Not long ago we wrote about the risks of cryptocurrency trading, and now we are going to discuss what is a cryptocurrency trading platform and what should you know about it before you start investing or trading.
What is a cryptocurrency trading platform?
A cryptocurrency trading platform is also called as a cryptocurrency exchange. It allows customers to trade cryptocurrencies or digital currencies for other assets, such as conventional fiat money or other digital currencies.
If you have US dollar on your account, you can trade it for Bitcoin or any other crypto that can be find on that exchange. Not all exchanges allow customers to trade their cryptos for fiat money, such as dollar or euro. On some exchange you can only trade your crypto for another crypto. In this case you need to send your assets to another exchange which allows you to trade your digital money for fiat currencies.
On these platforms, cryptocurrency buyers and sellers can make limit orders or market orders, and the brokering process works like it would for any other kind of asset. The cryptocurrency exchange helps with the transaction and collects the fees.
What are the costs of a cryptocurrency trading platform?
Exchanges make their revenue through fees. Every platform sets different fees for the transactions. Basically, there are three main fees that an exchange platform will charge you for.
- Deposit fee – When you transfer money to your account, the exchange can charge you for it, but many exchanges let users to deposit money for free.
- Trading fee – Trading fees are the main source of revenue for every platform. They usually charge between 0,1-1% for the transactions.
- Withdrawal fee – Exchanges can also charge you for withdrawing your money from the platform. This fee is various on every platform as well.
How safe is a cryptocurrency trading platform?
Most exchanges make security for their number one priority. This means that users can only register an account if they can provide identification documents such as passport or ID card. This is necessary to prevent crimes such as money laundering.
Know Your Customer or simply just KYC, is the process of a business verifying the identity of its clients and assessing their suitability, along with the potential risks of illegal intentions towards the business relationship. The importance of KYC is evident even from the customer’s point of view.
The clients will feel they are working with a legitimate company and educated in the understanding of whether they are ready to use the platform.
We can say that platforms with this level of security can be considered safe, although hack attacks can occur any time on every platform. This is why we suggest you to store your money on an offline wallet when you are not trading.
What to consider before choosing a cryptocurrency trading platform?
Before you choose a cryptocurrency exchange you should know what are the strengths and weaknesses of that platform. Try to find answers for the following questions:
- Is it a well trusted exchange? Look for reviews!
- Do they have KYC and 2FA?
- How do they try to defend themselves against hack attacks?
- Supported cryptocurrencies
- How many cryptocurrencies do they support on their platform?
- Can you trade cryptos for fiat currencies?
- Does that exchange have sufficient liquidity for trading?
- Look up their most recent trading volume!
- Check their fees. Is there any deposit fee?
- How much is the trading and withdrawal fee?
- Is there any hidden fee?
Our platform the PEAK is a highly trusted exchange, where our number one priority is the safety of our user’s money. We have KYC and 2FA to provide the maximum security to our users. You can register an account in a few minutes by clicking here.