Cryptocurrency trading has gained immense popularity in recent years. However, it’s crucial to note that only a minority of Americans have ventured into this realm. Among the most sought-after cryptocurrencies are Bitcoin, Ethereum, and Cardano, each of which has witnessed substantial price fluctuations. What attracts traders to these volatile assets? The potential to generate substantial profits.
In this ever-evolving landscape, traders now have an array of options to access cryptocurrencies. New exchanges and trading platforms have emerged, catering to the growing interest in crypto. You might already have a trading app on your smartphone, such as PayPal or Venmo, which allows you to buy and sell a limited selection of cryptocurrencies. Nevertheless, other platforms offer a more extensive range of digital currencies or additional advantages like lower costs.
Here, we present the top apps and exchanges for cryptocurrency trading, along with essential insights to help you make informed decisions.
What Is a Crypto Exchange?
A cryptocurrency exchange serves as a marketplace where you can purchase and sell cryptocurrencies like Bitcoin, Ethereum, or Dogecoin. These exchanges function similarly to traditional trading platforms, providing various order types to facilitate buying, selling, and speculating on crypto assets.
Some crypto exchanges offer advanced features, such as margin accounts and futures trading. However, these features are less commonly available to users in the United States. Additionally, some exchanges provide services like crypto staking or crypto loans, enabling you to earn interest on your crypto holdings. The best exchanges also offer educational resources to keep you informed about the latest developments in the crypto space.
How Do Cryptocurrency Exchanges Work?
Crypto exchanges operate much like conventional brokerage platforms. They provide a portal where users can create various order types to engage in cryptocurrency trading with other participants.
Cryptocurrency exchanges can be categorized as centralized or decentralized:
Centralized Crypto Exchanges
Centralized exchanges (CEX) are managed by a single corporate entity, typically a brokerage company responsible for ensuring the security of transactions. However, this centralized nature contradicts the decentralized philosophy of cryptocurrencies. Some centralized exchanges also require users to adhere to Know Your Customer (KYC) regulations, necessitating identity verification to combat money laundering and fraud.
Centralized exchanges face a higher risk of security breaches since they temporarily hold the crypto assets being traded. To mitigate this risk, many centralized exchanges have enhanced their security measures, including storing customer assets offline and obtaining insurance policies to cover losses due to hacking.
If you prefer the convenience of a centralized exchange, it’s advisable to transfer your crypto to a separate, off-exchange hot or cold wallet to reduce your risk.
Decentralized Crypto Exchanges
Decentralized exchanges (DEX) distribute the responsibility for facilitating and verifying crypto trades among network participants, similar to how cryptocurrency blockchains operate. This approach enhances transparency and accountability while ensuring the exchange’s continued operation, even if the company behind it faces challenges.
However, decentralized exchanges are generally less user-friendly, both in terms of interface and currency conversion. Users may be required to already own crypto or use a centralized exchange to acquire the digital assets needed for trading on a DEX. Additionally, trading on DEX platforms may involve peer-to-peer transactions, which can take longer to complete, especially if liquidity is low.
Different Types of Crypto Exchanges
In cryptocurrency exchanges, two primary categories exist: centralized exchanges (CEX) and decentralized exchanges (DEX), each with its own set of advantages and drawbacks.
Centralized Exchanges (CEX)
Centralized crypto exchanges are controlled by a single organization. They make it easy for users to convert their fiat currency, such as dollars, directly into cryptocurrency. Most crypto trading occurs on centralized exchanges, making them a popular choice for users. However, some crypto enthusiasts criticize these exchanges for deviating from the decentralized ethos of cryptocurrencies and for imposing Know Your Customer (KYC) rules.
Centralized exchanges have also faced security concerns due to the temporary holding of crypto assets. To address this, they have improved their security measures, such as offline asset storage and insurance against losses.
