Choosing the right cryptocurrency exchange in 2021 can be complicated. If you want to trade cryptocurrency, invest in altcoins, or exchange cryptocurrency for fiat currency, then you’re going to need a reliable, trustworthy cryptocurrency exchange — but there are a few critical factors that you should consider before getting started.
If you’re interested in crypto margin trading, for example, you’ll likely be interested in robust, advanced trading features. Inversely, if you’re only focused on trading cryptocurrency for fiat currency (like USD), then you may find that a simple, streamlined, user-friendly crypto exchange is the best option.
This article will break down the top 5 cryptocurrency exchanges, providing guidance on the best, most secure exchanges for various trading preferences, geographic locations, and fee structures.
Before signing up with a cryptocurrency exchange and getting started, there are a few important factors that must be considered. The best cryptocurrency exchange for your needs will vary depending on your geographic location, the amount of crypto you want to trade, and the way in which you want to trade.
All cryptocurrency exchanges are fundamentally similar with regards to funding and trading. Users of cryptocurrency exchanges create an account, complete identity verification, fund their account with fiat currency or cryptocurrency, then proceed to trade and withdraw.
The key points of difference to consider when assessing cryptocurrency exchanges are:
The following 5 cryptocurrency exchanges are the best options online today, and are broken down by ease of use, fee structure, trading functionality, security, and trading pairs.
Coinbase is one of the most popular cryptocurrency exchanges, and is an ideal entry point for new traders or cryptocurrency investors new to the crypto ecosystem. Coinbase offers crypto traders and investors two options — Coinbase and Coinbase Pro.
Coinbase is primarily focused on making cryptocurrency purchases simple and easy to understand, and doesn’t flood users with complicated trading interfaces. The standard Coinbase platform functions as a simple brokerage and wallet, allowing users to buy or sell cryptocurrency for fiat currency or instantly exchange between different cryptocurrencies.
Coinbase Pro is a more complex trading tool aimed at users that want to access a more robust trading experience and provides the more complicated trading UI expected of a cryptocurrency exchange.
Binance is one of the most widely-used cryptocurrency exchanges online, and is arguably one of the most feature-rich options available. Launched in 2017, Binance began as a crypto-only exchange focused on listing an extremely broad spectrum of cryptocurrencies, but added fiat currency support in 2019-2020.
The rich feature set offered by Binance makes it popular with traders seeking low-cap altcoins, margin trading, or more complex features such as exposure to liquidity pools or crypto-backed loans. The powerful, customizable trading UI offered by Binance makes it ideal for professional traders, while robust API access allows algorithmic traders to execute trades through third-party systems.
Binance can be somewhat daunting for new traders, but provides three separate trading UI options — basic, classic, and advanced, ensuring that all levels of experience are catered to.
Crypto.com is focused primarily on accelerating cryptocurrency adoption, bridging the gap between fiat currency and cryptocurrency. Rather than delivering a “traditional” cryptocurrency exchange experience, Crypto.com is heavily aimed towards smartphone users and aims to make cryptocurrency trading as simple as traditional banking.
The biggest advantage offered by Crypto.com is the ease with which the platform integrates cryptocurrency into everyday life. Crypto.com offers users cryptocurrency-funded debit cards, which are available in a variety of tiers.
Crypto.com makes a spot exchange available to traders that offers impressive liquidity and competitive fee structures. Using Crypto.com, it’s possible to purchase, invest, or trade cryptocurrency, then spend crypto directly in everyday life using a Crypto.com debit card — a rare offering in the current regulatory environment.
Bittrex is one of the longest-running cryptocurrency exchanges online, and was founded in Seattle in 2013 by three ex-Microsoft employees. Bittrex holds a reputation as the most secure cryptocurrency exchanges online, and hasn’t experienced a hack or lost customer funds since launch.
Bittrex, like Binance, was founded primarily as a crypto-only exchange, but offers USD fiat support for specific US states and several international countries for identity verified users. A major draw of Bittrex is the diverse range of cryptocurrencies listed by the platform, with a focus on promising new tokens and projects.
Uphold takes a different approach to cryptocurrency trading when compared to a “traditional” crypto exchange such as Binance or Coinbase. Rather than focus solely on cryptocurrency, Uphold provides multi-commodity functionality that allows users to invest in and trade crypto, precious metals, and fiat currencies.
The Uphold platform is centered on the Uphold smartphone app, and boasts commission-free trading. Notably, Uphold offers 0% fees on credit and debit card deposits, which makes it a highly attractive option for investors that want to quickly purchase crypto with a card without paying exorbitant fees.
The Uphold trade UI is not as complex as platforms aimed at professional traders, but the simple, streamlined interface makes it possible to quickly exchange fiat currency for 30 different cryptocurrencies and 4 precious metals, making it a suitable solution for retail or casual investors.
Choosing the right cryptocurrency exchange for your needs depends entirely on your personal requirements. If you’re a professional trader and require robust trade interface functionality, Binance or Bittrex will provide you with the tools you need. New crypto investors or casual investors, however, may benefit from the simple and streamlined trade interface offered by Coinbase or Uphold.
When trading cryptocurrency on a cryptocurrency exchange, it’s important to keep in mind that exchange wallets are “hot” wallets and are thus not a secure option for long-term crypto storage. If you’re trading cryptocurrency, it’s best to store your crypto on a dedicated hardware wallet and move it onto an exchange only when required for trading.
One element to keep in mind as you buy, sell, and trade various crypto assets is the tax implications of crypto. Most governments around the world treat crypto as an investment—meaning capital gains and losses associated with your investing activity need to get reported on your yearly taxes.
Because of the transferable nature of cryptocurrency, crypto exchanges often do not have the ability to provide users with gains and losses tax forms. This creates a problem for millions of cryptocurrency investors all over the world, as reporting crypto related income without proper documentation is extremely difficult.
We wrote about the crypto exchange tax reporting problem extensively in our blog post: The Crypto Exchange Tax Problem.
To solve the crypto exchange tax reporting problem, cryptocurrency tax software platforms like CryptoTrader.Tax have become prevalent.
Today, hundreds of thousands of crypto investors can simply import their trading history from any of the exchanges they use directly into their CryptoTrader.Tax account. Once historical trades are imported, the software generates all necessary crypto tax forms based on the users trade data with the click of a button.
You can take your tax reports to your accountant or simply import them into your preferred tax filing software such as TurboTax or TaxAct.
You can learn more about how CryptoTrader.Tax works here.