Engaging with cryptocurrencies can be, without a doubt, a very complex and challenging venture. It doesn’t matter whether one is a beginner buying a satoshi or an experienced trader using leverage strategies to maximize gains — the digital asset landscape can be a journey for all.
Exchange or OTC desk operators must know the requirements of their users in order to provide a truly valuable service and exchange to them. At Scalable, we understand the pain points that cryptocurrency exchange users face, and in turn, have the necessary technology to help our exchange clients meet these requirements.
In this short guide, we suggest the main variables that need to be taken into account when choosing a digital asset exchange.
1. Cryptocurrency asset pairs supported. The digital asset palette offering varies within exchanges, with massive differences existing between each other. Top exchanges can offer hundreds or thousands of cryptocurrencies, while others can offer merely tens. Another major difference is the asset pair offer. Big exchanges offer thousands of different asset pairs, combining both crypto-to-fiat (such as BTC/USD) and crypto-to-crypto (think BTC/ETH), whereas others don’t have that possibility.
★ Choose an exchange that offers a wide choice of digital asset pairs, in particular the ones you are looking for.
2. Intuitive, user-friendly interface & easy purchase process. Understanding cryptocurrency technology can be tricky. Learning how to analyze each token on its fundamental or speculative merits is even more so. Utilizing a cryptocurrency exchange does not need to follow this course. User-focused interfaces and intuitive designs lighten the barriers to entry, taking out an unnecessary load from interested newcomers.
★ Choose an exchange that you feel is easy to navigate and understand.
3. Security. As digital assets move in a -typically unregulated- terrain, cryptocurrency exchanges are not required -nor have any major incentive- to have robust security systems in place. Many exchanges have fallen victim to hacks, scams, and other creative ways used by malicious actors to get ahold of users’ funds. ID verification, two-factor authentication, and encryption protocols are merely the tip of a truly secure iceberg — and few create that clearly impenetrable barrier.
★ Choose an exchange with a strong security history and includes safety measures such as ID verification and 2FA authentication.
4. Fee structure. Similar to traditional financial institutions, cryptocurrency exchanges generate profit via fees. Deposit, withdrawal, and transaction fees can end up being quite sizable if a user trades on some high fee-structure exchanges. After some time, high fees end up taking a considerable amount of any potential profit or can intensify losses.
★ Choose an exchange that provides a clear fee structure that suits your needs.
5. Liquidity. One of the pillars that determine the quality of exchange is liquidity. Its metrics and analytics can help understand under which conditions the exchanges’ users trade; helping to assess market makers and their performance, and contrasting the exchange’s qualities. Strong liquidity will ensure minimal slippage and efficient executions for any order size.
★ Choose an exchange with a deep liquidity pool and market surveillance monitoring.
6. Exchange features. Depending on the trading profile, any user might need a wide range of trading order types and exchange features that can align with their strategy. Features can include margin and futures trading, as well as various order types such as hidden, reduce-only, and take profit orders.
★ Choose an exchange that is compatible with your trading strategy and level of professionalism.
7. On/off-ramps. Having an easy and secure way to get in and out of the digital asset world can be just as important as having a wide crypto offering. Unfortunately, because of the regulatory requirements that must be met for an exchange to offer on/off ramps, many avoid this, causing an unnecessary pain point for users.
★ Choose an exchange with integrated technology allowing for easy fiat-to-crypto payment gateways.
These are only some of the factors to consider when choosing an exchange — the ones we have learned from experience and practice are what digital asset exchange users look for. A cryptocurrency exchange that is able to offer the mentioned features will have a strong base to attract new users and retain existing ones.
Interested in improving your exchange to give the ultimate experience to your users? Get in touch with our team today.