The Best Crypto Exchanges

Cryptocurrency exchanges work similar to traditional stock exchanges. After you have registered and identified yourself with the exchange, you need to deposit money (euros or dollars) into your exchange account. Once that's done you can start trading. The simplest and fastest way to buy, if you don't feel comfortable with advanced trading options, is to submit a so-called "market order", which simply means that you are willing to buy at the current market price. This will get your order executed instantly and your exchange account will be credited with the amount of cryptocurrency you purchased.

In most Western countries cryptocurrency exchanges need some sort of licenses to operate. In the US it is common for exchanges to register with FINCEN and apply for a money transmitter license while in Europe, exchanges frequently need a brokerage license. This is why users need to identify themselves upon registering with an exchange. Furthermore, they need to have a crypto custody license or use the services of a third-party custody service to store cryptocurrencies on behalf of users.

Cryptocurrency exchanges are safe if you do your research and choose one that has a good track record and established reasonable safety measures. Although, there have been hacks of exchanges in the past, these have largely only affected smaller exchanges. All exchanges that we have listed have a good reputation and take security seriously. To make your account more secure, it’s important to set-up second factor authentication, choose a long and random password and never store too much cryptocurrency funds on the exchange.

Cryptocurrency exchanges hold user funds in two types of wallets: hot wallets and cold wallets. Hot wallets are connected to the internet. They hold just enough funds to allow users on a daily basis to withdraw their assets on demand and on short notice. However, because they are connected to the internet, they are also more exposed to hackers who can break into the servers of that exchange. That’s why most exchanges hold the majority of user funds in cold wallets, which are not connected to the internet. Often the keys to the cold wallets are split between multiple senior staff members of the exchange who all have to approve a transaction before funds can leave the exchange.

Cryptocurrency exchanges make money by charging a small fee on each transaction. The fee amount depends on whether you are buying or selling as well as the amount of crypto that you’re trading each month. The more frequently you trade the less you’ll pay for each single trade. Most exchanges listed here take a 0.25% fee if you’re looking to buy crypto. Sometimes exchanges have additional revenue streams by providing crypto lending or staking services.