cryptocurrency

Choosing a Cryptocurrency Exchange – DRIVE Insider


There are literally hundreds of crypto exchanges available to trade on. Just trying to understand what they do, what they offer and which is the best for you can be enough to dissuade you from trading at all.

So we’ve put together a handy guide to the types of crypto exchanges there are and what they do to help you decide which best suits your trading needs.

A cryptocurrency – or “crypto – exchange is not unlike a stock exchange, though rather than stocks, users are able to buy and sell cryptocurrencies. Crypto exchanges are generally grouped by the types of transactions they facilitate:

 

Fiat-Crypto Exchanges

These exchanges allow users to purchase crypto using fiat currencies (government-issued currencies like US dollars, British pounds, etc.), creating a lower barrier to entry than other types of exchanges.

Some Fiat-Crypto exchanges also allow Crypto-Crypto trading, such as DRIVE Markets.

Crypto-Crypto Exchanges

These exchanges require users to purchase cryptocurrencies using another cryptocurrency. They often offer a larger variety of assets to trade, commonly known as ‘altcoins’.

Using this type of exchange often requires a user to first use a Fiat-Crypto exchange in order to purchase a cryptocurrency with which to trade.

Peer to Peer Exchanges

These exchanges match buyers and sellers but don’t facilitate the exchange itself. Some will offer a form of escrow service in order to minimize risk for both parties.

Popular P2P exchanges include LocalBitcoins, Bisq and Paxful.

Brokerages

Brokerages, such as eToro. don’t technically count as an exchange as you don’t take ownership of the asset you’re trading.

Rather, you trade a CFD (contract for difference) which allows you to profit from the price movement of said asset without actually owning it.





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