Wednesday, May 22, 2024

Are Crypto Exchanges Safe? How to Choose an Exchange You Can Trust?

Investment in cryptocurrency is the latest trend. While it is a challenge to select the right cryptocurrency from the thousands of crypto assets available, it is equally challenging to select a good platform, i.e., a cryptocurrency exchange that is safe and secure and provides ease of trading. There have been cases where the fraudsters have been able to hack some crypto exchanges in the past, but with the improvement in technology and adoption of stringent security protocols by the leading cryptocurrency exchanges like Zebpay, crypto trading on these exchanges is completely safe.

Below, we have discussed some of the factors that investors must look at while selecting the exchange for their crypto investing.

1. Transparency: In most countries, cryptos are not regulated. Hence, it is important for an investor to look at the transparency provided by the crypto exchange. An investor may look into the audit reports provided by the exchange. Audit reports provide information about the financial position of the company.

2. Ease of trade: This is a critical factor that the investor must evaluate. The smoothness with which an investor can carry out a crypto transaction, the time taken for clearing and settling crypto transactions, and facilities such as lock-in price once the trade is selected are important criteria for measuring ease.

3. Availability of crypto assets: The availability of the particular coin or token that the investor is looking for is also a deciding factor in the selection of an exchange. A good exchange will have all the popular cryptocurrency options available for trading.

4. Book (order) size: The order book volume, that is, the transaction on an exchange on a daily basis, will give an idea about the liquidity of an exchange. More volume will indicate a greater number of investors and more liquidity. This will ensure that the investor may exit at the desired time. Most of the popular exchanges publish their order book volume in order to boost investor

5. Settlement mechanism: This is a very important measure as this indicates the exchange of cash and currencies. While crypto trading is not possible with cash, investors have to maintain a wallet with the exchanges, and this stage is most susceptible to fraud, so extra care must be taken in evaluating this aspect.

6. Reputation: This is a very important factor, and you must not fall for the advertised claims and glossy exterior of the exchange. The goodwill of the exchange should be critically reviewed by the investor. Adequate research and guidance can be found in community forums created by the users of the exchange.

7. Hacking/fraud history: This is of utmost importance as cryptocurrency trading is relatively new and anonymous in nature, and thus any exchange with a record of fraud or
mismanagement in the past must be avoided despite the price advantage it offers.

8. Location of the Exchange: The location of the exchange will give an idea about the law and regulation that the exchange will have to follow, whom to approach in case of any grievances.

Other factors

a. User Charges

This is also a significant factor as this will impact the final return that you will be getting on your investment in cryptocurrency.

b. KYC Norms

Like other financial investments, every cryptocurrency exchange will put in place some KYC norms for investment and withdrawal. This is to safeguard the investor from fraud.

If you take care of all the above factors, trading on the selected exchange will be completely safe. Most of the major cryptocurrency exchanges providing trading facilities in India, like Zebpay, will score well on all the above factors. So, don’t wait if you want to invest in crypto. The time is now!

Monesh Kumar
Monesh Kumar
Monesh Kumar is a cryptocurrency and blockchain enthusiast. He trades cryptocurrencies and holds some but he prefers holding Bitcoin, Ethereum & Cardano.

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