A Beginner’s Guide To Choosing The Best Exchange For Crypto Banking

It is the age of cryptocurrencies and a great many crypto banks have come up in recent years. As an increasing number of investors continue to venture into the crypto landscape, there is a clear need to chart out a guide to help beginners pick the best crypto exchange platform. Much like choosing the right bank for fiat money, choosing the best exchange for crypto banking is an essential step in your cryptocurrency journey.

In early 2020, Kraken Financial became the first crypto company to get a banking charter under Wyoming’s Special Purpose Depository Institution statute. All of this comes in the light of growing enthusiasm for crypto banking amongst customers.

A survey by Bit2buzz revealed that Indian crypto banks and exchanges have seen massive growth amid the rising COVID-19 crisis. Coinmarketcap also revealed that the number of women in the crypto industry had increased by 43.24% in the first quarter of 2020.

As the adoption of cryptocurrencies and banking is finally coming true in the real sense and enthusiasm gathers amongst customers, it’s important to be well informed about these matters.

To make the right choice, start by considering what makes a great crypto exchange stand out amongst the rest.

What To Look For In An Exchange For Crypto Banking

In the same way that you would not open a fiat money account with the first bank you see, you should not determine which exchange platform to use for cryptoassets without doing your research.

For example, when looking at platform features, some things can be based on your personal preference. However, others, such as security and business transparency, should be indisputable. Read on for what to look for in the best crypto exchange options.

1) Interest Rates On Lending And Borrowing

Coins stacked next to a graph

Crypto exchanges have finally been offering competitive interest rates. For example, on Vauld, the borrowing rate is currently lower than 8% for Bitcoin and Ethereum and 4% for BAT.

Comparing interest rates for crypto lending and crypto borrowing is an essential step because different exchanges can have varying rates for different cryptocurrencies. On the other hand, depositors earn upwards of 7% on Bitcoin, Ethereum, and other major cryptocurrencies.

It’s true, though, that interest rates can fluctuate based on the supply and demand of loans and deposits of crypto assets. One of the easiest ways to find the lowest interest rates is by using a price comparison platform that enables users to query and compare rates across different exchanges.

You’ll be surprised how much you can save by picking the best crypto exchange.

2) Trading Functionality

It is also imperative to look at the trading functions, capabilities, and features of the crypto exchange platform. How much does it offer in leverage positions? Does it offer a variety of trading venues, and how many cryptocurrencies are available?

Trading features such as auto-matching and margin trading may be useful to some investors. Some might also be looking for trading in crypto derivative products such as swaps, futures, and options trading.

If you are a beginner, you might want to check the payment methods available. Not every exchange may have the option of paying via PayPal, Debit Card, or the option to trade with USD EUR.

While many of these features are actually quite rare, a few platforms do offer them. Vauld, for instance, not only offers buying, crypto lending, and trading but also margin trading, cross-platform trading, and trading with INR.

3) Wallet Features

Cryptocurrency wallets need to be secure and easy to use. It is essential that every crypto wallet have a private key, two-factor authentication, and protection from hackers.

Other features such as being able to transfer and transact directly via wallets and the use of international payment systems are important as well. In addition, the transaction fee is another thing you must keep in mind. While costs should not be so high that they erode your profits, they should also not be suspiciously low.

4) Security Measures

Beyond wallet security, having additional safety measures will make a notable difference when it comes to user experience and protection. While features such as two-factor authentication are important, other features will further protect your crypto.

First, look for a platform that allows you to set up user alerts. This will immediately inform you when someone has tried to log in to your account from an unregistered device. These notifications give you more control and the ability to lock your account if you believe there is suspicious activity.

Should someone gain access to your account and associated email address, sending a confirmation notification is not enough to prevent hackers from moving any further. Instead, consider using video verification to increase security measures.

For example, if two users are attempting to access the same account, the exchange platform will temporarily disable the account and set up a video meeting in order to grant access back to the rightful account holder.

Other potential features a platform might include are collateral coverage and biometric authentication. Discover the many safety options that are included when you partner with Vauld.

5) Partners/Tie-Ups

Handshake in front of computer coding background

Quality tie-ups and partners certainly help enhance the capabilities of crypto exchanges and even widen the range of cryptocurrencies, customer support, security, and other aspects of their platform.

Moreover, having reputed ventures as lead investors is a huge plus. Tie-ups with partners that specialize in custody help to bring in a lot of expertise to handle the very real security challenges that the centralized crypto ecosystem faces.

For example, BitGo is one such digital asset trust and security company, while LuneX is a venture that invests in high-growth blockchain companies and cryptocurrency assets. Vauld has partnered with both BitGo and LuneX, along with Binance, Tesseract, and Three Arrows Capital.

6) An Engaged Community

Sometimes, the best way to determine the reliability of a crypto exchange platform is by asking the users themselves. It is often the case that a well-known, trustworthy platform will spur positive reviews and foster an engaged user community.

Take Vauld’s Crypto Circle, for example. Our growing community of crypto enthusiasts is constantly seeking new information and joining ongoing conversations about the industry. You can even search topics by category or begin a discussion of your own.

