The current global crisis that is happening across the globe has affected the economic power of the world due to the Covid pandemic, resulting in a tragic health crisis that has affected the business climate and brought it to its knees.
Since the last global financial crisis in 2008, financial debt has increased successively every year. The repayment situation becomes almost unrealistic due to the lack of fiat currency flows in the system.
Suddenly, we witnessed the advent of cryptocurrency and blockchain technology from scratch, which could be used legally to overcome the shortcomings of the current financial system.
After all, cryptocurrency worked exactly as it was designed. It offered an alternative to regular fiat currency that was also decentralized, digitally accessible, and available to a large segment of the population with decent internet and a smartphone.
During this lockdown period when people had plenty of time to kill and also wanted some non-traditional ways to make money, the craze of cryptocurrencies like Bitcoin and Ethereum came into vogue due to which it was an excellent opportunity to invest.
If that’s the case, why keep your investment methods outdated!!
If you want to start investing in cryptocurrency, consider the following factors to choose your exchange.
1. Availability in your country
It sounds absurd, but not all crypto exchanges are available for legal jurisdiction around the world. This is mainly due to financial regulations that govern the crypto market in the first place.
Before getting involved in this market, make sure you contact your trading platform and bank to find out the acceptance of your fiat currency and deposit exchanges supported in your country.
And remember that the availability of exchanges in all countries is constantly changing. As recently reported by The Money Mongers, Binance has suspended its operations in Malaysia and suspended margin trading and derivatives offerings in some European countries.
2. Available Cryptocurrencies
Most exchanges allow investors to buy/sell/trade globally recognized cryptos such as Bitcoin, Ethereum, USD Tether, and Litecoin.
However, if you want to invest in some lesser-known cryptocurrencies, you need to check if the exchange allows trading that crypto against your fiat currency.
They must also have sufficient liquidity to be able to trade these cryptos according to international standards at all times, and the platform must be trusted in terms of the authenticity of its transparency and trading mechanisms.
3. Trading Fees
This is an essential factor to consider as every time you buy/sell/trade a percentage of your investment or transaction is deducted from the platform/bank/currency exchange. Trading fees should be nominal and competitive to preserve your wealth even when trading in large numbers.
The somewhat high fees can add up over time to eat up your sizable amount of money, which you might not realize. Intraday traders are hit the hardest as the fees are directly proportional to the frequency of transactions.
Additionally, you should also keep an eye on spread fees as these can be as high as 5-6% and are not directly disclosed by exchanges and can eat up your shares by adding to trading fees.
4. Reputation
The cryptocurrency market is new compared to the traditional financial investment options that have been trusted for decades, so it has yet to gain people’s trust in terms of security and guaranteed returns.
Various new exchanges fell victim to fraud, theft, privacy breaches and hacks in the early stages as blockchain technology was made quite transparent to avoid illegal transactions through the dark web.
Millions of funds have been compromised and lost in multiple hacking activities in the past, which certainly makes it difficult to restore trust in the cryptocurrency domain.
You need to do some background research on the exchange you want to join and determine if it has been linked to security breaches or reprehensible fraud.
In addition, you should not keep your purchased digital assets long-term and let them flow between the company and your hardware wallet.
5. Security
The security of your data and funds is the main priority for the secure and efficient functioning of the exchange. The majority of exchange platforms have centralized money storage, which means that the reliability of the platform depends on the security measures they put in place.
You should be able to read all of their safety and precautionary statements on their website and it should at least offer features like:
- Cold storage wallets for almost every customer.
- Easy transfer between exchange and hardware wallet.
- SSL site security certificate.
- Multi-layer verification for withdrawals.
- Two-factor authentication.
You also need to read users’ reviews and ratings socially and search public forums to learn about the shortcomings of the exchange.
Conclusion
With the current scenario still being dominated by various financial investment options and the Covid crisis, cryptocurrency is a great retreat in the global markets to buy your first crypto which can be Bitcoin, Ethereum etc.
As a beginner, buying safe and legit cryptos is a tedious task; That is why it is necessary to keep these five main factors in mind when proceeding with it.
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Editor’s Note: Our publications do not provide investment advice. R&AN’s goal in publishing articles like this is simply to provide information for people who wish to invest at their own risk in the future.
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