Disclaimer: The text below is an advertising article that is not part of cryptonews.com editorial content.
Most of the time, choosing a crypto exchange makes the trading experience a breeze or a nightmare for newbies. But with so many options (since there are hundreds of cryptocurrency exchanges), there is a small chance that you will come across a scam.
However, how do you separate the wheat from the chaff? To make sure you don’t deposit your funds on an exchange that will only get away with the money, and to help you separate the wheat from the chaff, we’ve detailed the key factors you need to pay attention to.
#1 Be careful with trading volume and liquidity
In the world of digital assets, prices tend to change in a fraction of a second. You as a trader may want to make moves during these price fluctuations and buy coins that have the potential to go to the moon or sell the ones that are likely to fail without waiting too long.
In order to make the most of every moment in crypto, the exchange you have deposited your money on must fulfill your buy and sell orders immediately, at a price as close to the one you set earlier, without making you pay a huge markup. . .
That is exactly why cryptocurrency exchanges have to be liquid, and the ones that are usually have consistently high daily trading volume. It is safe to say that cryptocurrency exchanges are more or less liquid depending on the number of users they have.
It is also evident that scam crypto exchanges do not have a large user base, or users trade their assets infrequently and the number of orders is quite low. When no one is willing to buy or sell cryptocurrencies, you have no choice but to sell at a dramatically lower price or buy at an outrageously high price.
#2 Check deposit and withdrawal limits
It doesn’t matter if you are a cryptocurrency trader or an investor, at a certain point, you will definitely want to withdraw some of the money. Most reputable crypto exchanges have set reasonable minimum and maximum withdrawal and deposit requirements. For example, you can start trading on change now with as little as $2. And then some crypto exchanges have minimum deposits of $200, which seems, you’ll agree, a bit fishy.
On the other hand, most exchanges have strict limits when it comes to withdrawals, which is totally fine. However, withdrawals must be simple and the minimum withdrawal amount must also be reasonable. Do not trust an exchange that requires you to raise a significant amount of capital in order to make withdrawals.
#3 Stay on top of fees
Cryptocurrency exchanges would not exist were it not for the fees they charge every time users make transactions, deposit or withdraw. Commissions vary from one exchange to another and range from 0 to 4.5%, depending on the type of transaction.
Although ChangeNOW does not disclose exact fees, we found that fees vary by pair and quantity; about X% on a heavy network fee pair like BTC-ETH, and about X% on others like TRX-XRP. If a crypto exchange is charging abnormal fees, you can be sure that they just want to scam you, and you should definitely avoid such deals.
#4 Check their customer support
Whenever you are using a crypto exchange for the first time, you will probably need some time to get to know how it works. Sometimes you may also need additional help or some of your questions answered. And, knowing how dynamic the crypto markets are, you will need the answers in a matter of minutes! With scam crypto exchanges, contacting someone from their customer support is impossible or their agents take a long time to respond.
#5 Do the background check
There is nothing wrong with reading online reviews before trusting a certain online service. Google is your friend, so be sure to see what users have to say about a couple of trades you have in mind. Also, try to find more information about the team behind the platform. Are they drugged? Can you find their profiles on LinkedIn and other social networks? Do these people look real? Fraudulent exchanges provide little or no information about their equipment.
Also, make sure they have a strong digital and media presence. Have you ever seen them attend or speak at events and conferences? Are you building alliances? All of these factors are important when trying to figure out which exchanges are reputable and trustworthy and which are not.
#6 See if they are insured or not
Gemini, Binance, and FTX are among some exchanges that secured their users’ funds. This really instills confidence in your services, as entrusting money to a company you know very little about does not seem like a wise decision.
Cryptocurrency exchanges that offer insurance protect their users from hacks, theft, and theft, just to name a few cases. Keep in mind that not all exchanges have the same insurance, and you should check what each one covers.
Although having a healthy insurance policy is a good idea, not all exchanges offer this level of protection. The ones that don’t simply don’t care much about their users and could be fraudulent.
#7 Learn about your security practices
Trusting someone with your money is a great thing. Therefore, you should monitor the security practices that different exchanges have (at least if you don’t want to end up empty-handed). As a general rule, cryptocurrency exchanges that have been around for years and have a large user base are the safest, but of course there are some exceptions.
BitMart is a perfect example of a well-known exchange that was still hacked. In this cyber attack, somewhere between They stole USD 150,000 and USD 200,000. No platform is 100% secure, but it is common sense that you should not invest significant amounts of money on exchanges that have a history of cyberattacks. While some platforms suffer attacks, others help them get your funds back.
Fraudulent crypto exchanges don’t even use basic protections like 2FA, while those who care about their users’ assets often use multiple layers of protection, including facial identification or biometric login, and require user-issued IDs to be provided. the government by opening a new account in order to keep impostors away. Some of them even require authentication when users want to change funding levels or buy or sell their cryptocurrencies.
Also, it is safe to say that non-custodial exchange services seem to be much more reliable than centralized custodial exchanges. Why that? Non-custodial crypto exchanges (one of which is ChangeNOW) never force you to sign up, respect your privacy, and give you maximum control over your funds. As long as you keep your private keys secure, you don’t have to worry about hackers, government regulations, or penalties.
#8 Think about the asset options they offer
It is almost impossible to have all the digital assets you are interested in listed on a single exchange. After all, with more than 10,000 cryptocurrencies and 100,000 trading pairs, everything is understandable.
Exchanges do their best to list coins with high market caps, but also some of the less traded ones with great potential. This practice goes a long way in getting the attention of active crypto traders and investors. And then some platforms only list pretty obscure privacy coins, which could also be a major red flag.
It doesn’t necessarily mean that every crypto exchange that has higher fees or lists suspicious coins is a scam, however, if you come across the one that ticks all the (negative) boxes we’ve listed, then you’d better run away. The result is that you can never know if your funds are 100% safe as the entire crypto space is still unregulated, but you can at least stay away from platforms that scream “Give us your money and get lost”.