Cryptocurrency Exchanges — Explained
If you’re new to the world of cryptocurrency and decentralized finance (DeFi), you may be a bit confused about the role cryptocurrency exchanges play. The good news is that DeFi and cryptocurrency are open to almost anyone. If you can access an internet connection, you should be able to buy and trade cryptocurrency or access other decentralized financial products.
But before you dive in, you’ll need to take some preliminary steps. Here’s what you need to do:
Choose a Crypto Exchange
A cryptocurrency exchange, crypto exchange, or digital currency exchange is a platform that enables the buying and selling of digital assets like cryptocurrencies. Crypto exchanges are generally run by companies. They make revenue by charging small fees for exchanges through their platform.
There are a number of crypto exchanges to choose from.
When selecting an exchange, you need to consider its security, its fee structure, and the currency pairs it offers. Most cryptocurrency exchanges have user-level protection such as two-factor authentication, but you should also consider each exchange’s security history when making your decision.
Just like investing on a traditional platform, it’s also impossible to avoid fees when trading cryptocurrency. Thankfully, most platforms keep their fees relatively small, typically requiring you to pay less than 1% of the total amount of the transaction. Some platforms even offer reduced fees on large transactions.
Finally, you need to consider what types of currency pairings the exchange offers. If you want to trade Ethereum or purchase Ethereum-based currencies, you’ll need to select an exchange that supports them.
Attach a Funding Account
Once you’ve selected a crypto exchange and created an account, you’ll almost be ready to buy cryptocurrency.
First, you must attach another account you will use for payment. Most exchanges will let you connect a bank account, debit card, or another type of account to keep your exchange account funded. Using a bank transfer will likely be less expensive than using a card.
Order Your Desired Cryptocurrency
Once you have a payment method set up, you’ll be able to start placing orders for cryptocurrency. Most exchanges will let you enter the exact dollar amount you want, and you’ll be able to purchase the currency of your choice at the exchange rate. Some exchanges also allow you to place a “limit order,” which will enable you to automatically purchase currency once it reaches a given rate.
Store Your Cryptocurrency
The exchange will likely allow you to leave your cryptocurrency in your exchange account. If you’re a beginner and you aren’t investing large sums of money, this might be a viable and convenient option.
But if you’re investing a significant amount of your wealth into cryptocurrency, you should consider more secure forms of storage. Digital cryptocurrency wallets come in various forms, but they are all designed to keep your investment safe. For example, desktop wallets keep your investment secured on your desktop computer while hardware wallets back up your assets onto a physical device that’s similar to a zip drive.
Currently, most digital asset consumers have limited options for banking level access to their digital assets. Most traditional banks don’t provide access to digital assets, and most DeFi platforms aren’t as user-friendly as banking-level apps.
EQIFI is a decentralized protocol that delivers digital financial products directly to the user through an intuitive interface. It will provide a single, unified platform for pooled lending, borrowing, and investing for ETH and ERC-20 tokens.
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Originally published at https://eqifi.com on August 5, 2021.