As a trader, it takes more than viable crypto signals to run a profitable business. For one, the efficacy of your chosen crypto exchange, or lack of it, plays a vital role in the success of your trading endeavors. As such, it is common knowledge that traders ought to take the time to research crypto exchanges before adopting their services.
In light of this, I have chosen to explore the challenges that traders encounter when picking an exchange, introduce a viable solution to the stated problems, and conduct a comprehensive review of three exchanges using these recommendations.
In light of this, I have chosen to explore the challenges that traders encounter when picking an exchange and introduce a viable solution to the stated problems.
What are the recurring issues related to identifying quality crypto exchange platforms?
Crypto trading is one of the legitimate ways of earning money in the crypto space. Although the successes of crypto traders heavily depend on their capacity to identify and capitalize on market trends, however, the quality of exchange services they access for the most part determines how trading activities translate into profits.
According to a survey carried out in 2018, 40% of traders polled believed that security was the biggest problem encountered while utilizing crypto exchanges, 37% of respondents believe that it is high transaction fees, while 36% argued that the lack of liquidity threatened their business the most.
In tandem with this research, here are some of the things to look out for in crypto exchanges to increase your chances of becoming a successful trader.
The Accessibility of Funds and Services
One of the core requirements for every crypto exchange is the availability of tools that helps traders to access the crypto market instantly. This assertion stems from the fact that the crypto market, known for its unprecedented volatility, waits for no one.
Hence, the onus falls on serious crypto traders to ascertain that their crypto services offer instant access to their funds and the crypto market at large.
To ensure that the crypto exchange you are considering provides accessibility, you ought to analyze the efficacy of its hot wallet, liquidity, and its capacity to match orders almost instantly.
The Transaction Fees and how they stack up against Earnings
Transaction fees have an integral bearing on the long-term profitability of trading activities. Opting for a crypto exchange with exorbitant fees could, in the long run, diminishes profits.
As such, it is advisable to gauge how these fees would compound over a period of time, especially if you plan on engaging the crypto market frequently.
You can limit the effect of compounded transaction fees on your profits by opting for crypto exchanges offering low transaction fees, discounts, or loyalty programs.
The reputation of the crypto exchange
Reputation is one of those factors you have to take seriously. Chances are, you will have no other choice but to incorporate the exchange’s wallet and subject your funds to the security system of the platform.
Thus, it is imperative to do some digging on the exchange’s propensity to deliver bank-grade and flexible security features. Also, it doesn’t hurt to research the service provider’s history in the crypto world as regard regulatory compliance.
It is advisable to always adopt exchanges that have a reputable track record and not one which will suddenly come up with an excuse why it can no longer give you access to your digital assets.
Binance Vs Coinbase Pro Vs Crypto.com
Having discussed some of the challenges that might adversely affect your trading activities and possible ways to circumvent them, it might interest you to know that there are crypto exchanges that embody the above-mentioned recommendations.
In the next section, I will be comparing three crypto exchanges that fit into this narrative. They are Binance, Coinbase, and Crypto.com
Coinbase Pro is one of the top exchanges in the market as its high liquidity and limits have endeared it to traders executing large trades. Likewise, Binance has been up and about for the last couple of years, and it has strived to cement its name at the top tier of the crypto exchange market.
On the other hand, Crypto.com is one of the new breeds of platforms looking to tackle the current failings of the crypto exchange market. In other words, the exchange has studied the needs of traders and built an infrastructure that provides all of the tools necessary to run a profitable crypto trading business.
While reviewing these highlighted platforms, I decided to base my research on the three core requirements mentioned earlier in this article. Hence, I examined the ease of access, the discounts on transaction fees, and the reputation of each exchange.
Ease of access
Coinbase introduced its exchange service, Coinbase Pro, to make it easier for experienced crypto traders to access more sophisticated and flexible features absent from the original Coinbase platform.
Traders can capitalize on Coinbase’s ongoing movement to improve the accessibility of the crypto market through interconnected and simplified crypto gateways. Note that the Coinbase ecosystem includes a crypto debit card and a widely adopted wallet.
Hence, it is a given that Coinbase provides an array of access and exit points for users. Even more impressive is the platform’s recent qualification as a Visa principal member, which will improve its crypto debit card service.
Also, I found that Coinbase Pro runs an unlimited wallet model as there are no limits placed on transaction volume and the value of trades.
The same way, Binance emerged in the crypto space as a quality exchange platform for professional traders. While Binance operates basic and advanced versions of its site, those that are familiar with the exchange will, however, agree that it is suited to experienced traders.
Another feature peculiar to Binance is its high liquidity. The crypto exchange provides a rich list of crypto pairs, which offers users a diverse array of trading options lacking in the other two exchanges highlighted in this article.
Similarly, Binance has been able to endear itself to the crypto community because it enables a high-frequency exchange platform that circumvents the negative impacts of the prevailing volatility of digital assets.
Before introducing its exchange platform, Crypto.com had established itself in the crypto payment sector, as it provides wallet and crypto debit card services.
Hence, users of Crypto.com Exchange can take advantage of these payment services to access their funds anywhere in the world. With this functionality, a trader can implement an interoperable ecosystem, consisting of the Crypto.com App, which provides market order trading at true cost, MCO Visa Card, and the Crypto.com Exchange.
Note that the MCO Visa Card offers cashback on spending and allows ATM withdrawals, which improve the liquidity of crypto holdings. Nonetheless, Crypto.com is just starting in the crypto exchange scene and lacks options as regards crypto pairs found on Binance or Coinbase Pro.