Decentralized Exchanges (DEX)
Decentralized crypto exchanges operate differently by distributing transaction verification responsibilities among network participants, similar to blockchain networks. This approach enhances transparency and ensures the exchange’s continuity, even if the company supporting it faces challenges. However, DEX platforms are typically less user-friendly and may not offer easy conversion between fiat currency and cryptocurrency. Users on DEX platforms may also need to engage in direct peer-to-peer trades.
Global Crypto Exchanges
The global cryptocurrency exchange landscape is vast, with nearly 600 exchanges worldwide. These exchanges offer investors the opportunity to trade various cryptocurrencies, including Bitcoin and Ethereum. However, the quality, costs, and safety of these exchanges can vary significantly. Forbes Digital Assets has ranked the top 60 cryptocurrency exchanges worldwide, emphasizing regulatory compliance.
Crypto Exchange Fees
When trading cryptocurrencies, you will encounter two types of fees: trading fees and withdrawal fees.
Trading fees can be assessed as a flat percentage of the amount of cryptocurrency you buy or sell. Some exchanges differentiate between “maker” and “taker” orders, charging varying percentages for each. Makers add liquidity to the exchange, while takers remove liquidity by executing existing orders. It’s essential to consider overall fees and any discounts available for trading a certain volume each month or holding the exchange’s native cryptocurrency.
It’s worth noting that certain crypto investment apps claim to have zero fees. Instead, they charge a spread, which is the difference between the buying and selling rates. Spreads can sometimes be more costly than a percentage-based trading fee.
Many exchanges impose fees for withdrawing cryptocurrencies from their platform. These fees can vary depending on the specific cryptocurrency you wish to withdraw.
If you plan to move your crypto to a secure third-party wallet or another exchange, it’s advisable to choose a platform that offers a certain number of fee-free withdrawals.
Engaging in advanced trading strategies, such as margin trading, may result in additional fees associated with borrowing money. Some beginner-friendly exchanges charge higher fees for quick buy features, especially when using a credit card or debit card. To minimize costs, consider purchasing crypto with cash or wire transfers.
Top Apps and Exchanges for Cryptocurrency Trading in October 2023
Let’s explore some of the top apps and exchanges for cryptocurrency trading in October 2023:
Binance.US, the American branch of the larger Binance organization, stands out as one of the best crypto exchanges due to its low trading costs. Bitcoin and Ethereum traders can enjoy commission-free trades, while other coins are priced based on a sliding scale for high-volume traders. Using Binance’s native coin, BNB, to pay trading fees even provides a 25 percent discount. Binance supports the trading of more than 130 different cryptocurrencies, ensuring you can find what you’re looking for, whether it’s popular coins or more niche options.
Please note that Binance faced legal action from the SEC in June 2023, alleging illegal operation as an exchange, broker-dealer, and clearing agency, as well as the sale of unregistered securities. SEC Chair Gary Gensler advised caution when using Binance platforms, while Binance assured customers of the safety of their assets.
- Cost: Free for Bitcoin and Ethereum, with fees for less common coins starting at 0.45 percent and decreasing for high-volume traders. A 25 percent discount is available when paying trading fees with BNB.
- Coins available to trade: 137, including Bitcoin, Ethereum, Solana, Cardano, and more.
Coinbase is a specialized cryptocurrency exchange offering trading options for a diverse range of digital currencies, currently at 230. This vast selection includes most major coins, such as Bitcoin. However, it’s essential to note that Coinbase has recently obscured its fee structure on its website.
When the fee structure was visible, it was complex, involving a spread markup of about 0.5 percent and transaction fees based on transaction size and funding source. Coinbase Advanced Trade introduced fees starting at 0.6 percent for a 30-day volume under $10,000, decreasing to as low as 0.15 percent for volumes up to $100,000.
In June 2023, Coinbase faced a lawsuit from the SEC, which alleged illegal operation as an exchange, broker-dealer, and clearing agency, and the sale of unregistered securities. The lawsuit accused Coinbase of knowingly violating securities laws designed to protect investors. Coinbase stated that it would continue its business operations as usual.
