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Crypto exchanges are places where the public can purchase cryptocurrency. They are digital marketplaces that allow people to trade or sell their virtual assets.
Crypto is not an asset you can acquire anywhere, though it is becoming more and more prevalent in everyday transactions. If there is a cryptocurrency you want to purchase, like Litecoin, then the easiest way to get your hands on it is on a public exchange. However, not all exchanges are created equal. See below for a brief overview of what to look for in a cryptocurrency exchange.
Security Measures
The main thing you want to consider is security. Although cryptocurrency and blockchain technology is very secure, keeping your crypto assets on an exchange is not always the best idea. Crypto exchanges have been hacked in the past, and if they do not offer insurance to cover such incidents, your money could be at risk. It is generally a good idea to move large amounts of cryptocurrency off exchanges and into a cold wallet. However, if you want to keep even a small amount of money in an exchange, you should still check their safety protocols. For instance, some crypto exchanges migrate most of their customer’s crypto into their own cold storage system. This means your money is not connected to the internet and is virtually unobtainable by hackers. Other security precautions include two-factor authentication and verifications when logging in from a new device. Though these are far from hacker-proof, they still raise the overall security of your account.
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Regional Accessibility
However, the most secure exchange in the world is useless to you if you cannot access it in the first place. Certain exchanges are location restricted and may not be available to you in your country. Even the state you live in can prevent you from using an exchange. New York requires all exchanges to get a license before offering their services in the state. As cryptocurrency becomes more mainstream, regulations and restrictions will only increase. In the beginning, crypto was a fringe commodity that the mainstream did not take seriously. However, the explosion in value in recent years is impossible to ignore, and more financial institutions will want to take a piece.
Crypto Variety
Besides the most popular cryptocurrencies, thousands of altcoins are on the market. Public exchanges do not offer every single coin that comes to market, so this should also play a factor in your choice. Serious cryptocurrency traders use multiple exchanges to purchase every currency they predict will increase in value. Still, you can use one exchange that offers a wide range of cryptocurrencies to start. When most coins launch, they are not going to be public exchanges. Larger crypto exchanges take time to vet coins before offering them on their trading platform. So, if you only rely on public exchanges, you will not see some of the lesser-known altcoins.
Exchanges are a vital part of the cryptocurrency market. They allow relative newcomers to make their first transactions without fully understanding the functionality of blockchains. As you learn more about cryptocurrency, you might want to branch out and try several exchanges to see what is right for you.
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