various order types. Some may offer limit orders, allowing you to specify your order, set a maximum price for which you want to purchase an asset or a minimum price for which you agree to sell it. Others may not offer this order type and simply offer market orders, where you buy the desired crypto for the current market value on the marketplace.
We collected and evaluated data on the different order types each exchange offers and then used it to score each platform. Exchanges offering a larger number of order types received a higher score than those with a smaller number.
OTC Trading
When a crypto exchange supports OTC trading, it allows two parties to conduct transactions directly instead of through the exchange. OTC trading is often used in institutional grade trading or wholesale by those entities who want to buy or sell a larger amount of cryptocurrency. Some exchanges offerOTC trading for institutional traders or high-net-worth clients looking to make large transactions.
We collected data on whether a crypto exchange supports OTC trading. Exchanges that support this option received a higher score than those that did not offer it.
Third-Party Trading Bot
We also considered the support of third-party trading bots. These trading bots, typically allowing users to customize their trading experience, can integrate with an exchange’s API. They may offer added value to high-volume traders or those looking to automate their trades. Those crypto exchanges that support third-party trading bots received a higher score than those where this option was missing.
Availability
During our evaluation process, we also reviewed the availability of each crypto trading platform on our list. We considered the following factors in this category:
- Countries available
- Funding methods
Funding Methods
To assess the availability of poducts from a funding perspective, we also considered which funding methods each company offers and in which territory they were available. Companies offering a variety of funding methods, such as credit cards, debit cards, bank wire transfers, crypto transfers, e-wallets such as PayPal, Neteller, etc. and crypto funding. We then looked at an overall fiat funding availability, meaning which fiat currencies were supported by each exchange.
Features
When comparing crypto exchanges, you want to ensure that each marketplace offers the features you desire. For example, you might be interested in a crypto credit card that earns rewards or interest on your digital assets. Some exchanges may offer these earn features while others may not.
In our evaluation of these features, we considered the following criteria:
- Financial features
- Customer support
- Other rewards
Financial features
Certain exchanges offer products and features like credit cards that allow users to earn crypto rewards on their day-to-day spending, the ability to earn interest on crypto holdings, and the option to take out a loan against the crypto coins and tokens they hold. We took into account if exchanges offered these products, and to which extend in our evaluation.
Customer Support
Since many crypto exchanges are new, they may not offer many options for customer support or a very limited customer service accessibility. But as a customer, being able to have access to customer support is essential, for example, if you encounter problems on the platform or have questions about your account. We evaluated and weighted the number of options available, as well as the exchanges’ response times and quality in their responses, based on individual experiences.
Other Rewards
Exchanges may also offer rewards for specific actions, like referring a friend, maintaining a high balance of a specific asset, or fulfilling specific tasks on the platform. Rewards may be available in a few forms, including bonus earnings or discounted fees. We assigned a weighted score to each exchange based on the number of rewards it offered.
Mobile App
We also considered whether each cryptocurrency exchange we reviewed has a functioning mobile app, their mobile app accessibility, customer ratings, and functionality. We collected data on the following bullet points and assigned a percentage weighting based on importance:
- App availability
- Customer rating
- Update frequency
- Data privacy
- Compatibility
App Availability
In our evaluation, we considered if an exchange offered a mobile app available for Android and iOS. Mobile apps that were available on Android and iOS operating systems scored higher than those that were only available on one.
Customer Rating
After app availability, we also looked at how mobile users rated each app on Google Play and the Apple Store. We then assigned a score based on customer ratings that the apps received by users.
Update Frequency
We further considered how frequently each crypto exchange’s mobile app was updated. Mobile apps that were frequently updated received higher scores than those that didn’t receive regular updates.
Data Privacy
Data privacy is another important factor we took into account when we were evaluating each exchanges’ mobile app. We considered factors like data points linked to the user and if the app tracked user data.
Compatibility
In addition to app accessibility across the two operating systems, we also considered compatibility with various Apple devices, including iPhone, iPad, MAC, iPod Touch, and Apple Watch.
