4 tips when you first visit a crypto exchange
Finding a crypto exchange is one of the first things you need to do when starting in crypto. Crypto exchanges are, aside of crypto wallets, one of the pillars of the ecosystem that allows you to trade and store cryptotokens – such as Bitcoin, Ethereum and more.
If you are a newbie, you can find a lot of exchange comparisons online that break them down by fees, ease-of-use, token variety and more. Please look for some of those to pick up the one most suitable for you. Ones of the most common as of 2021 are Kraken, Binance and Coinbase, but there are many more. Now, however, we will dive into what awaits you on basically any of them. Please note that this is not a financial advice and you should do your own research.
Crypto exchange is a gateway into crypto world. It allows you to exchange your fiat currency (dollars, euros…) into crypto, crypto to another crypto and crypto back to fiat. Exchanges work (and sometimes look like) stock exchanges and allows you to trade with advanced orders, but a simple one might be good for you at the beginning.
Tip #1 See if there is two factor authentication. If so, enable it and be ok with few more seconds each time you log in. If someone discovers your password, they will still not be able to log in as long as they do not have your 2FA device (often your phone).
First, you would need to fund your account with fiat (or crypto). Fiat funding can be done (depending on platform) most often via bank transfer or card payment. Check the fees, as some of those might incur them, however very often at least part of those options are free.
Tip #2 Check options for funding and consider time to process and fees incurred. If you are in Europe, check SEPA options.
One important caveat that people often do not know about is that you would need to undergo some kind of anti-money-laundering identification. Crypto exchange will ask you (very often as a prerequisite to buying crypto with fiat) for some personal information and some documents. Often it is one ID document (ID, passport, drivers’ licence) and some statement confirming your permanent address (bank statement, utilities…). The process is often very quick and takes seconds for systems to process, but in some cases, you need to count that this will delay your purchase by several days.
Tip #3 Count with time to process AML check and have your documents ready.
Then, you would like to buy some crypto. Here, you usually need to count with some fee. It is usually peanuts compared to many other fees you see in banking, but still, it is good to see how much it is. If you decide to buy crypto with crypto or convert crypto back to fiat, you often need to pay some fee as well.
When you own your crypto, you can decide to keep it on the exchange or use it otherwise (like buying digital art on opensea.io or store it in a wallet). For this, you need to transfer it to another address (e.g., address of your crypto wallet) and transfers like these cost gas fees. It is, however, not very safe to keep crypto in exchange, so a little fee to transfer to another wallet outside of the crypto exchange might be worth it.
Tip #4 Due to hacking risks, it is the best if you do not keep your crypto on an exchange, but move it to the wallet to which you own the primary key (not often the case with exchanges).
If you decide to withdraw your money, you often need again count with some fee and with some days for the transfer as it is often done via bank transfer. In some cases, like SEPA payments, the fees and time to process are very small/quick and you can have your transfer within minutes or hours in your bank account.