Personal Finance

Investing in bitcoin? Consider these factors for selecting right crypto exchange

Updated : January 14, 2021 07:20 PM IST

When it comes to trading, one should always consider multiple factors before zeroing on the cryptocurrency exchange.

An investor will have a long-term relationship with an exchange, so it becomes essential to do a bit of research.

When it comes to trading, one should always consider multiple factors before zeroing on the cryptocurrency exchange. An investor will have a long-term relationship with an exchange, so it becomes essential to do a bit of research.

Here are key factors to consider before choosing an exchange for investing in any cryptocurrency such as bitcoin:

Check the security norms

According to Sumit Gupta, CEO and Co-founder, CoinDCX, security is the foremost factor to consider since investors invest their hard-earned money to buy or trade-in bitcoins or any other cryptocurrency exchange.

Also read: Here are the risks involved in bitcoin investing

“The measures like security to investors’ wallets, two-factor authentication, confirmation while depositing or withdrawals, etc. are of utmost importance,” Gupta suggests.

Since exchanges are not very old, some of them have been involved in nefarious activities lately.

Consider the history and reputation of exchange

As per Kumar Gaurav- Founder and CEO, Cashaa, there are more than 80 percent of exchanges that do not hold any bank accounts and have unclear shareholding patterns.

“Hence, considering the reputation and history of an exchange is the key criterion,” Gaurav advises.

Also read | Bitcoin vs mutual funds: Where should you invest?

In case there is not much history available on the exchanges, Gaurav suggests investors to choose the exchanges whose directors can be tracked, and also that trade in national currency instead of just crypto to crypto transactions.

Check legitimacy

It’s crucial to trade on legitimate exchanges that follow KYC and AML guidelines. Hence, it's vital to check if the exchanges comply with all the rules and regulations of the country.

Consider exchanges that offer ease in liquidity

Further, everyone wants their investments to be liquid. The exchange offering ease in the liquidity of assets without compromising its value is the one to be considered.

Be aware of charges

Finally, it's important for investors to be aware of the fees or any other charges that will be charged for trading on the platform.

Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.

Investing in bitcoin? Consider these factors for selecting right crypto exchange

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