Frequently Asked Questions

If you’re looking to buy or sell cryptocurrencies, you’ll need to use a cryptocurrency exchange. These online services often work similarly to a stockbroker, giving you the tools to buy and sell digital currencies like bitcoin, ethereum, and dogecoin. The best crypto exchanges make it easy to buy and sell the currencies you want with low fees and strong security features.

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When choosing the best crypto exchange for your needs, it’s important to look at supported currencies, pricing, withdrawal options, and security which is where we focused when picking this list of the best crypto exchanges. Keep reading to learn more about which crypto exchange could be best for your goals.

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Understanding the Types of Crypto Exchanges

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To choose the best exchange for your needs, it is important to understand the types of exchanges.

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Centralised Exchange

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The first and most common type of exchange is the centralised exchange. Popular exchanges that fall into this category are Binance, Coinbase, Kraken, and Gemini. These exchanges are private companies that offer platforms to trade cryptocurrency. These exchanges require registration and identification, known as the Know Your Client (KYC) or Know Your Customer rule.

The exchanges listed above all have active trading, high volumes, and liquidity. That said, centralised exchanges are not in line with the philosophy of Bitcoin. They run on their own private servers, which creates a vector of attack. If the company's servers were to be compromised, the whole system could be shut down for some time. Worse, sensitive data about its users could be released.

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The larger, more popular centralised exchanges are by far the easiest on-ramp for new users, and they even provide some level of insurance should their systems fail. While this is true, when cryptocurrency is purchased on these exchanges, it is stored within their custodial wallets and not in your own wallet that you own the keys to.

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Decentralised Exchange

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Decentralised exchanges work in the same manner that Bitcoin does. A decentralised exchange has no central point of control. Instead, think of it as a server, except that each computer within the server is spread out across the world, and an individual controls each computer that makes up one part of that server. If one of these computers turns off, it does not affect the network because plenty of other computers will continue running the network.

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This is drastically different from one company controlling a server in a single location. Attacking something that is spread out and decentralised in this manner is significantly more difficult, making any such attacks unrealistic and likely unsuccessful.

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Due to this decentralization, these types of exchanges cannot be subject to the rules of any regulatory body, as no specific person or group is running the system. The individuals who participate come and go, so there is no one individual or group that a government or regulatory body can realistically pursue. This means that those trading on the platform do not have to declare their identification and are free to use the platform in any manner they choose whether legal or not.