- Cost: Typically at least 1.99 percent (lower with Coinbase Advanced Trade).
- Coins available to trade: 230, including Bitcoin, Ethereum, Cardano, and Solana.
eToro is a brokerage platform entirely focused on cryptocurrencies, offering access to around 80 digital currencies. This selection includes some less common options not typically found on traditional brokerage apps, such as Tezos, Uniswap, and Polygon. Instead of charging direct commissions, eToro applies a flat spread markup of 1 percent, regardless of the cryptocurrency or transaction size.
- Cost: Commission-free, with a spread markup of 1 percent.
- Coins available to trade: 79, including Bitcoin, Ethereum, Dogecoin, and more.
Kraken is another specialized cryptocurrency exchange that enables trading of a wide variety of coins, including both popular and niche options like Solana, Uniswap, and Cardano, which aren’t typically available on mainstream financial apps. Kraken offers trading support for over 212 cryptocurrencies, although it doesn’t serve residents of New York and Washington state.
Kraken Pro’s commissions are competitive, ranging from 0.16 to 0.26 percent for low-volume trading and decreasing to 0 to 0.1 percent for volumes exceeding $10 million within the last 30 days. High-net-worth traders can also access margin trading, increasing their buying power and risk. While deposits via ACH are free, debit or credit card transactions incur a 3.75 percent fee plus 25 cents. Additionally, funding through a bank may involve a 0.5 percent online banking processing fee.
- Cost: Fees start at 0.26 percent, with additional fees for card transactions and online banking.
- Coins available to trade: 212, including Bitcoin, Ethereum, Solana, and Uniswap.
Robinhood is well-known for its user-friendly trading app, offering stocks, options, and ETFs. In addition, it has expanded into the cryptocurrency market and maintains its no-commission approach to crypto trading. While trading may be fee-free, Robinhood charges a spread markup incorporated into the buy or sell price of the cryptocurrency. The platform also offers an instant transfer feature for quick start-up.
- Cost: $0, commission-free, with a spread markup.
- Coins available to trade: 18, although some may not be available in all states, including Bitcoin, Dogecoin, and Ethereum.
Webull, while not as popular as some other trading apps, offers features that exceed those of Robinhood. Similar to its competitor, Webull provides access to stocks, options, ETFs, and cryptocurrencies without charging out-of-pocket commissions. Webull uses a spread markup for crypto trades, with costs factored into the trade. Moreover, Webull allows users to trade a slightly larger variety of coins compared to Robinhood, including Cardano.
- Cost: Commission-free, with a spread markup of 1 percent.
- Coins available to trade: 58 different types, including Bitcoin, Ethereum, and Solana.
Cash App may not be the first name that comes to mind when thinking of cryptocurrencies, but it does provide the ability to trade one cryptocurrency — Bitcoin. Users can send Bitcoin to others for free, but Cash App discloses a “small fee” for trading, which is provided before completing the trade. Additionally, Cash App applies a spread markup as part of the trade but doesn’t disclose the exact fee structure.
- Cost: Spread markup plus a trading fee.
- Coins available to trade: Only Bitcoin.
PayPal is another well-known financial app that offers cryptocurrency trading. If you already have PayPal on your phone, you can begin trading cryptocurrencies within seconds. PayPal charges a fee for each trade and incorporates a spread markup into the trade process. The fee starts at 49 cents for trades under $5, gradually increasing to $2.49 for trades up to $200. For trades exceeding $1,000, the fee transitions to a percentage-based structure, eventually decreasing to as low as 1.5 percent. PayPal transparently displays its fee structure for all users to review. PayPal’s sister app, Venmo, offers similar services with comparable terms.
- Cost: Spread markup of about 0.5 percent, plus a trading fee starting at 49 cents and decreasing to 1.5 percent.
- Coins available to trade: Four different cryptocurrencies — Bitcoin, Ethereum, Litecoin, and Bitcoin Cash.
