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Are Crypto Exchanges Safe? How to Choose an Exchange You Can Trust.
2020-12-30


What is your first memory of crypto? If it's the user interface of a cryptocurrency exchange, then you probably know how important it is to do your own research (DYOR) before you even register on one. 


The ever-growing cryptocurrency market has a significant demand for high quality and trusted exchanges. As the Bitcoin price hit an all-time high at $28,598 and rose more than $2,500 in two days, bitcoin became the talk of the town and everyone wants to buy some. But how do you find an exchange you can trust when there are more than 200 of them? What are the criteria that make a trusted exchange?


A search for an exchange you can trust

Finding the right exchange isn't easy, but it can be a great learning experience with the right tools and resources. In this article, you’ll learn the most important categories and factors you need to consider before registering on a cryptocurrency exchange. 


Each of the categories below should help you identify the exchanges to avoid and the exchanges to consider. And although there are hundreds of cryptocurrency exchanges, only a handful meet the criteria described below. 


1. Security

Your cryptocurrency is only as safe as the method you use to store it. Therefore, it's crucial to choose a partner you can trust and rely on — one that protects your private data and funds with the latest security standards, a professional security team, and ideally a recovery fund as a cherry on top. 


1.1 Security standards

Security must be the top priority of every exchange. Because of the difficulty required to hack a cryptocurrency, it’s much easier to target exchange and attempt to steal user funds or data. The best exchanges in the world have the latest security standards, employees trained for breach & intrusion incidents, undergo regular penetration testing, and educate their users on cyber-hygiene. Have a read about general security principles and crypto security to better understand crypto security.


1.2 Safety of funds 

Cryptocurrency markets are ripe with malicious actors and hackers looking for an opportunity to explore attack vectors on exchanges and steal your funds. Exchanges are a favorite target for hackers due to the large volume of money stored on them, and although successful fund thefts are rare, it's good to use an exchange with a funds recovery plan or insurance plan. 


1.3 Security team

The most important team at every crypto exchange is the security team. For this reason, many exchanges carefully protect the identity of their cybersecurity specialists, so it’s not an easy task to review the team. Ideally, you want to register on an exchange with the least incidents, with an active security team that publishes reports and researches, and collaborates with other projects on improving the security of the entire cryptocurrency industry.


1.4 Transparency

The threats aren't just external but also internal. The ideal exchange is transparent to its users from all points of view – clear and understandable terms and conditions, fee schedule, transparent operations, and roadmap. The exchange should operate in such a way that it is easy for its users and stakeholders to observe the operations and functioning of the exchange or review how the funds are stored and protected. Transparency is extremely important for all exchanges but twice as much for exchanges that also issue their own stablecoins. You can read more about transparency in stablecoins on Binance Academy. 


1.5 User data protection

The first process you'll go through is registration. You'll be required to share your email, first and last name, country of residence, and date of birth at a minimum. That's a fair amount of private information. Add to it know-your-customer (KYC) verification and payment details used for deposits, and there's a lot at stake. Choose an exchange that processes your data according to data protection laws and doesn't share them or resell them to third parties. 



2. Products and services

An ideal exchange should offer a wide variety of trading pairs and payment methods, coupled with a range of financial products to complement your cryptocurrency experience and open doors for new earnings opportunities.


2.1 Deposit & withdrawal methods

Before you start trading and using different products, you need to obtain some crypto. The fastest and easiest way is to simply buy some. Some exchanges might offer only 1 or 2 payment methods, but it's always better to choose an exchange with multiple options such as debit/credit card payments, bank transfer, P2P, or third-party payment providers. Each method has its pros and cons so always consider individual methods according to your circumstances and region.


2.2 Cryptocurrencies & trading pairs

Many exchanges provide services that allow you to buy a range of different types of cryptocurrency. Undoubtedly buying bitcoin is the first choice of many new crypto users, but later on, you might want to buy some other popular crypto such as Ethereum, BNB, XRP, or maybe USDT. In that case, you will need an exchange that provides you with all the options to choose from - both cryptocurrencies and trading pairs. A wide variety of trading pairs provides you with an increased selection of trading opportunities.


2.3 Products 

What do you expect from buying bitcoin or other cryptos? Do you only plan to buy and hodl, or do you want more for your money? Global exchanges are often surrounded by an extensive ecosystem of supplementary products such as crypto debit cards, assets custody and protection, trading services, and other financial services designed to improve your crypto experience and provide additional earning potential. Once you buy your first crypto, you might decide to hodl and stake, or maybe trade and boost your earnings. Whatever is your plan, make sure to pick an exchange that offers the solutions you need.

3. Fees and profitability

The stories of users registering on an exchange are different, but the goal is usually the same – invest and earn a profit. To maximize your investment potential, it's important to look for an exchange with a fair and transparent fee schedule, profitable products, and a generous returns scheme.


