Our Methodology: How We Review, Test, and Rate Crypto Exchanges
The cryptocurrency exchange can be described as an online market which allows you to purchase or sell cryptocurrency, such as bitcoins, Ethereum, and other altcoins. In most cases you can buy and sell cryptocurrency for fiat currency, however, some exchanges allow only cryptocurrency-to-crypto trading. Certain exchanges operate as centralized ones, while others are decentralized, some offer your preferred crypto-currency, while others don’t and some are more accessible for beginners and others target experts in the field.
In order to help you choose the best crypto exchanges – ones that are secure that are reasonable, as well as offer the cryptocurrency and services you require, we’ve reviewed the best firms available. We evaluated each one by focusing on the most significant aspects for those who wish to trade cryptocurrency efficiently and securely.
Find out the results of our research in our picks for the most reliable bitcoin exchanges.
ADVICE: Investing into cryptocurrencies and decentralized Finance (DeFi) as well as Other Initial Coin Offerings (ICOs) is extremely uncertain and speculative. markets are extremely unstable. Get advice from a professional prior to making any financial decision. This article is not a recommendation by CryptoExchangesAustralia or the writer to invest in cryptocurrencies nor can the accuracy or timeliness of the information be guaranteed.
We have gathered over 1,000 data points that are publicly accessible from cryptocurrency exchange websites as well as news websites. We also contacted company representatives to obtain more details when needed, and for information on geographic restrictions as well as advanced trading options and the speed of crypto transfers.
The cryptocurrency market is known not just for its volatility, but it is also infamous for its shakiness and vulnerability to hacking. Certain crypto exchanges do not take security of the user or company funds sufficiently seriously. If you don’t believe in that an exchange will keep your funds safe, don’t make use of it to purchase, sell or trade cryptocurrency.
We assessed every exchange on the basis of the following security characteristics and weighted security in general more heavily than other factors (30 percent of the score).
- FDIC Insurance (5%)
- Multi-Factor Authentication (MFA) (10%)
- Know-Your-Customer (KYC) Standards (2%)
- Hot Storage/Cold Storage (10%)
- Decentralized/Centralized (10%)
FDIC insurance can provide the possibility of up to $250,000 of insurance for customers of banks who qualify in the event of a bank going under. While most U.S. banks have FDIC insurance however, the crypto exchanges are not all insured. The only U.S.-based crypto exchanges are eligible for FDIC insurance and only if they are partnered with a bank that is eligible.
It’s crucial to understand that cryptocurrency-related assets aren’t covered under FDIC insurance. Only certain deposits in covered banks are acceptable. If a crypto exchange states it’s insured by FDIC, that means that it holds a part or its funds as deposit accounts at a bank that is insured by FDIC.
We assigned exchanges scores of one when they’re insured by FDIC, or one for those that aren’t. FDIC insurance made up five percent of the total score.
Multi-Factor Authentication (MFA)
Multi-factor authentication (MFA) is an authentication method in which you must verify an act by multiple verification elements. For logging into the crypto exchange for instance you might have to enter an account number and password using an authenticator application like Google Authenticator. The exchanges you use may permit you to establish MFA to perform other crucial actions such as buying trading, selling and withdrawal.
MFA is a very regular practice for the major crypto exchanges. We scored exchanges with zero points for those who don’t utilize MFA or MFA, and one score when they do utilize MFA. This was a factor that was responsible for 10 percent of the total score.
Know-Your-Customer (KYC) Standards
If you sign up with cryptocurrency exchanges it is common to provide some personal details. To gain access to the simplest features to the exchange, you might only have to enter your email address. For full access to purchase or sell, deposit withdraw, trade and deposit cryptocurrency, you’ll be required to supply your name and address together with a valid proof of identity and a valid government identification card. Certain exchanges require verification through facial recognition, too.
These practices are known by the name Know-Your-Customer (KYC) guidelines, and they’re typically required to satisfy the requirements of compliance for governments all over the world.
