How to choose your crypto exchange

Making the decision to invest in a cryptocurrency is the first step in the buying process. But before you can make a purchase, you need a place to buy, sell and hold your funds.

You need an exchange.

Exchanges are businesses that allow people to buy (and sometimes sell and trade) Bitcoin and other cryptocurrencies. They can accept credit or debit card payments, wire transfers or other digital forms of payment and some also hold your crypto-wallet for you.

When I first decided to invest in crypto I had no idea what to look for in an exchange. I signed up for Coinbase because it was recommended to me and had a straightforward interface. I’m going to continue using and recommending Coinbase because I believe it’s a great place to start and it lets me do what I want to do with my wallet and funds. I may consider upgrading to Coinbase Pro or another exchange with lower fees at some point, but for me, as a beginner, it checks all the boxes. Ready to choose your own exchange? Here are a few things to consider:

• Which type of cryptocurrency do you want to buy, sell or trade? All of the exchanges I’m suggesting will allow you to trade Bitcoin. But which cryptocurrencies are available on different exchanges varies greatly. For example, Dogecoin (of recent Reddit fame) is unavailable for purchase on Coinbase, while Cash App only lets you work with Bitcoin.

• What do you want to do with your funds? It can be expensive or complicated to get your money out of some exchanges, while some make it much easier and cheaper. Consider how you’ll use your crypto, whether you want to pull money out frequently or if you’re more focused on holding for the long term. Investigate the fees and exchange rates of your exchange before choosing one to work with.

• What’s your risk level? There’s always some risk when it comes to crypto. Exchanges aren’t government-backed and don’t have a safety net like a traditional bank. On top of that, exchanges are often targeted by hackers, although you have options like creating your own secure wallet or using long-term storage options like Coinbase’s Vault for added security.

• Anonymity concerns? Many of the main-stream exchanges require you to provide ID to be a part of the exchange. You’re still operating under an anonymous code to other users, but the exchange has your person information and will report on you to the IRS. The trade-off for not having to provide your identity is usually a level of difficulty and lack of security. Try Paxful or Bitcoin ATMs if you’re interested in more anonymous trading, then read this article from Bitcoin.com on how to get started.

Now that you understand what you need to know to choose an exchange, check out my list of the three best exchanges for beginners to start buying and selling crypto.