Not only do these interactions further inform you, but they are read by Vauld employees to consider user feedback and help shape the future of the platform.

7) Innovations And Updates

A platform for crypto banking that is more interested in profits than their customers can typically be spotted by lack of updates or poor platform usability. In other words, the best crypto exchanges are intuitive, simple to use, and always innovating.

Beyond verifying that an exchange is compatible with iOS and Android, partnering with one that provides regular updates and aims to innovate their platform means heightened security, forward-thinking business practices, and a better user experience overall.

These updates take many forms, such as adding trusted devices to an account or implementing new tokens for trading, borrowing, investing, and overall diversification purposes. Most importantly, they should make your wealth-building journey as simple as possible.

Crypto Banking Red Flags

Crypto coin broke in pieces

When it comes to crypto banking, there are risks inherent in making that first deposit, no matter which platform you decide to open an account with. From not being FDIC-insured to the possibility of hackings, many things can go wrong. Proceed with caution.

Although choosing the right platform can decrease the chances of these risks occurring, choosing the wrong one can make the risks even greater. Below are a few red flags that you may come across.

Hidden Information

Partnering with a crypto exchange that hides information, such as sources of funding or anonymous founders, can immediately spell trouble. Platforms operating in such a way should instantly raise a red flag since reliable platforms will be proud of their origins and business practices.

Withdrawal or deposit limits and hidden fees can also begin to appear everywhere if you have not carefully researched your exchange. Trustworthy platforms will clearly state any fees, such as transaction fees, and keep the charges minimal.

Suspicious Rates

Rates are another red flag when it comes to identifying poor crypto banking options. Competitive rates for tokens will be similar across a variety of platforms, so any exchange offering drastically different rates should likely be avoided.

For example, if most platforms are offering a savings rate of around 4.60% on XRP and you come across a platform offering under 3%, then it’s sensible to question why the rate is so low.

On the other hand, if a platform is offering rates that are too good to be true, there’s a chance that they are. Some sites will even utilize false testimonials along with unrealistic rates to scam customers and take their crypto.

An easy way to avoid scams is by staying alert and always asking questions. Keep up to date on all your crypto’s current rates, and do plenty of research on a platform before depositing your assets with them.

No Safety Measures Or Insurance

Person using a crypto bank on computer with computer coding overlay

Even though crypto exchanges are not FDIC-insured like traditional banks, it doesn’t mean they are not working to protect their users’ assets. The best platforms take considerable measures to keep crypto safe and insured.

Platforms that do not outwardly specify how accounts are kept safe or have no insurance are probably not the best choice. Most reliable crypto exchanges will publish this information on their homepage, where it is easy for new or interested users to locate.

Keep in mind the type of insurance that each one has will be different from the next, so finding one that works best for your crypto banking needs is a good idea. Insurance should cover you from events like third-party hacks, internal bad actors, theft of private keys, and more.

At Vauld, we store our users’ funds in a centralized lending pool with BitGo, where the funds are insured for $100 million against any threats. We aim for optimal security and quality insurance so customers can rest assured that their assets are safe.

Are There Alternatives For Securing Crypto?

For anyone skeptical about opening an account with a crypto exchange platform, another option is a crypto wallet. Depending on how you intend to store your crypto, whether you want to build wealth using your assets will ultimately determine which option is best.

Hot wallets, for example, are also stored online, making them prone to cyberattacks. Cold wallets, on the other hand, are offline and significantly more difficult to steal. However, they are less convenient compared to mobile or desktop wallets.

Another factor to keep in mind is that neither option allows the earning capacity that crypto exchanges do through lending opportunities. While crypto kept in a wallet will still fluctuate in value, crypto exchange platforms can help users generate regular, passive income.

Some platforms allow users to maintain their wallets when they sign up, though most will require users to deposit crypto in a hosted wallet for interest to be earned.

Many platforms offer both hot and cold wallet options, so opening an account with the right crypto exchange is a good way to make the most of your crypto.

The Ideal Crypto Exchange

What makes a crypto exchange ideal? The ideal platform must be authentic and reliable. In the digital era, and especially in the crypto sector, there’s no dearth of scams. You must do your research and verify that an exchange is authentic before choosing it.

But how can you ensure its authenticity?

Well, to begin with, going through customer reviews and ratings and looking for the legal registration of the platform are some ways.

Moreover, the business must also value its customers and have a reliable customer support system. For beginners, customer support and ease of use can be particularly important features. You might also want to go through the websites of your shortlisted crypto platforms to assess usability and interface.

Therefore, doing the right research can not only save you from potential trouble, but it can also help you save more and have a smoother customer experience. Above all else, the ideal crypto exchange will check all of the necessary boxes as well as meet your preferences.

Options for earning, borrowing, and storing crypto are growing by the day. That’s why it’s so important to research your ideal platform and make sure you’re satisfied with your ultimate choice.

Signing up with Vauld grants you all of the critical features we’ve mentioned and offers access to a safe and secure crypto wallet. Whether you’re looking to earn, borrow, or trade, choose Vauld for the best rates and get ahead of the curve with all things crypto.

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