With the mainstream adoption of cryptocurrencies getting bigger and bigger every single day, the risk of investing and trading has also mounted. The news of scams where people tend to lose money has made rounds very frequently.
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While the scams are pretty hard to stop, the trading can be made safe and easy with the crypto exchanges. If you are willing to trade cryptocurrencies like Bitcoin, Ethereum, or DeFi tokens, and looking out for best-suited exchanges, then you have landed in the right place.
what are Crypto Exchanges ?
Before digging into the blog, let’s first have a look at the basics. Cryptocurrencies are the digital form of money which are cryptographically secured on the blockchain. They were developed as an alternative to the fiat currency.
Moving forward, the cryptocurrency exchange is a platform where you can buy/sell or trade cryptocurrency. Some exchanges also support fiat currencies while most of the exchanges trade only with the cryptocurrencies.
Centralized and Decentralized Exchanges
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Crypto exchanges can be bifurcated into centralized and decentralized exchanges. Basically, exchanges are the platforms to buy or sell cryptocurrencies. The main difference between them is that a middleman or third-party is involved in centralized but not decentralized.
In centralized exchanges, third-party monitors all the transactions and also takes the responsibility of the cryptos stored. They also keep the records of all the customers and also charge some fees for the service they offer. The deals here are not tracked on the blockchain.
On the contrary, decentralized exchanges provide only the interface to carry out trade but do not interfere. The transactions are recorded on the blockchain but no third party monitors them. Moreover, the transactions are anonymous as the exchange does not record KYC.
Now, when you have got an idea of what are crypto exchanges, let’s list out the top 5 centralized and decentralized exchanges.
Top Centralized Exchange
Now, when you know what Centralized Exchange is, then below are the top 5 centralized exchanges of 2020.
Binance exchange is considered the best destination to trade altcoins. It offers more than 600 trading pairs including some of the fiat/crypto pairs.
Binance dominates the global crypto space but makes up a significant share in the daily trading volume. The exchange supports credit/ debit card purchase and also more than 20 fiat currencies including EURO.
The PROS of this exchange is low fees. It charges 0.1% both for the maker and taker. Moreover, if you use BNB(Binance’s native coin) to pay the fees, you can save 25% more.
Read More About Binance Exchange
Coinbase and Coinbase Pro
It is one of the most widely known and most popular cryptocurrency exchanges in the United States. Founded in 2012, it is a fully regulated and licensed cryptocurrency exchange.
While controversies are most common with most of the exchanges, Coinbase has distanced itself from the beginning. A newbie or a beginner can explore with Coinbase and the experienced users can enjoy advanced features on Coinbase Pro.
The advantages of this exchange are, it provides a pretty good variety of cryptocurrency to trade with very high liquidity and an extremely simple user interface.
On the other hand, the fees are pretty high which ranges from $0.99 to $2.99 depending on the transaction. And secondly, the user does not have control over the wallet keys.
Read More About Coinbase Exchange and CoinBase Pro Exchange.
Kraken is considered as the safest platform to carry out trade as they have never experienced a security breach or any hack to date. Founded in 2011 by Jesse Powell, it is one of the biggest cryptocurrency exchanges as per the trading volume in the United States.
The exchange supports 38 different cryptocurrencies with plenty of available trading pairs. It also supports seven fiat currencies, and also records the largest EURO trading volume than any other exchange.
Recently, Kraken exchange reached a milestone by procuring a license to function as a bank in the US.
Among the advantages, Kraken charges fees depending on whether you are buying or selling the cryptocurrencies. Trading fees range as low as 0% to 0.26%.
Secondly, it is said that the founder learned a lot from the MT. Gox exchange hack and given the topmost priority for the security of the user funds. Therefore it stores most of the currency offline.
Read more About the Kraken Exchange:
Founded by Winklevoss Twins in 2015, Gemini is considered as one of the most secured centralized exchange. It also became the most reputed exchange in the digital space and also the world’s first exchange licensed Ether exchange in 2016.
The exchange provides various features to help protect users against hackers and safeguard their funds. Considering the fees, the Gemini exchange has a 6-layered fee structure which is dependent on the 30-day trade volume. The fees are recalculated every midnight.