We assigned cryptocurrency exchanges an overall score of 0 for those who do not utilize KYC or KYC, and one point when they do utilize KYC. This was a criterion that made up 2percent of the total score.
Hot Storage/Cold Storage
If an crypto account has and is not accessible via the Internet, it’s known in the context of “cold storage.” If it is connected to the internet, it’s described in the context of “hot storage.”
Cold storage cryptography cannot be compromised digitally, which makes it more secure than cryptocurrency stored in hot storage. The majority of crypto exchanges maintain the majority of user and corporate money in cold storage with a small portion stored in hot storage for day-to-day activities.
Exchanges that make use of cold storage one score while exchanges that don’t use cold storage, a score of zero. Storage was responsible for 10 percent of the overall score.
The cryptocurrency exchanges can be either decentralized or centralized. In a central cryptocurrency exchange, all transactions between users (buying or selling, or trading cryptocurrency) are handled by an approved third-party. Centralized exchanges permit you to purchase crypto with fiat currency. Assets could be held in escrow for the purpose of fulfilling requests. There is a centralized exchange called the New York Stock Exchange is centralized, as are other prominent crypto exchanges, such as Coinbase as well as Kraken.
Through an exchange that is decentralized (DEX) transactions happen peer-to-peer. Instead of relying on an intermediary that is centralized transactions are processed through intelligent contracts and atomic swaps between users. DEXs generally give users greater control over their money and typically have lower cost of transactions, however they are only able to swap crypto against crypto. You aren’t able to purchase crypto using fiat. While DEXs aren’t totally safe from attacks, they’re generally regarded as safer than central exchanges. Crypto.com, Bitrue, and Bisq are all decentralized exchanges.
We awarded centralized exchanges the score of zero, and decentralized exchanges one. This was the reason for 10 percent of the total score.
Exchanges for cryptocurrency use a variety of fee structures. They typically use a model of maker-taker (one charge is charged to “market makers,” who provide liquidity, the other fee for “takers” who remove liquidity) however, not all. Certain have just a few functions, while others offer additional services and higher charges.
To evaluate crypto exchanges that have various fee structures in a fair way We examined charges for the most significant tasks.
- Trading Fees (10%)
- Deposit Fees (5%)
- Withdrawal Fees (5%)
Companies that are less expensive in average had higher scores. In total, fees comprised 26percent of overall score.
A lot of exchanges have fees that are tied. The greater your trade volume, the lower the charges. Certain exchanges offer discounts for holding their own coins.
We considered spread fees, maker-taker charges and derivative trading charges to determine exchanges that fall in this category by using a scale of 1 to zero. Fees for trading accounted for about 10% of overall score.
The majority of exchanges do not charge fees for deposits in crypto, however some charge fees for deposits made with fiat currency.
We calculated the average of deposits in crypto and fiat to determine the score of exchanges in this category with a range of 1 to zero. Deposit fees made up five percent of the total score.
Exchanges also often charge distinct fees that apply to fiat withdrawals and withdrawals made using crypto.
We estimated average fees for withdrawing crypto and fiat to determine the score of exchanges that fall in this category, by using a range of 1 to zero. Fees for withdrawals comprised 5percent of the overall score.
Crypto traders require access to certain types of coins as well as order types and trading options in order to implement their strategies.
In this section, we examined the availability of crypto and other services that crypto exchanges might offer. In total, these offerings contributed to about 9% of the overall score
- Third-Party Trading Bot (1%)
- Over-the-Counter (OTC) Trading (2%)
- Order Types (4%)
- Derivatives (4%)
- Crypto Assets (5%)
Third-Party Trading Bot
The trading bot is a software program which will execute preprogrammed trades. They can be modified to different levels, based on the kind of bot as well as the exchange that it is used on. It is possible to set up an exchange bot that can spot the exchange of two cryptocurrency in a back and forth fashion as an example or profit from arbitrage. Once you have set it up, trading bots can be operational continuously and will aid in the implementation of sophisticated trading strategies.
