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8 things to consider when choosing a cryptocurrency exchange

milaeryomina

If you’re in Australia and looking to purchase some cryptocurrency, then the first step is choosing the right online exchange to trade with. But beware, not all exchanges are created equal!

Choosing a cryptocurrency exchange in Australia
Before choosing an exchange, you should know what kind of trading you’re interested in and ask yourself:  What’s most important to you?

Ease-of-use
A wide selection of coins
Low fees
Platform authenticity and security
All of the above
Well, it all starts with a bit of research. As a starting point to refer back to, here’s a table of the current Australian Cryptocurrency Exchanges.

Australian Cryptocurrency Exchanges April 2022
The table below displays some of our referral partners’ Cryptocurrency Exchanges.

This information does not reflect any ranking, rating, recommendation or endorsement by Canstar of cryptocurrency or any specific provider. Canstar is providing factual information supplied by providers. Not all providers or products are shown. Canstar will earn a fee from the providers displayed in the table, and the fee levels determine placement in the table. Cryptocurrencies are speculative, complex and can involve significant risks. Canstar is not providing a recommendation for your individual circumstances.

What to think about when choosing a crypto exchange
Here are the top eight things to consider when choosing a cryptocurrency exchange.

1. User interface & ease-of-use
Buying and selling crypto doesn’t need to be complicated. While having all the advanced trading features can be appealing to experienced traders doing high volume/futures/leverage trading, most crypto users are just after a simple way to buy and sell crypto that is safe and easy to understand. If this is you, you may want to look for an exchange that:

Is designed for simplicity and emphasises a user-friendly experience
Offers a clean and no-nonsense display of your assets and the current markets
Provides a free, personal wallet (kept on the exchange) upon sign up
Offers educational guides on the basics of crypto
Offers useful features such as recurring buys/dollar-cost-averaging, price notifications or the ability to pay your bills with Bitcoin (which is becoming more popular in Australia)
Has a desktop/mobile app that is easy to use
Isn’t convoluted with every advanced trading feature out there (which can make buying crypto WAY harder than it needs to be)
2. Platform Security
Platform security is paramount. If an exchange is insecure you could potentially lose all your assets. If you want to avoid this happening, it may be best to prioritise exchanges that offer:

2-factor verification (2FA) – especially for withdrawals
The vast majority of customer funds stored offline in cold storage
A web address that starts with HTTPS (NOT HTTP)
A KYC (know your customer) policy, which ensures the integrity of the platform and is now a legal requirement for most exchanges in Australia
Biometric face recognition, which greatly improves your account security
Sophisticated and regularly updated multi-layered security
Regular security reviews and criminal background checks of employees
If you have a large holding of crypto stored on an exchange, we recommend considering using a cold, hardware wallet for added security.
3. Company authenticity & customer-support
While this is one that people too easily gloss over, the authenticity and transparency of the company and the people who run the exchange are very important. If you’re new to crypto there’s a good chance you may need to contact your exchange at some point, so it’s really worth looking into an exchange that:

Offers responsive and Australian-based customer support
Is passionate about crypto education and getting newcomers crypto-savvy
Openly reveals its owners, company location and the members of its team
Has members who are personally involved with local crypto events and active in crypto forums and Facebook groups
Has an upfront and transparent fee schedule (be aware that most exchanges claim this even if it isn’t true)
4. Fees & charges (especially the hidden ones!)
The fees that an exchange charges matters! And they vary wildly, with many exchanges stowing hidden fees away where they aren’t so easy to notice. Most exchanges charge fees for crypto trades, it’s a good idea to review and compare a few different exchanges to see who provides the most competitive fees. Be vigilant! Some exchanges may advertise that they charge no fees only to take their cut from hidden currency conversion fees, their spreads, or listing their coins at prices that are higher than other exchanges. Looking for an exchange that ‘locks in’ your trades (also called guaranteed pricing) can guarantees that you get the price you see at the time of transaction even if the trade doesn’t settle immediately. Make sure you can trade directly with AUD. While this is available on most local exchanges, some exchanges require you to convert your AUD to BTC or USD before trading. They then charge a sneaky currency conversion fee they don’t tell you about when you signed up!

5. Selection of coins
As you know, Bitcoin is no longer the only crypto on the market. Coins like Ethereum, Litecoin and Ripple are becoming increasingly part of the mainstream vocabulary and there are thousands of other altcoins to choose from. While many altcoins are highly risky and volatile investments, the crypto market is booming with innovative new coins, some of which may do well in the future. If you want access to more than just Bitcoin and Ethereum, it may be worth looking at exchanges with a wide selection of coins.

6. Local or international exchange
Generally speaking, it’s better to choose an exchange from the country you are in. This makes things easier with:

Any legal and regulatory changes
Doing your crypto taxes at the end of the year
Having quality customer-support
Buying crypto direct with AUD
If you do want to use an international exchange for whatever reason, this is possible too, just be mindful of some of the drawbacks they can have if you’re living in Australia.

7. Spreads & liquidity
Have you taken spreads into account? Spreads are another way you can be charged fees that are not stated upfront, so get savvy about them before you sign up. Basically, the spread is the difference between the quoted buy and sell price on an exchange. Having tighter spreads (a lower difference between the quoted prices) is beneficial in a number of ways and will minimise your fees and losses when trading cryptocurrency. Not only do spreads affect every trade you make but they are often not stated upfront and may leave you confused and out-of-pocket.

Liquidity on the other hand makes it possible to complete transactions faster, more easily and without so much price volatility. The higher the trading volume is, the more liquid an exchange or any individual asset is. It is probably a good idea to prioritise exchanges that offer ‘locked-in trades’ or ‘guaranteed pricing’. Depending on the type of trading you’re looking to do, liquidity can be an important factor.

8. Instant trading, verification & method of purchase
Having access to instant withdrawals and deposits is desirable for most traders. Additionally, the method of purchasing cryptocurrency can vary between platforms. Some exchanges offer deposits by bank transfer, PayID, PayPal, POLi, or credit and debit cards. Choose an exchange that offers free, instant AUD deposits. Some exchanges have begun using PayID/Osko payments as their deposit method which is a safe, easy and free way to deposit money into your crypto account. However, it is also worth noting that there are some exchanges out there which only accept other cryptocurrencies or USD – you will likely pay an extra conversion fee if you are trading/depositing AUD. It usually helps to choose an exchange with fast/instant account verification, especially if you’re eager to get trading. You’ll usually need to provide an official ID document and do a biometric face check for instant verification to be possible.