What is a Cryptocurrency Exchange?
Take a closer look at what exactly is a cryptocurrency exchange, how they work, and how you can get started investing in crypto.
Cryptocurrencies are becoming more and more relevant in our increasingly digital lives. If you think about it, most of our transactions nowadays are done digitally either through mobile banking, or some form of merchant payment gateway.
That said, the increase of interest in cryptocurrencies means that more and more people are looking to get into crypto as a way to diversify their investment portfolios, transact or send international remittances with low fees, or anything in between.
A cryptocurrency exchange is often the first place that new users have in mind to get into crypto. So, in this article, we’ll be going over what a cryptocurrency exchange is and how it works to get you started.
Understanding a cryptocurrency exchange
To wrap your head around exactly what a crypto exchange is, think about it like a stock exchange. An exchange allows a user to buy or sell cryptocurrencies in return for fiat money (government-backed currencies like the NZD). A user can also exchange or ‘swap’ one cryptocurrency for another.
They are similar to stock markets in the way that a buyer places an order for crypto at a certain price, and the transaction is settled when a seller matches the buyers’ price.
There are hundreds of crypto exchanges worldwide and each accepts different types of payment to others. Some crypto exchanges accept a bank transfer, credit or debit card, currency contracts, or even gift vouchers.
Exchanges make money by charging their users a transaction fee. Each exchange advertises different fees, although they are commonly around 0.25%. However, this can also depend on the volume of transactions.
To use an exchange, you will first need an account. To make an account, this includes several verification processes to ensure the user’s identity.
While this may seem like a nuisance, it is required to follow anti-money laundering laws and to protect the exchange’s customers.
Some exchanges can take weeks to process a verification, but it’s not all bad news. Easy Crypto’s average verification time is less than 2 hours. You can visit Easy Crypto’s verification guide for more information.
New to crypto? Start your journey with our crypto 101 guide.
How does a cryptocurrency exchange work?
A key thing to understand is that one crypto exchange can be very different from another. Some exchanges allow their users to store fiat and cryptocurrencies on the exchange, while some do not. However, an exchange should NOT be treated like a wallet.
A cryptocurrency wallet is a place to store your currency after it has been bought, allowing you to manage your digital assets with ease.
An exchange should only be used to buy and sell crypto or store small amounts temporarily. Now, you might be asking yourself why? The answer is the S word.
Security is and should always be talked about when storing any asset, including cryptocurrencies. Nowadays exchanges are relatively secure and employ multi-layered encryption coupled with secure cold storage solutions to safekeep their liquidity and prevent data theft.
With that said, one can never be too safe when it comes to security. There have been instances in the past when crypto exchanges were compromised resulting in loss of assets and data.
For example, in early 2019, Cryptopia was hacked for $30 million NZD, and this is now regarded as the biggest theft in New Zealand’s history.
However, a crypto exchange does put security measures in place to ensure customers’ safety. Follow these tips to help protect your crypto!
- Use Two-Factor Authentication (2FA). Most exchanges will offer 2FA through a mobile application, like Google Authenticator. It’s simple, safe, and secure.
- Always use a secure password. Most exchanges put in tough password restrictions, but your crypto is also your responsibility! Always set a strong and secure password.
- Cold Storage. Exchanges that store crypto in cold wallets are much harder to hack. Take precautions by doing some research into an exchange’s storage and learn more about cold wallets first.
Understanding Easy Crypto
So, is Easy Crypto a cryptocurrency exchange?
Well… not exactly. Easy Crypto is primarily a retailer, rather than a crypto exchange. We do things a little differently to ensure security and to protect our customers.
Exchanges hold onto the customer’s fiat and crypto, where instead we simply just move the funds through our system while an order is being processed. Simply, your crypto orders will be sent directly to your crypto wallet.
If you’re selling, then the fiat currencies will be sent directly to your bank account — no need for a stablecoin intermediary!
Some crypto exchanges can be difficult to navigate and complicated to new users. Easy Crypto takes this hassle away by offering a simple trading interface. It really is just as easy as putting through an order, and we’ll handle the rest!
About Easy Crypto
Our mission at Easy Crypto is to simplify the crypto experience – to make it easy and accessible for anyone to get started with cryptocurrencies.
We are a global crypto retailer headquartered in New Zealand and are now operating in Australia, South Africa and Brazil – with more regions soon to follow.
What can you do with Easy Crypto?
Buy, sell, and exchange cryptocurrencies
You can also sell directly from your crypto wallet to receive the equivalent amount directly converted to your local currency.
Direct crypto swaps between your assets
You can also swap directly between your crypto assets at the best rates without having to use fiat currency as an intermediary.
Track the growth of your crypto with our portfolio
Track and measure the performance of your cryptocurrency portfolio, as well as the keep an eye on the market movements with our tracker.
Automate your crypto investments
Automate your crypto investments to make it easy for you to stay disciplined with the Dollar-Cost Averaging principle, we also offer a feature called the Auto Buy to automate your crypto buy orders, which you can control with your bank account.
Earn crypto with our affiliates program
Lastly, Easy Crypto also rewards you for participating in our Affiliate Programme that can earn you credit rewards from a limitless number of people you refer.
Also, don’t forget to subscribe to our monthly newsletter to have the latest crypto insights, news, and updates delivered to our inbox.
Disclaimer: Information is current as at the date of publication. This is general information only and is not intended to be advice. Crypto is volatile, carries risk and the value can go up and down. Past performance is not an indicator of future returns. Please do your own research.
Last updated August 29, 2022