Which Crypto Exchange is Best for you?
Are you looking to get started investing in cryptos? Or maybe you would like to have a better idea of which exchange will make the most sense for you. There are literally thousands of cryptocurrencies, most of which the casual investor will never hear about. There are also hundreds of crypto exchanges. So where do we start? Finance Frog has already reviewed several crypto apps to give you a more in depth look.
Use this article as a cheat sheet when determining which crypto applications will work best for your needs. We will categorize and rank 6 different popular exchanges (Coinbase, Gemini, Kraken, Robinhood, Uphold,) where you can buy and sell various cryptocurrencies. They will be grouped based on 5 criteria:
Ease of Use
Fees
Security
Access to multiple crypto currencies
Ability to earn crypto interest
Ease of Use
Not surprisingly, many of the popular crypto exchange apps are very easy to use. Without an easy to use interface these companies would not be able to retain users. Here are the Finance Frog top 3 for ease of use:
(1) Robinhood
Easily trade a small number of cryptos as well as stocks. Robinhood is in the process of rolling out transferability of cryptos between wallets. Robinhood also tracks profit and loss as part of the interface.
(2) Uphold
The next spot goes to Uphold. Easily trade cryptos and various national currencies. Does not track profit and loss as part of the interface. Allows you to easily trade between various cryptos.
Fees
Another very important aspect to review are the fees an exchange will charge you. Simplicity and ease of use are great, but if you pay high fees it’s not worth it in the long run. Every extra dollar you are charged in fees is a dollar that is not going towards your investment and over time this can add up to a non trivial amount. Here are the Finance Frog top 3 to get the best bang for your buck:
(1) Kraken
Kraken provides users with very low fees. When using Kraken Pro you can expect fees on normal transactions to be 0.26% or less. When you are trading large amounts, $50k or more in a 30 day period, these fees decrease steadily to 0.10% or even 0% if you are lucky enough to be trading millions of dollars at a time. Two other important considerations for using Kraken: 1) Kraken main account funding via wire transfers which may cost $15 or more per transfer. This is different than other common exchanges. Given this we recommend transferring $5k or more at a time to keep the overall fees low. 2) Kraken has an Instant Buy option that is straightforward and can be connected directly to your bank account, but you will pay extra for the convenience. Expect to pay a 1.5% Kraken fee + 0.5% online banking processing fee.
Here is a more detailed breakout of their fees.
(2) Gemini
Gemini is another low cost option for crypto investors. Using Gemini’s Active Trader Platform, fees start at 0.35% and decreases once your 30 day trading volume goes beyond $500k. See Gemini's complete Active Trader fee schedule here. Please note that using the standard Gemini trading interface your fees will be much higher. In the range of 1.49% (higher if you trade less than $200 at a time) + 0.5% convenience fee. For beginners this is fine as a starting point, since it is slightly easier to use, but it's worth taking a little time to familiarize yourself with the Active Trader platform and save yourself more than 1% in fees per trade.
Security
Not as visible as the fees or noticed like a smooth interface, but arguably more important is the security. We all want to make sure our investments are in good hands and will not be exploited. There are plenty of crypto horror stories like the Mt. Gox scandal where people’s crypto seem to disappear. Given cryptos and blockchain technologies are still relatively new and constantly evolving, there is plenty of skepticism (healthy and unhealthy) surrounding it. The problem is that unless you’re familiar with cyber security and familiar with the inner workings of these exchanges, it’s hard to truly know how secure they really are. However, there are a few metrics we can use to give us some guidance.
First is 2 factor authentication (2FA), which adds an extra level of security for logins. This typically comes in the form of a text message, email or via a separate application that generates a random set of numbers as an extra step for your login. All exchanges noted below provide or require 2FA for user accounts.
Asset Insurance. While cryptocurrencies are not insured by the FDIC, some crypto exchanges provide insurance for theft and fraud against their platform.
Lastly is cold storage. Just like we can pull crypto off exchanges onto offline wallets, exchanges can also pull funds offline to reduce risk of malicious actors stealing your crypto holdings.
All exchanges noted below have a bug bounty program where they can leverage outside resources to test weaknesses in their site so they can be repaired.
Here are the Finance Frog top 3 secure exchanges:
(1) Kraken
In addition to 2 factor authentication (2FA) for login, Kraken also provides 2FA for funding and trading events. This adds an extra level of protection for your account.
Kraken keeps 95% of deposits in offline, geographically distributed cold storage. They keep full reserves so that withdrawals can be supported on demand.
The Kraken security page can be found here.
(2) Gemini
Gemini offers digital asset insurance giving its users some level of protection in cases of a hack or breach of their systems. This does not, however protect you from unauthorized access to your user account
Gemini states that the majority of customer deposited crypto is stored in offline cold storage.
The Gemini security page can be found here.
(3) Coinbase
Coinbase also provides insurance against theft from its systems, but not from unauthorized use of your account.
Coinbase claims to keep 98% of customer funds offline.
The Coinbase security page can be found here.
Access to Cryptocurrencies
For most crypto investors all the exchanges noted above will give you the ability to invest in the major cryptocurrencies like Bitcoin, Ethereum, Cardano, Ripple and Polkadot. Where there are differences, are in some of the smaller, lesser known and newest crypto projects. If there is a particular lesser known crypto you are interested in investing in, you will want to research how and where you can trade it.
The amount of cryptos available on exchanges is a moving target, as new cryptos are added very frequently. Here are the top 3 exchanges providing the most access to cryptocurrencies, utility tokens and stablecoins. As measured by the number of cryptos tradable for U.S dollars. As of October 2021:
Coinbase Pro (Over 90 tradable crypto assets)
Uphold (Over 55 tradeable crypto assets)
Earning Interest
Another growing area of cryptocurrencies is the ability to stake and earn interest on your holdings. In many cases these interest rates can be very attractive, especially when compared to the very low rates of typical banks. Of course there are additional risks involved in staking, such as; minimum holdings, lock up periods and general asset volatility. For example some exchanges require you hold a certain amount of a given crypto before you are allowed to earn interest. While others may have lock up periods, where once staked, the asset cannot be unlocked until the specified time has passed. Typically days or months, but in some instances it can be potentially years, as in the case of the Ethereum 2.0 upgrade. Here are the Finance Frog top 3 exchanges for earning interest:
Final Thoughts
Ultimately you will need to decide what factors are most important to you when it comes to choosing an exchange to trade crypto currency. All the exchanges reviewed above are generally considered as trusted within the crypto community and seem to take security and overall user experience seriously.
Ask yourself and rank the importance of a few questions:
Am I looking for access to many small cryptos? Or just a few majors like Bitcoin and Ethereum?
Do I want to earn interest on any of my crypto holdings?
What volume and frequency do I expect to trade crypto with?
Whatever exchange you feel works best for you, please be sure you take advantage of their lowest fees. Many exchanges offer easy to use platforms for beginners, but charge high fees for the convenience. Additionally, these same exchanges also offer platforms where crypto can be trader at much lower fee structures. For example Coinbase and Gemini have Coinbase Pro and Gemini Active Trader. They are slightly more challenging to use at first, but are well worth the lower fees.
Earn Crypto
If any of the exchanges discussed seem like a good fit, see our referral codes below to earn crypto for opening an account and trading crypto.