We assigned each crypto exchange one point for allowing third-party trading robots, and the score is zero for those that don’t. Trading bots’ access accounted for 1percent of the overall score.
Over-the-Counter (OTC) Trading
OTC (OTC) trading is trading that is conducted with two other parties and with no intermediary central to the transaction. OTC trading in crypto OTC trading is the process of trading cryptocurrency between two users without the use of an trading platform to act as an intermediary. This is advantageous for large-volume traders since it may result in lower rates and lower costs.
Certain exchanges offer OTC trading options. In some instances they’re only accessible if your trading volume exceeds the threshold. We assigned every exchange an overall score of 1 for those that allow OTC trading or zero if it does not. This was a criterion that was a significant only 2% of the total score.
Basic crypto exchanges can only provide a few basic order types, including limit, market, and stop limit. However, experienced traders typically need more sophisticated types of orders that can be utilized to manage risks and protect profits. To help, certain exchanges provide order types such as trails stop, great until cancelled (GTC) as well as the highest bid offers (BBO).
We scored exchanges on an interval of zero to one and higher scores being given to exchanges with more types. The amount of types of orders was a significant factor in 4 percent of our total score.
We looked into whether our cryptocurrency exchanges provide derivatives like swaps, options, futures and perpetuals. Derivatives are advantageous due to their relation to an asset. When it comes to cryptocurrency derivatives, the asset is a specific token or coin. Crypto futures, as an example can be described as agreements to buy or sell a currency at a specific price on an agreed upon date. They allow investors to reduce the risk, but they also carry the risk that are their own.
We scored each cryptocurrency exchange using a scale ranging from 1 to zero. Exchanges that had more derivatives options were scored higher. This was the reason for 4 percent of the overall score.
The cryptocurrency exchanges can only work with certain currencies, and the number of cryptocurrencies supported alters over time. The more cryptocurrency you can are able to access for purchasing or selling the more you can benefit.
We scored cryptocurrency exchanges on this aspect with a range of zero to 1. Exchanges that have more supported cryptocurrency were scored higher. This was a factor that was a significant five percent of the total score.
Accessibility is crucial for cryptocurrency exchanges as trading markets benefit from being able to attract more users. A higher number of users, as well as a greater trading volume, may result in greater liquidity and lower volatility. The more the volume of trading and the greater the efficiency of trading exchanges will become in making trades.
Exchanges that are active in more countries and have different funding methods are likely to attract greater number of users and a higher trading volumes. We evaluated exchanges on the following categories:
- Funding: Wire Transfer (2%)
- Funding: ACH Bank Transfer (3%)
- Funding: Online Service (3%)
- Countries Available (5%)
The availability of countries and the presence of funding options accounted for 9percent of the overall score.
Funding: Wire Transfer
Wire transfers are quicker than ACH transactions, however they generally cost more. As with ACH financing, this feature is not uncommon. Most exchanges we looked at permit you to fund your account with fiat by way of wire transfers.
Exchanges that accept funding via wire transfer earned an overall score of one, and exchanges that don’t have this feature receive scores of zero. Wire transfer funds made up 2% of the total score.
Funding: ACH Bank Transfer
Payments made via the Automated Clearing House (ACH) network are a simple and cost-effective method to fund your exchange account using fiat currency, though the time required to process (typically just a few days) might be too long for certain traders. A majority of exchanges we reviewed have this feature.
Exchanges that accept ACH bank transfers one point and exchanges that allow not allow ACH bank transfers, a score below zero. This was a factor that was responsible for 3 percent of the score.
Funding: Online Service
The methods for funding vary a bit based on the type of exchange you’re using as well as the degree of KYC verification that you’ve completed. The simple act of funding your account through any online transaction (credit/debit credit card PayPal, Google Pay, Apple Pay, etc.) is typically the most convenient and fastest method, however, there aren’t all exchanges that offer this feature.
We scored exchanges with the score one if they permit the use of online services to fund their accounts, or one for those that do not. The score was 3percent of the overall score.