3.1 Fees & Referral Commission 

Fees are the primary source of revenue for cryptocurrency exchanges. Every time you make a trade or a transaction, you might have to pay a fee based on the exchange fee schedule. A generally acceptable maker/taker fee (or buyer/seller order) would be between 0.1% to 0.2%. Exchanges usually don't charge any fees on deposits and only a small fee on withdrawals, but this might differ across the platforms. Some exchanges return part of fees as referral commission to the user who recommended new friends to register. Consider your trading volume and calculate your average fees before you register. If you trade higher volumes, consider VIP programs that provide decreased fees as well as unique benefits within the platform.


3.2 Profitability

As the cryptocurrency market grows and the services develop, investing in crypto is not just about trading and holding. Different services allow you to leverage your holdings and increase your profits with a range of products with different risk/reward ratios. Your selected exchange should provide you with profitable products with attractive earning potentials such as savings, staking, loans, futures, and margin trading. More-developed global exchanges also offer a new form of financial services, called DeFi, or decentralized finance. Competitions and giveaways are a bonus. 


4. Reputation and track record

Once you verify that your selected exchange is secure, meets your needs, and offers fair conditions, it's time to review their brand and system. Registering on an exchange and depositing your hard-earned money takes trust. Before you send your money to an exchange, always verify their reputation, past incidents or scandals, legal and regulatory issues, and system performance. 


4.1 Reputation

Reputation is one of the most decisive factors in the success of a cryptocurrency exchange. Exchanges realize this very well, and a reputable company will do everything in its power to protect its users and name. One of the easiest ways to evaluate an exchange is to see what the community and social media followers say. You can also search the exchange name on the google news section to see the media reports. Who is the CEO and what kind of the team is behind the exchange? The team should always be approachable and hear the community’s feedback.


4.2 Track record

Actions speak louder than words. Search Google and social media such as Twitter, Facebook, or Reddit for information about recent hacks, lawsuits, or regulatory issues that might be a threat to your preferred exchange. Put good use to the Bitcoin memo “Don’t trust; verify,” and always check the accuracy of the information with multiple sources. Watch out for FUD


4.3 System performance 

You need an exchange that is reliable and withstands volatile market movements, sustains increased user activity, and provides liquid markets that allow you to quickly execute trades. 

Not all exchanges make this available, but try to look for the performance of their matching engine. This can tell how many trades can the exchange execute per second. Then go and visit their social media or blog to see the maintenance frequency and past outages. 

5. User experience, satisfaction, and education

The exchange you choose must be reliable, easy to use, and intuitive. Can the exchange withstand large trading volume during volatile markets? Does the interface provide a seamless experience? No one wants to waste time looking around menus for functions and buttons when they could be making money. 


5.1 User experience

You will spend a few hours looking at the interface of your selected exchange, so it’s a good idea to make sure you like the visuals and the user flow. Download their app or crawl through their website. Get the feel of the interface. Is it intuitive and straightforward? Is the color scheme easy on your eyes? 


5.2 Customer support & satisfaction

Bitcoin never sleeps. The cryptocurrency market is open 24/7, 365 days a year, non-stop. The chances are that eventually, you’re going to need some form of support. Check the customer satisfaction and customer support reviews for the exchange to see if you can count on their team would you experience some issue. Look for an exchange that provides 24/7 support, 7 days a week, with a high response speed and resolution rate. Global exchanges also often provide support in different languages so make sure that your preferred language is supported.


5.3 Education

If you got to this point and there’s still an exchange that meets all the criteria, there’s one more benefit you want to have - a learning source of unbiased and updated knowledge for your cryptocurrency education. Although last on this list, education is an extremely important part of a safe and profitable experience with crypto. The exchange should provide you with a plentiful of learning materials where you can learn more about security, trading, finance, crypto, and everything that’s related.

Conclusion

It’s not an easy task to find an exchange that meets all the criteria and there are only a few that tick-off all the boxes. But it’s worth the time to DYOR before you trust someone with your money. In the upcoming months, there will be more and more newcomers joining the markets, so don’t hesitate to share this article with your friends on social media. 


Register on Binance

Among the very few options that meet the criteria, we want to invite you to join Binance.com. As the world’s largest cryptocurrency exchange by trading volume, with 26 supported languages, we offer you an ecosystem of crypto-related products and services like no one else. Multiple deposit and withdrawal methods, a wide range of trading pairs, lowest fees, unbeatable matching engine, and 24/7 support prepared to resolve your issues in 11 languages. Trade on the go with the Binance App or enjoy the performance of Binance Desktop



Register on Binance today!



