If you are looking to get started with digital currencies, and in particular Bitcoins, it will pay to look at exchanges. From Gemini to Luno, to Unocoin there are many to choose from, so knowing which one to turn to can be confusing. We have set up a guide for you which is designed to help break down the features that you should be looking for in your chosen exchange. Ultimately, you will be investing your funds into Bitcoin, and the exchange in which you buy them from, so it is important that you are choosing the right one for you. Our checklist has been designed to help you come to the right decision, without forgetting about anything. Although, you should always do your own research first, as exchanges will likely change based on the market itself and the exchange rate. To help get you started, these are just some things you should be considering:
- Where the exchange is located.
- It is important to know what country the exchange that you are looking at is based out of, as you may find that laws and regulations can change dramatically from country to country.
- It is much more advisable to buy your Bitcoin from an exchange that is based in your own country.
- Whether you choose an exchange that is based in your own country or not, it pays to always read the fine print carefully, as there may be some currencies that are not accepted. This is particularly important if you are looking to trade in multiple currencies.
- How the Bitcoins can be purchased and any exchange fees.
- Before you commit to any exchange, it is important to determine how you can pay for your Bitcoins, and whether this is convenient to you. There are a number of possibilities, including wire transfer, cash, credit cards and PayPal just to name a few. It is important to find one that suits you best.
- Pay close attention to the privacy levels as well, as some forms of payment will be more private than others. Credit cards are likely to be the least private way to purchase Bitcoins, so bear this in mind if you were considering using that as a form of payment.
- Different exchanges like LocalMonero will also charge different exchange fees, so it is important to look around and find an exchange where the fees are a reasonable amount, and are not overpriced compared to the rest of the market. It is also important to note that the fees can change overtime, and can vary drastically. It is worth checking to see whether your chosen exchange charges additional fees on top of Bitcoin transaction fees.
- How quickly will you receive your Bitcoins?
- Something that is very important to research prior to picking your Bitcoin exchange is how quickly you will receive your currency. Although the time frame might not bother you, it is worth knowing, so you can flag up any problems should they arise.
- Check to see if your exchange offers a ‘locked in’ price. This means that the price in which you buy your Bitcoins at, is the price that you will actually be charged; even if the Bitcoins take a few days to arrive, giving time for the price to change. It is best to find all of this out prior to signing up to an exchange, so you can be prepared.
- Anonymity?
- Before committing to any exchange, it is important to decide whether anonymity is important to you or not.
- Although complete anonymity is very difficult, there are a number of different things that you can check that will help to protect you. Make sure the exchange that you choose follow both the Know Your Customer (KYC) and Anti-Money Laundering (AML) laws in your own country. Although these will ultimately protect you in the long run, it does mean that some identity information will have to be sent to them before you can purchase any Bitcoins.
- Preventing and avoiding fraud should be at the front of your mind all the time you are making decisions about the Bitcoin exchange. We will go into more detail on how you can prevent being a victim of fraud later on.
- How secure is the exchange?
- If you are only going to research one thing, it should be how secure the exchange is. It is not something that should be overlooked at all. Firstly, check that the web address is secure. If it has HTTP it is not secure. It must have HTTPS. If it is not secure, do not consider it, as it is too much of a risk.
- Other factors worth checking is if the exchange offers secure log in, as well as a two-step authentication.
- If you are not happy with the security features of an exchange, do not sign up to the exchange. Trust your instinct, and keep your money safe.
- Has the exchange got a good reputation?
- One of the most important things that you can do when it comes to choosing an exchange is to listen to what others are saying about it. Reputation and word of mouth is one of the most reliable pieces of feedback that you can get.
- If you have not heard much about the exchange that you are looking, visit some internet forums and ask questions and get feedback. It is a great way to get an honest review about what to look for, and might help influence your decision.
How to help prevent Bitcoin Exchanges fraud:
Unfortunately anything that is done online has an element of risk attached to it, and careful measures must be taken to keep your account safe. There are some basic steps that you can follow that will help to keep you safe online, and often they stretch further than the exchange itself.
- Never disclose how much your investments are worth
- Posting how much your investments are worth will instantly prick the ears of any hackers that are out there. Do not feel that you have to disclose anything about your investments, or what you have been able to purchase with them.
- Never disclose where you trade
- Much the same advice as above. Disclosing where you trade can be very risky, and you instantly open yourself up to fraud risks. So, the bottom line is, to not discuss where you trade, especially on public social media sites and forums, such as Twitter and Facebook.
- Use an exchange that offers a Two Factor Authentication
- Finding an exchange that uses a two-step authentication is a great way to keep your accounts protected. The two-step authentication works in a very simple way, where the user will supply a username and a password, and a third party will provide a temporary security code by text, or app. This makes it very difficult for hackers to enter your account, as they will have to access to your phone; so before you commit to a Bitcoin exchange, check to see if yours is supported by the two-factor authentication.
- Use more than one exchange
- Spreading your investments across more than one exchange will help to keep them protected. Doing this will mean that if one account on an exchange got hacked, you would not lose all of your investments.
- Avoid using real answers in security questions
- When you set up an account, it is likely that you will be asked a number of different security questions, such as ‘what was your first pets name?’ or ‘What city were you born?’. Good and experienced hackers will know where to look to get this information, and it is not unlikely that you might have leaked at some point online. The easiest way to protect yourself is to use false answers, that only you know the information to.
- Remember that no amount of security is too much
- This is one of the most valuable things that you can remember when using an exchange. Research different exchanges well, as it is in your best interest that you protect your assets through as much digital security as you can. Don’t tell anyone your passwords either, and remember to only invest as many Bitcoins as you are willing to lose.
- Use Multi-Sig exchanges
- To increase security and reduce your chances of becoming hacked, pick an exchange that offers multi-sig. This means that two signatures are required, but also means that two servers would have to be hacked in order to steal your investment, adding extra security.
Even if you follow all of these, it will not eliminate the risk of fraud completely, but rather make it as hard for the hackers as possible. Regardless, it is ultimately your responsibility to research your exchange well, and keep on top of all the security changes and updates.
References And Further Reading:
- Bitcoin; How to Avoid Bitcoin Fraud
- Medium; How To Keep Your Crypto and Digital Assets Safe Online
- Bitcoin Exchange Guide; Top 3 Ways To Avoid Bitcoin Scams – Fraud & Hacking Prevention
- Bitcoin Magazine; How To Secure Bitcoin Exchanges, or Why All Hope Is Not Lost
- AtoZ Forex; Top 10 Cryptocurrency Exchanges 2017
- Bitcoin; How To Choose the Best Bitcoin Exchange
- Bestbitcoinexchange; How to Choose The Best Bitcoin Exchange?
- Master The Crypto; Crypto Guide 101: Choosing The Best Cryptocurrency Exchang