On the contrary, the only limitation with this exchange is the limited reach of currency and funding methods. Also, it requires an enormous amount of user data to complete the verification process. Moreover, it often goes offline at the times when the trading volume is extremely high.
Read More on Gemini Exchange
Huobi is one of the largest crypto exchanges which focuses on the Asian audience. Huobi has its own native token, HT, and its own USD backed Stablecoin HUSD. It provides a very simple user interface and strong customer service.
One of the major plus points is that the Huboi exchange was never hacked although it was the target of most of the attackers. Huobi prioritizes the security of user funds and hence it stores them in cold storage to restrict access.
Read More on Huobi Exchange
Top Decentralized Exchanges
Now let’s have a look at the top 5 decentralized exchanges.
Launched in February 2019, Binance DEX is a decentralized exchange platform that works on Binance Chain which is a blockchain built by Binance. And therefore the fees are comparatively lower than that of the DEX on Ethereum blockchain as the fees are charged in the form of BNB, not ETH.
The fees are as low as 0.1% for non-BNB trades and 0.04% for BNB trades. Secondly, Binance DEX reduces the security risks for both exchange and its users by not holding the user funds.
However, Binance DEX has very low liquidity with many markets having very little 24-hour volume. It does not support margin trading as in its centralized exchange.
Binance DEX is also not accessible in more than 10 countries like the USA, Albania, Cuba, Iran, Iraq, Sudan, Zimbabwe, etc, and also provides no streamlined customer support.
Uniswap is an automated token exchange based on the Ethereum blockchain, launched in 2018 in the US. The swaps are not limited to BTC or ETH or XRP, but many other altcoins can also be swapped.
The platform allows anyone to list their tokens by creating their own liquidity pool. At present, there are nearly 400 active trading pairs and more than 6000 liquidity pools. During the DeFi hype, Uniswap became the most traded exchange surpassing the 24-hour volume of Coinbase exchange.
As Uniswap allows anyone to list their tokens, complaints of ‘fake tokens’ being listed also emerged. As there is no verification process, it made it very easy for the scammers to create token and trick users to purchase their worthless tokens.
However, Uniswap took steps to try to resolve this issue by introducing lists of legitimate tokens.
Kyber Network is an on-chain liquidity pool that enables instant, seamless and secure transactions. It uses a reserve system rather than an order book to provide high liquidity at all times. As a result, it is very cost-effective as it allows the transfer of cryptocurrency across other exchanges.
The Kyber protocol is a stack of smart contracts capable of operating on all blockchains. It aims to offer instant settlement without risk and immediate inter-token transactions with the ease of integration.
One of the main advantages of the Kyber Protocol, despite being a decentralized platform it maintains no user data or funds which reduces the risk to some extent. Moreover, it lists many tokens with relatively low costs.
On the contrary, as it runs on the Ethereum protocol, it supports only ERC-20 tokens and also does not support any fiat currencies.
The balancer is an automated market maker(AMM) that was launched in early 2020. It is a platform that was audited by Trail of Bits, ConsenSys, and OpenZeppelin.
It provides a flexible platform for programmable liquidity where anyone can create a pool with several assets. One of the main features Balancer carries is, it balances itself in managing funds or rebuilding strategies which is usually done by the portfolio managers.
A balancer is a multi-asset pool with two main benefits. First, it allows assets to be in many pools at once, and hence the swapping orders from DEX can be optimized. Secondly, the weight-distribution of the liquidity pool can also be improved.
Curve Finance is a decentralized exchange built on Ethereum. It is designed to provide efficient trading between cryptos of the same value and provide high annual interest on the cryptos deposited in curve finance.
Currently, 3 out of 7 pools on curve finance accommodate stablecoins and the remaining 4 involve versions of wrapped bitcoin-like wBTC, sBTC, renBTC, etc. Therefore these pools provide a high interest of nearly 300% yearly to the liquidity providers.
Curve finance has recently launched its governance token CRV which did not have an ICO but a surprise release.
By now, you must have had an idea of what are cryptocurrencies and exchanges. Moreover, the popular exchanges list might also be helpful in deciding the type of exchanges you want to deal with. Considering the risk factor, the decentralized exchanges are more risky compared to centralized, but they also cannot be assured as fully secured.
Always do your own research before investing in any cryptocurrency and have a detailed study & analysis before starting any trade on any platform.