Binance Blog
News and updates from the world’s leading cryptocurrency exchange
Dec 30
2020
Are Crypto Exchanges Safe? How to Choose an Exchange You Can Trust.


What is your first memory of crypto? If it's the user interface of a cryptocurrency exchange, then you probably know how important it is to do your own research (DYOR) before you even register on one. 


The ever-growing cryptocurrency market has a significant demand for high quality and trusted exchanges. As the Bitcoin price hit an all-time high at $28,598 and rose more than $2,500 in two days, bitcoin became the talk of the town and everyone wants to buy some. But how do you find an exchange you can trust when there are more than 200 of them? What are the criteria that make a trusted exchange?


A search for an exchange you can trust

Finding the right exchange isn't easy, but it can be a great learning experience with the right tools and resources. In this article, you’ll learn the most important categories and factors you need to consider before registering on a cryptocurrency exchange. 


Each of the categories below should help you identify the exchanges to avoid and the exchanges to consider. And although there are hundreds of cryptocurrency exchanges, only a handful meet the criteria described below. 


1. Security

Your cryptocurrency is only as safe as the method you use to store it. Therefore, it's crucial to choose a partner you can trust and rely on — one that protects your private data and funds with the latest security standards, a professional security team, and ideally a recovery fund as a cherry on top. 


1.1 Security standards

Security must be the top priority of every exchange. Because of the difficulty required to hack a cryptocurrency, it’s much easier to target exchange and attempt to steal user funds or data. The best exchanges in the world have the latest security standards, employees trained for breach & intrusion incidents, undergo regular penetration testing, and educate their users on cyber-hygiene. Have a read about general security principles and crypto security to better understand crypto security.


1.2 Safety of funds 

Cryptocurrency markets are ripe with malicious actors and hackers looking for an opportunity to explore attack vectors on exchanges and steal your funds. Exchanges are a favorite target for hackers due to the large volume of money stored on them, and although successful fund thefts are rare, it's good to use an exchange with a funds recovery plan or insurance plan. 


1.3 Security team

The most important team at every crypto exchange is the security team. For this reason, many exchanges carefully protect the identity of their cybersecurity specialists, so it’s not an easy task to review the team. Ideally, you want to register on an exchange with the least incidents, with an active security team that publishes reports and researches, and collaborates with other projects on improving the security of the entire cryptocurrency industry.


1.4 Transparency

The threats aren't just external but also internal. The ideal exchange is transparent to its users from all points of view – clear and understandable terms and conditions, fee schedule, transparent operations, and roadmap. The exchange should operate in such a way that it is easy for its users and stakeholders to observe the operations and functioning of the exchange or review how the funds are stored and protected. Transparency is extremely important for all exchanges but twice as much for exchanges that also issue their own stablecoins. You can read more about transparency in stablecoins on Binance Academy. 


1.5 User data protection

The first process you'll go through is registration. You'll be required to share your email, first and last name, country of residence, and date of birth at a minimum. That's a fair amount of private information. Add to it know-your-customer (KYC) verification and payment details used for deposits, and there's a lot at stake. Choose an exchange that processes your data according to data protection laws and doesn't share them or resell them to third parties. 



2. Products and services

An ideal exchange should offer a wide variety of trading pairs and payment methods, coupled with a range of financial products to complement your cryptocurrency experience and open doors for new earnings opportunities.


2.1 Deposit & withdrawal methods

Before you start trading and using different products, you need to obtain some crypto. The fastest and easiest way is to simply buy some. Some exchanges might offer only 1 or 2 payment methods, but it's always better to choose an exchange with multiple options such as debit/credit card payments, bank transfer, P2P, or third-party payment providers. Each method has its pros and cons so always consider individual methods according to your circumstances and region.


2.2 Cryptocurrencies & trading pairs

Many exchanges provide services that allow you to buy a range of different types of cryptocurrency. Undoubtedly buying bitcoin is the first choice of many new crypto users, but later on, you might want to buy some other popular crypto such as Ethereum, BNB, XRP, or maybe USDT. In that case, you will need an exchange that provides you with all the options to choose from - both cryptocurrencies and trading pairs. A wide variety of trading pairs provides you with an increased selection of trading opportunities.


2.3 Products 

What do you expect from buying bitcoin or other cryptos? Do you only plan to buy and hodl, or do you want more for your money? Global exchanges are often surrounded by an extensive ecosystem of supplementary products such as crypto debit cards, assets custody and protection, trading services, and other financial services designed to improve your crypto experience and provide additional earning potential. Once you buy your first crypto, you might decide to hodl and stake, or maybe trade and boost your earnings. Whatever is your plan, make sure to pick an exchange that offers the solutions you need.