Selecting a Cryptocurrency Exchange and Finance Apps
Selecting a Cryptocurrency Exchange
Choosing the right cryptocurrency exchange and financial apps is crucial for a smooth and secure experience. Here’s a guide to help you make informed decisions:
Security: Prioritize security features to protect your digital assets. Look for exchanges that offer two-factor authentication (2FA), cold storage of funds, and a strong track record in safeguarding user funds.
Available Coins: Consider the range of cryptocurrencies available on the exchange. Choose one that aligns with your investment goals, whether you’re interested in major coins like Bitcoin and Ethereum or more niche altcoins.
Trading Volume: High trading volume ensures liquidity, allowing you to execute trades quickly and at the desired prices. Low-volume exchanges can result in slippage and increased trading costs.
Trading Types: If you’re an advanced trader, ensure the exchange offers the trading types you need, such as limit orders, margin trading, and other advanced features.
Educational Resources: For beginners, look for exchanges with educational resources like articles, videos, and tutorials. These can help you understand the complexities of cryptocurrency trading.
Regulatory Compliance: Ensure the exchange complies with the legal and tax requirements in your region. Cryptocurrency regulations vary widely, so choose an exchange that operates within the framework of your local laws.
Selecting Financial Apps
Budgeting and Expense Tracking: Choose apps that offer budgeting and expense-tracking features. These can help you manage your finances, track spending, and save money.
Banking and Payments: Look for apps that provide easy access to your bank accounts, enable mobile payments, and offer features like bill payment and fund transfers.
Investment and Trading: If you’re interested in investing, consider apps that offer stock trading, cryptocurrency trading, or other investment opportunities. Ensure they provide research tools and real-time market data.
Savings and Investment Management: Apps that offer automated savings plans, investment portfolio management, and retirement planning can help you grow your wealth over time.
Security: Security is crucial when dealing with financial apps. Choose apps that use encryption, secure login methods, and regularly update their security features.
User-Friendly Interface: Opt for apps with user-friendly interfaces, making it easy to access and manage your financial information. Intuitive design can enhance your overall experience.
Mobile Accessibility: Ensure the app is available on your preferred mobile platform (iOS or Android) for convenient access on the go.
Customer Support: Reliable customer support is essential. Look for apps that offer responsive customer service through various channels, including email, chat, or phone support.
Reviews and Ratings: Read user reviews and check app ratings on trusted app stores to gauge the app’s reliability and user satisfaction.
By considering these factors, you can choose the right cryptocurrency exchange and financial apps that suit your specific financial goals and preferences.
Selecting the best cryptocurrency trading app or exchange hinges on your requirements. If you wish to trade a wide range of digital currencies, consider platforms that provide this diversity. Conversely, if your interest is primarily in major cryptocurrencies like Bitcoin and Ethereum, many of the platforms mentioned here will serve your needs. However, it’s essential to factor in the costs associated with each platform before opening an account, ensuring that it aligns with your financial objectives.
1. What is the best cryptocurrency exchange for beginners?
- The best cryptocurrency exchange for beginners often depends on their specific needs. Some user-friendly options include Coinbase and Robinhood, which offer a straightforward interface.
2. Are decentralized exchanges (DEX) safer than centralized exchanges (CEX)?
- DEX platforms distribute responsibilities among network participants, enhancing transparency and security. However, they may be less user-friendly, and liquidity can be an issue. CEX platforms offer convenience but can have security risks.
3. Which cryptocurrency exchange offers the most diverse selection of coins?
- Binance.US and Kraken are known for offering a wide range of cryptocurrencies for trading, making them suitable for users interested in diverse options.
4. How can I minimize cryptocurrency trading fees?
- You can minimize fees by choosing platforms that offer fee-free withdrawals, considering volume-based discounts, and being aware of spread markups in addition to percentage-based trading fees.
5. What is the current regulatory landscape for cryptocurrency exchanges?
- Cryptocurrency regulations vary by country and can change over time. It’s essential to stay informed about the legal and regulatory aspects of cryptocurrency trading in your jurisdiction
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