Studies estimate that one in ten people will invest their stimulus checks in crypto-currencies. This means that there will be a large number of people rushing into the crypto space without knowing what to expect - fortunately, this is exactly what cryptocurrencies were designed for. These tokens were built with the goal of allowing access to everyone, whether they are new investors or institutional investors. As an individual investor, there are a few things you will need to familiarize yourself with before investing. Especially if you want your investment to be safe and secure.
Understanding the basics of the market is an extremely important part of investing in crypto. The other thing that many investors may not pay attention to at first is how to choose the best crypto trading platform that fits both their needs and ideologies. This is an often overlooked part of investing wisely, and something that is surprisingly easy to fix.
Why choose a crypto currency trading platform?
While there are still many ways to get bitcoins, crypto currency trading platforms and crypto currency exchanges remain by far the most popular. This is largely due to the fact that they are much more reliable than any other options. By choosing a crypto-currency exchange platform, you gain access to a high level of security, both when purchasing your coins and when storing them. Not only that, but crypto exchange platforms represent a massive pool of demand. This means that everyone on a crypto exchange platform is eager, happy, and willing to engage in crypto, which you may not find elsewhere.
These exchanges also have access to a large supply of bitcoins - as many of those using the exchanges are also looking to sell them. That's why they're called "exchanges" and "trading platforms," because that's exactly what they do. They facilitate the exchange, or trading, of crypto-currencies. Since they are spaces where large communities of crypto-currency enthusiasts can coexist, there are other benefits to their use as well. For example, in some cases and at certain times, some transactions can be reversed in case of an error. This is something you won't find on peer-to-peer networks. The tokens to be purchased are also guaranteed. You won't soon find an exchange that doesn't produce the tokens you paid for.
What to look for
When you're about to choose a crypto-currency exchange platform, there are some pretty important things that the one you choose will need to have. There are also some things that you should definitely consider, but that aren't really necessary. Choosing a crypto exchange is a pretty highly personal goal. You'll need to think about how you want to invest, what you want to invest in, and take a close look at your existing ideals towards crypto-currencies - or why you want to invest in crypto-currencies.
For most investors, answering these three questions will automatically select viable exchanges to use.
How to invest
Do you plan to trade in high volumes, or on a drip basis? Do you intend to HODL every bitcoin you buy, or is day-trading or arbitrage more your style? Do you plan to invest in options? How you plan to invest will give you a much better framework for the investment options a given platform should offer you.
What to invest in?
Are you looking to invest in the big names - like Bitcoin and Ethereum - or do you really want to diversify and explore the ever-growing sea of altcoins? Keep in mind that not all exchanges support all cryptocurrencies, so if you want to buy a specific token, you'll need to make sure your exchange of choice offers it.
Why are you investing?
Looking to create capital? Do you want a solid store of value or to protect your existing assets against currency deflation? Do you need to transfer money to friends and family across borders? Do you simply like the idea that crypto-currencies are a disruptive form of money? The reason you invest in cryptos will tell you where to invest. This is because some centralized exchanges won't meet these requirements, while in other cases, decentralized exchanges won't be able to offer the protections you need.
Once you've determined your initial motivation, finding a good exchange platform becomes much easier. All you need to do is focus on the fundamental attributes of the options available to you:
- Does the platform offer good volume and liquidity?
- Does the platform align with geo-specific regulations and rules?
- What are their transaction fees?
- Are they secure?
These four fundamental characteristics are the final four questions you'll need to ask to find the ideal trading platform. If the platform you're considering meets these seven criteria, you're good to go! It's time to start trading.