3. Fees and profitability

The stories of users registering on an exchange are different, but the goal is usually the same – invest and earn a profit. To maximize your investment potential, it's important to look for an exchange with a fair and transparent fee schedule, profitable products, and a generous returns scheme.


3.1 Fees & Referral Commission 

Fees are the primary source of revenue for cryptocurrency exchanges. Every time you make a trade or a transaction, you might have to pay a fee based on the exchange fee schedule. A generally acceptable maker/taker fee (or buyer/seller order) would be between 0.1% to 0.2%. Exchanges usually don't charge any fees on deposits and only a small fee on withdrawals, but this might differ across the platforms. Some exchanges return part of fees as referral commission to the user who recommended new friends to register. Consider your trading volume and calculate your average fees before you register. If you trade higher volumes, consider VIP programs that provide decreased fees as well as unique benefits within the platform.


3.2 Profitability

As the cryptocurrency market grows and the services develop, investing in crypto is not just about trading and holding. Different services allow you to leverage your holdings and increase your profits with a range of products with different risk/reward ratios. Your selected exchange should provide you with profitable products with attractive earning potentials such as savings, staking, loans, futures, and margin trading. More-developed global exchanges also offer a new form of financial services, called DeFi, or decentralized finance. Competitions and giveaways are a bonus. 


4. Reputation and track record

Once you verify that your selected exchange is secure, meets your needs, and offers fair conditions, it's time to review their brand and system. Registering on an exchange and depositing your hard-earned money takes trust. Before you send your money to an exchange, always verify their reputation, past incidents or scandals, legal and regulatory issues, and system performance. 


4.1 Reputation

Reputation is one of the most decisive factors in the success of a cryptocurrency exchange. Exchanges realize this very well, and a reputable company will do everything in its power to protect its users and name. One of the easiest ways to evaluate an exchange is to see what the community and social media followers say. You can also search the exchange name on the google news section to see the media reports. Who is the CEO and what kind of the team is behind the exchange? The team should always be approachable and hear the community’s feedback.


4.2 Track record

Actions speak louder than words. Search Google and social media such as Twitter, Facebook, or Reddit for information about recent hacks, lawsuits, or regulatory issues that might be a threat to your preferred exchange. Put good use to the Bitcoin memo “Don’t trust; verify,” and always check the accuracy of the information with multiple sources. Watch out for FUD


4.3 System performance 

You need an exchange that is reliable and withstands volatile market movements, sustains increased user activity, and provides liquid markets that allow you to quickly execute trades. 

Not all exchanges make this available, but try to look for the performance of their matching engine. This can tell how many trades can the exchange execute per second. Then go and visit their social media or blog to see the maintenance frequency and past outages. 

5. User experience, satisfaction, and education

The exchange you choose must be reliable, easy to use, and intuitive. Can the exchange withstand large trading volume during volatile markets? Does the interface provide a seamless experience? No one wants to waste time looking around menus for functions and buttons when they could be making money. 


5.1 User experience

You will spend a few hours looking at the interface of your selected exchange, so it’s a good idea to make sure you like the visuals and the user flow. Download their app or crawl through their website. Get the feel of the interface. Is it intuitive and straightforward? Is the color scheme easy on your eyes? 


5.2 Customer support & satisfaction

Bitcoin never sleeps. The cryptocurrency market is open 24/7, 365 days a year, non-stop. The chances are that eventually, you’re going to need some form of support. Check the customer satisfaction and customer support reviews for the exchange to see if you can count on their team would you experience some issue. Look for an exchange that provides 24/7 support, 7 days a week, with a high response speed and resolution rate. Global exchanges also often provide support in different languages so make sure that your preferred language is supported.


5.3 Education

If you got to this point and there’s still an exchange that meets all the criteria, there’s one more benefit you want to have - a learning source of unbiased and updated knowledge for your cryptocurrency education. Although last on this list, education is an extremely important part of a safe and profitable experience with crypto. The exchange should provide you with a plentiful of learning materials where you can learn more about security, trading, finance, crypto, and everything that’s related.

Conclusion

It’s not an easy task to find an exchange that meets all the criteria and there are only a few that tick-off all the boxes. But it’s worth the time to DYOR before you trust someone with your money. In the upcoming months, there will be more and more newcomers joining the markets, so don’t hesitate to share this article with your friends on social media. 


Register on Binance

Among the very few options that meet the criteria, we want to invite you to join Binance.com. As the world’s largest cryptocurrency exchange by trading volume, with 26 supported languages, we offer you an ecosystem of crypto-related products and services like no one else. Multiple deposit and withdrawal methods, a wide range of trading pairs, lowest fees, unbeatable matching engine, and 24/7 support prepared to resolve your issues in 11 languages. Trade on the go with the Binance App or enjoy the performance of Binance Desktop



Register on Binance today!