It is common for cryptocurrency exchanges to have a limited access to regional markets. Certain exchanges have distinct websites for various regions, and offer different charges, cryptocurrencies and services. When you are researching the possibility of a new exchange, make certain to choose the right website for your country.
We scored exchanges with an interval of zero to one based upon the number of countries they work in. The greater number of countries, the better the score. This criteria was a significant 5percent of the overall score.
Exchanges for cryptocurrency are not simply a place to buy and sell cryptocurrency. It is reasonable to expect support from the customer service department, of course however, exchanges can also offer additional features that differentiate them from other exchanges.
We looked into the following aspects to determine the amount of value an exchange can offer in addition to the standard trading services:
- Loan Options (2%)
- Credit Card Availability (2%)
- Earn Interest on Crypto (2%)
- Rewards Program (3%)
- Customer Support (5%)
Overall, this score was 11 percent of the overall score.
Certain crypto exchanges permit users to borrow cryptocurrency similar to banks that allow customers to borrow money in fiat. It is common to require collateral with the form of cryptocurrency. In certain cases this feature may be included in margin or leveraged trading options that may come with additional KYC requirements. The exchange you choose and the loan type, your cryptocurrency loan could have a specific term length and interest rate similar to a personal loan.
We assigned exchanges a score of 1 in the event that they offer loans as well as one in the absence of loan options. The loan options comprised only 2% of our total score.
Credit Card Availability
Some exchanges offer the option of owning credit cards which allow you to purchase using funds from your account for exchange. They also earn rewards they do, but usually with the help of cryptocurrency of some sort.
We awarded exchanges a score one in the event that they have credit card access and zero points when they don’t. Credit card availability was a factor in only 2% of the total score.
Earn Interest on Crypto
Certain exchanges allow you to make money on cryptocurrency simply by keeping it in an exchange wallet. Only certain coins qualify to be rewarded with interest contingent on your exchange. You might need to choose to join prior to earning interest.
We scored exchanges with an A-grade when they permit users to make interest in crypto and one point in the event that they don’t. This was a factor that accounted for 2percent of the total score.
The cryptocurrency exchange may reward you when you complete one among the following actions:
- Introduce to new users
- Have a cryptocurrency
- You can invest in a cryptocurrency
Referral bonuses are straightforward to use: Invite a new person to the platform and you’ll earn a reward when they perform the necessary actions. Some exchanges offer reward points, often in the form of cryptocurrency in exchange for holding or staking an amount of a particular currency. Sometimes, this reward is as a reduction. In most cases, you must keep the coin of the exchange (ex. BNB for Binance, or FTT for FTX, etc.) to receive a discount, however, there are other options to the staking.
The exchanges were scored with the range of zero to one, based on the amount of reward programs they offer and the greater the number of reward programs, the higher the score. The reward programs made up three percent of the total score.
Every exchange we examined featured at the very the very least a help section, and the majority of them offered a way to contact customer service.
We also found customer support options, such as:
- Forums for Support
- Email (direct or through ticketing system)
- Chatbots or live chat
- Chat groups (Telegram etc.)
We scored exchanges with an interval of zero to one based upon the number of customer service options; the more options you have, the better the score. This was the reason for 5percent of the overall score.
Choosing the Best Cryptocurrency Exchange for You
There are a variety of cryptocurrency exchanges that you can choose from, and none are identical. Prices as well as features and the available cryptocurrency options vary from one exchange to the next and therefore, many traders open accounts with multiple exchanges. Check out some of the top bitcoin exchanges to determine which provide the features you require to help you develop your own trading plan.
Our reviews seek to provide readers an in-depth look at what it’s like to purchase trade, sell, or buy cryptocurrency with a particular company. We strive to be impartial in our method of selecting and evaluating the most reputable cryptocurrency exchanges. We discovered that fees, security offering, availability along with features are the main broad-based lenses that we used we viewed exchanges. We used information that was publicly available as well as data from representatives of the companies to assign fair scores to every exchange.