Top 3 crypto exchanges in 2022

What are crypto exchanges?

A crypto exchange is a platform where users buy, sell and trade different cryptocurrencies. Along with trading services, Crypto exchanges provide price discovery through trading activity, as well as storage for crypto. Earlier, people were only able to obtain crypto by mining or by setting up transactions in various online and offline forums – a cumbersome procedure. Today, there are hundreds of crypto exchanges that offer a wide variety of digital assets, security levels, and fees. Now, users are responsible for choosing the exchange and digital assets that satisfy their unique needs, financial limitations, and security requirements. 

There isn't a single cryptocurrency exchange that is best for every user, according to Tyrone Ross,  a financial advisor and the CEO of Onramp Invest, a cryptocurrency investing platform for financial advisers. He suggests considering your personal cryptocurrency interests and choosing an exchange that supports them. Therefore, a proper study is necessary before beginning crypto exchanges.

There are a few crucial considerations that must be taken into account before registering and beginning to use the crypto exchange. The optimal cryptocurrency exchange for users’ needs will depend on several factors, including geographic location, the amount of crypto the users want to trade, and how they want to trade.

The key considerations that need to be kept in mind when assessing crypto exchanges are:

• Identification requirement: Users are required to submit identity verification, such as a photo ID or proof of address while setting up an account.
• Geographic limitation: Some exchanges are available only in specific locations.
• Trade limits: Depending on the identity verification process, some exchanges may impose restrictions. 
• Trading fees: Crypto exchanges, like every other platform, charge fees to make money.
• Fiat currency support: Some crypto exchanges deal only in cryptocurrency and don’t support fiat currency.
• Deposit & withdrawal method: Exchanges that accept fiat currency will provide a variety of deposit and withdrawal methods, including wire transfers, bank transfers, and credit cards.
• Trading pairs: It's important to confirm that the exchange you are considering offers the cryptocurrency you wish to trade.
• Hacks & security: The ecosystem of cryptocurrencies is constantly subject to hacks. Selecting an exchange with a track record of security is crucial. Secure exchanges include two-factor authentication and other security features.

Generally, there are three primary categories of crypto exchanges: centralized, decentralized, and hybrid. However, there are other means of buying and selling crypto, such as investing apps and P2P (peer-to-peer) trading platforms.

How do crypto exchanges work?

A Crypto exchange is a marketplace where traders buy and sell cryptocurrency. A live order book is generally used to accomplish this. The order book shows real-time purchase and sells orders that have an immediate impact on the exchange rate of the cryptocurrency. Since each exchange determines the price based on its own trading volume, an exchange with more users is more likely to offer prices that are relevant to the market. This is the main reason why there are frequently small differences in the price of crypto on various exchanges. 

Numerous orders can be placed on exchanges, but just two of them—the "Limit Order" and "Market Order" – are widely used. Suppose we wanted to purchase 0.50 BTC on the BTC/USDT pair.  Let’s use Order Book #1 as an example to understand. Placing a limit order to buy 0.50 BTC at 38,500.00, would direct the exchange to trade your funds at a predetermined price or better. This guarantees that you'll receive the desired price but does not assure that your limit order will be executed. To make sure that your limit order is executed, there must be a buyer or seller willing to trade at that price. On the other hand, if it were a market order, the exchange would trade your fund at the best possible market price available in the order book. A market order to buy 0.50 BTC would therefore look like this:

As mentioned earlier, placing a market order aggregates the best rates available for the relevant quantities. In our case, assuming order book liquidity doesn't change, we would end up with 0.50 BTC at an average cost of $38,512.58 per BTC. Obviously, it can be difficult to place a large block trade on an exchange since price variation may move against you and provide you with a poor entry or exit point.

To begin trading, you must fund your exchange account, also referred to as a wallet. You can then view the trading prices of various crypto which are determined by the market. Then you can place a buy order to purchase crypto and your order is added to the order book along with other buy and sell orders.

What makes crypto exchange so successful?

The primary benefit of crypto exchange is that it is based on blockchain technology – there is no central authority. This leads to a number of additional advantages, including simple transactions, a chance for traders to earn a higher return, and even quite strong network security.

The following are the factors that make a crypto exchange so successful.

• Simple and user-friendly for beginners.
• Allows for the trading of crypto in a reasonably controlled environment.
• Some exchanges provide tax forms to users, making it simpler to compute crypto taxes.
• Crypto exchange is found to be the safest.
• Crypto exchange enables users to trade fiat currency for crypto.

Since the crypto exchange is the simplest place to purchase crypto, this is where most people first experience crypto.

Top three crypto exchanges

Before selecting a crypto exchange, it is important to consider factors like supported asset fees, payment options, and security. Following are the best crypto exchanges of 2022.

Binance is the largest crypto exchange in the world by trading volume. As of August 2022, the Binance exchange had 90 million users and a $76 billion daily trading volume. The platform is a reliable place where users buy, sell and store their digital assets and it has access to over 350 cryptocurrencies listed and thousands of trading pairs. Additionally, Binance provides discounts for using Build and Build (BNB), one of the most widely used utility tokens in the world. 

Binance is user-friendly and one of the cheapest with a large number of transaction options and an advanced set of trading tools for experienced investors. Among all the trading platforms, it has one of the more generous fee structures. The fee keeps getting lower as your trading volume increases. The following are the advantages of Binance:

• Outstanding infrastructure for cybersecurity.
• Low fees.
• Advanced data visualizations and trading charts

Coinbase exchange is a US-based platform where users can easily purchase, sell, trade, and store cryptocurrencies. The platform supports fundamental transactions, digital wallets, and PayPal withdrawals and is user-friendly for beginners. 

It is best for beginners because of its user-friendly interface, comprehensive instructional resources on topics like volatility and blockchain, and strong security features. With a simple onboarding procedure that eases users into trading, the Coinbase platform does a remarkable job of eliminating the entrance barrier for investing in cryptocurrencies. The platform's layout makes it easy to navigate and manage cryptocurrency simultaneously. The following are the advantages of Coinbase exchange:

• Easy-to-use interface and straightforward purchase procedure.
• A wide range of educational resources for better understanding.
• Wide selection of crypto.

Kraken is a US-based crypto exchange where users can buy, sell, and trade a variety of assets for comparatively minimal commissions. Additionally, customers can receive benefits by staking coins. The exchange offers users the opportunity to trade over 100 crypto assets and 7 fiat currencies at a market-leading level of euro volume and liquidity. Kraken is the best choice for beginners and existing investors of cryptocurrency searching for reasonable trading fees and access to a range of coins. For buying, selling, and storing cryptocurrencies, Kraken offers secure platforms. Both cryptocurrency spot trading and cryptocurrency futures are supported by Kraken. Following are some of the advantages of using Kraken:

• There are various customer service options, including chatbot and phone support.
• The cost of withdrawing bitcoins is affordable.
• Provides customers with a wide assortment of instructional cryptographic content.