Things You Need to Know When Picking a Crypto Exchange

Welcome to cryptocurrency.

This post is presented in partnership with CoinJar. Student Edge members will receive AUD$10 worth of crypto and a free Swipe (EFTPOS) Card, valued at $29, when you join.

So, you’ve decided to delve into the fast-paced, high-tech world of cryptocurrency. Congrats.

Maybe you just made this decision because you like the word 'crypto' (perhaps because it sounds like 'crypt', which is cool, and the '-o' at the end makes it sound like 'daddio', which is also cool).

But if that’s indeed the case, you may want to hit the brakes for a sec. Best to read the below to make sure you’re heading into this with your eyes wide open.

First of all, here’s everything you need to know about cryptocurrency but were afraid to ask. (Yep, we wrote a whole article about it.)

Next, here’s the difference between Bitcoin and other cryptos. (We wrote a whole article on that too.)

We can now assume everyone who’s returned to this page has a full understanding of how cryptocurrency works as well as why and how some cryptocurrencies are different to others. Welcome back.

Though you may now have most of the basic information under your hat, there’s still something important you need to learn about before making the plunge: How to pick a crypto exchange. So, we've gone and written an article on that too.

FYI: Nothing in this post should be considered financial advice. The intention here is to encourage you to investigate exchanges personally before decided on one to use. You should always do your own research.

Wait, what’s a crypto exchange?

A cryptocurrency exchange is basically an online wallet, usually accessed as an app. Not only will it hold your cryptocurrencies (and it can hold many different currencies at once, including fiat, which is traditional money), but it’s also the service on which you can buy, sell, spend and trade cryptos too (that’s where the 'exchange' part comes in).

Cool. Now, how do I compare them?

It’s important to note that crypto exchanges are businesses themselves, separate to the cryptos, and, in some instances, offer financial products and services, just like banks, so be sure to do your research into any exchange you might want to deal with.

For instance, does your crypto exchange of choice offer financial products and services, and if so, do they have an Australian Financial Services Licence? If they don’t are they adhering to the correct Australian laws in how they operate? Make sure you read the exchange’s terms of service closely, and compare them to the regulatory requirements created by the Australian Securities & Investment Commission (ASIC). If they’re not playing by the rules, you may not be protected as a consumer.

Another thing to consider about your crypto exchange: How long have they been around? If an exchange is brand new, they may not have a demonstrable history of success or sustainability in different kinds of markets (as in, the good times and the bad). There are bull markets—which is a market that’s on the rise—and bear markets—which is when stocks decline in value, usually because of a receding economy—and there’s value in a crypto exchange that’s seen and survived both.

What you’ll want to investigate next is the security of the exchange’s website and apps. Any legitimate exchange should have a section outlining its security features (such as CoinJar’s). Make sure their security settings and procedures meet your expectations.

Also, how does this exchange let you spend the crypto currencies? Are they online only, or, like CoinJar, do they let you transfer it to a cryptocurrency debit card, or let you withdraw as cash? Depending on how you want to move your money around, this could be key.

Finally, does your exchange charge fees? If so, how much do they charge? An example: CoinJar has no fees on BPAY or PayID deposits from any Australian bank and free AUD withdrawals to your bank account. Their buying or selling of digital currency incurs a 1% fee.

Basically, before selecting your exchange, make sure you find out all the important stuff first. When you find an exchange you’re comfortable with, you can get going and trade on up.

A message from this post's partner: CoinJar is the simplest way to buy & sell digital currency. Whether you're just starting or you're an experienced trader, it's easy to manage your digital currency portfolio on desktop and mobile with CoinJar. You can sign up in an instant and access digital currency anywhere you go, whenever you like. Start here. Student Edge members will receive AUD$10 worth of crypto and a free Swipe (EFTPOS) Card, valued at $29.

Header Image: D-Keine via GettyImages