Discounts on transaction fees
As recommended earlier in this article, it is crucial to examine the pricing policy of crypto exchanges before deciding on the one that best suits you.
In line with this school of thought, I found that Crypto.com has introduced various means by which traders can reduce the amount spent on fees for engaging in the crypto market.
Note that the Crypto.com Exchange classifies its users based on the volume of transactions they execute in a 30-day timeframe. The higher the transaction volume, the lower the percentage of maker and taker fees applicable to such a trader.
As for withdrawals, traders do not have to pay charges if they transfer their earnings to a Crypto.com wallet address – this is not valid for on-chain transactions. However, there are withdrawal fees attached to payments made to other crypto wallets, depending on the type of crypto being withdrawn. On the contrary, depositing funds on Crypto.com does not incur any fees.
As recommended earlier in this article, it is crucial to examine the pricing policy of crypto exchanges before deciding on the one that best suits you.
In line with this school of thought, I found that Crypto.com has introduced various means by which traders can reduce the amount spent on fees for engaging in the crypto market. Note that the Crypto.com Exchange classifies its users based on the volume of transactions they execute in a 30-day timeframe.
The higher the transaction volume, the lower the percentage of maker and taker fees applicable to such a trader. As for withdrawals, traders do not have to pay charges if they transfer their earnings to a Crypto.com wallet address – this is not valid for on-chain transactions. Crypto.com offers discounts on trading fees when traders stake or pay with the platform’s CRO token.
Traders who hold CRO are eligible for discounts in the form of rebates as high as 100%, 20% interest on all staked CRO, and up to 50% discount on all newly listed
Like Crypto.com, Coinbase Pro offers a similar tiered-base fee structure determined by the volume of transactions accumulated over 30 days. Traders can enjoy discounts on maker and taker fees as their transaction volume increases over time.
However, Coinbase Pro tends to favor traders looking to trade with huge sums of funds as opposed to retail traders. This notion is evident in the 0.5% imposed on traders unable to cross the $10,000 trading volume threshold within the prescribed 30 day period. Also absent in Coinbase Pro is the staking program found on Crypto.com.
The reason is that the exchange does not have a specific token guaranteed to give traders the opportunity of accessing more discounts on trading fees. Furthermore, Coinbase Pro allows zero-fee withdrawals when traders transfer funds from their Coinbase Pro wallet to the Coinbase wallet.
While Crypto.com enables a competitive structure and Coinbase Pro concentrates its discount offers to high volume traders, Binance’s fee structure, on the other hand, is one of the lowest in the crypto space. The trading fee is set at 0.1% for individuals amassing less than 100 BTC worth of trades within a 30-day timeframe.
As trading volume increases, so also does the trading fee discount. Likewise, Binance provides a special discount to the tune of 25% of the trading fees applicable to traders when they hold a predefined volume of Binance tokens. And when traders choose to settle their trading fees with BNB, they are eligible to enjoy an additional discount of 25%.
Good reputation
Crypto.com’s foray into the crypto debit card and wallet niche has helped it to acclimatize with the regulatory and security requirements necessary to run a legitimate crypto exchange platform.
Therefore, Crypto.com has tapped from its vast experience as a global facilitator of crypto payments and wallet infrastructures to provide top-grade security features to traders.
Not only has the platform made this possible, but also, it incorporates a system where traders can still benefit from features of its other ventures, including a partnership with Visa to implement a compliant and secure payment gateway.
Similarly, Crypto.com claims to offer premium services built on a solid foundation of security, privacy, and compliance and is the first cryptocurrency company in the world to have CCSS Level 3, ISO27001:2013 and PCI:DSS 3.2.1, Level 1 compliance.
Although Crypto.com’s diverse ecosystem connotes commitment towards complying with stricter security and regulations, I, however, do not think that their security system comes close to what Coinbase Pro has to offer.
Coinbase has become a juggernaut in the crypto space due to its perceived commitment to ensure that its systems and products provide premium protection against threats associated with crypto. Hence, the platform has integrated an insured cold storage wallet into its Coinbase Pro exchange just to give it extra leverage against nefarious.
And so, Coinbase Pro has maintained a sturdy reputation in the crypto exchange market, unlike Crypto.com, which relies mostly on its track record in the crypto payment sector.
The only incident that I could note as a blemish in Coinbase Pro’s stellar track record was the 2017’s Ethereum flash crash. However, the exchange’s swift response did help it save face and clear its name of any wrongdoing.
On the contrary, Binance has faced its fair share of security scares. The first was an unsuccessful attempt in 2018, which stalled when Binance’s security system identified the potential threat and stopped the hackers from withdrawing the illegally acquired digital assets.
Unfortunately, Binance was not as lucky in 2019 when hackers stole crypto worth $40 million from the exchange’s coffers. Following this devastating turn of events, Binance announced that it will reimburse affected customers with funds from its Secure Asset Fund for Users (SAFU) account.
Even though Binance ensured that all losses were covered, the incident did open users' eyes to the risks associated with custodian-based crypto exchanges and the vulnerability of Binance's security mechanism.
Final thoughts
Crypto trading entails traders to develop an eye for details and a knack for correctly predicting market movements by analyzing historical trends. Without the right tools and services, adopting these skill sets to earn profits is a futile task.
It is, therefore, imperative to scrutinize crypto exchanges, just as we have done to Crypto.com, Binance, and Coinbase Pro in this article, before choosing to execute trades on them.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of the author.
Disclaimer: The author does not hold any vested interests in the projects mentioned.
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