The cryptocurrency market has experienced massive growth and expansion over the past decade. As it is becoming popular, an increasing number of people and institutional firms are taking an interest in the market. Hence, more cryptocurrency exchanges are emerging to offer access to cryptocurrencies including Ethereum.
When comparing the best Ethereum exchanges in 2021, you must look at their various features, including fees, security protocols, deposit and withdrawal limits, purpose, and more. A comparison of these features will help you to decide which platform is best to buy/sell ether (ETH).
Compare the Best Ethereum Exchanges
Considering Ethereum's popularity and usefulness to the market, there are so many Ethereum exchanges that offer top-quality services to buyers/sellers. Here's our selection of the best Ethereum exchanges, their features, pros and cons and other crucial information.
Understanding Ethereum Exchanges
Ethereum exchanges have sprung up to make it easier for people to buy and sell ether. Similar to Bitcoin, ether is generated via mining. However, cryptocurrency mining is a technical process that involves a lot of infrastructure and other investments. Hence, not everyone can mine ether. Ethereum exchanges have become platforms that allow you to trade ether with ease.
Cryptocurrency exchanges operate 24/7, which means you can buy/sell ETH at any time of the day and week. The Ethereum exchanges serve as the intermediary between buyers and sellers and earn money by charging a commission for the services.
To begin using an Ethereum exchange, start by registering on the platform and complete the verification processes required. Each crypto exchange has its unique KYC (Know Your Customer) checks. Ensure you fulfil them all to enable you to unlock the features offered by the exchange.
Non-KYC exchanges are also available, but they come with a certain level of risk since you are buying or selling your ether to unverified people. Following ID verification, your account would become active. You can fund it using payment methods such as debit cards, credit cards, e-wallets, and bank transfers, depending on the cryptocurrency exchange.
To start using an Ethereum exchange, you need to deposit funds into your account with the exchange. Each cryptocurrency exchange allows deposits in either fiat or cryptocurrencies. The deposited funds can be used to buy ether from the crypto exchange. Similarly, to withdraw funds, place a withdrawal request. To ensure your funds' safety while trading, it is best to deal with only reputable and reliable cryptocurrency exchanges.
The exchanges offer various ETH pairs, allowing you to trade ETH against fiat currencies like the USD or other cryptocurrencies like BTC, USDT and more. You can buy or sell ETH via the 'Buy' or 'Sell' orders.
There are various types of Ethereum exchanges, each one catering to the different needs of the users. Here are some of the popular types of Ethereum exchanges.
- Centralised exchanges: These are the most popular type of Ethereum exchanges. Central entities control them. The centralised exchanges are highly regulated and allow people to trade ETH against fiat currencies and other cryptos.
- Decentralised exchanges: These are exchanges that don't have any central entity controlling activities. Instead, they use networks and protocols to facilitate the transfer of funds amongst the traders.
- Derivative exchanges: These are special exchanges that allow people to trade investment vehicles such as options and futures for ETH and other cryptocurrencies.
- P2P exchanges: P2P exchanges could be the second most popular type of Ethereum exchanges. These platforms provide an avenue for the traders to transact directly. The traders can chat and negotiate the best deals possible for both parties.
- Fiat vs. crypto exchanges: Fiat exchanges are those that only accept deposits or withdrawals in fiat currencies. Meanwhile, crypto-only exchanges are those that accept deposits or withdrawals in cryptocurrencies only.
How to Choose an Ethereum Exchange?
One of the hardest things for crypto investors and traders is to select the right Ethereum exchange. Choosing the wrong Ethereum platform can lead to a lot of problems as you might find it hard to trade, battle with high fees, and face other difficulties in deposit and withdrawal of funds. Hence, it would help if you evaluated various features before choosing a platform. Some of these features are:
Usability - The Ethereum exchange you choose must have an easy-to-use platform with a simple and straightforward user interface.
Payment methods – The ideal platform must offer various deposit/withdrawal methods and charge low fees for the transactions.
Liquidity – An Ethereum exchange with high liquidity executes trades faster and easier. This means you can buy/sell ETH on the platform faster and with ease.
Fees – Choose an Ethereum exchange with low fees for various transactions, including deposits, withdrawals, buying and selling ETH, conversion and more. The exchange must be transparent regarding its fee structure.
Transaction speed – It is recommended to choose a platform with a fast transaction speed. This way, your trade is locked in at the desired rate and not higher due to volatility and price slippages.
Type of trades – Ethereum exchanges differs based on the type of trades they conduct. You have to know if the exchange is a derivative exchange, a decentralised exchange, P2P, or others and choose the platform that meets your trading demands.
Account verification – Choose a platform that offers account verification as it helps secure your account. However, if you value anonymity, it is best to choose an exchange that doesn't require you to reveal a lot about your identity.
Reputation – The crypto space has experienced a lot of exit scams in the past. Hence, as a trader, you need to be careful when choosing an Ethereum exchange. It is important to trade with a reputable exchange that has never made the news for the wrong reasons.
Security – This should be top of the list due to how prone crypto exchanges are to hacks. Ensure the platform implements strict and updated security protocols such as two-factor authentication (2FA), cold storage wallets, and more.
Advantages & Disadvantages of Using an Ethereum Exchange
Should I Buy or Trade Cryptocurrency?
Buying or trading cryptocurrencies depends on your objectives and knowledge of the market. If you desire to play the long-term game to earn profit from the market, then you should be an investor. However, if you intend to earn profits by leveraging the cryptocurrencies' daily price volatility, you should be a trader.
As a novice trader or investor, you can start small and increase your investment capital over time. However, it is best to abstain from trading until you have an in-depth knowledge of cryptocurrency.
The cryptocurrency market has expanded over the past few years to offer other trading alternatives. The availability of trading instruments like futures, options and CFDs (Contract for Difference) allow users to trade cryptocurrencies without necessarily owning them. You can also find these trading instruments on derivative exchanges.
- Options: These are cryptocurrency trading vehicles that allow the trader to buy/sell the cryptocurrency at a pre-agreed price on a specific future date.
- Futures: They are popular trading instruments that involve agreeing on a price at which a cryptocurrency trade will be executed on a future set date. They are high risk and high reward investment vehicles due to the high volatility of the cryptocurrency market.
- Contracts for Difference (CFDs): These allow you to speculate on the cryptocurrency price movements and take either short or long-term positions in the market so you can earn profits. You do all these without owning the underlying crypto asset. CFDs involve high risk and should be used by expert traders.
3 Steps to Using an Ethereum Exchange
Step 1: Choose an Ethereum Exchange
This is perhaps the hardest task because it involves doing a lot of research to find an Ethereum exchange that would cater to your needs and provide security. You can make things easier and choose from the list of the best Ethereum exchanges in 2021 above.
Step 2: Signing up with an Ethereum Exchange
After finding the right exchange, you will need to set up an account with them. You will have to complete the registration and account verification processes by providing data like your name, address, email address, phone number, and other KYC-related information.
Step 3: Deposit the initial amount and start using the Ethereum Exchange
The final step is to start using the services offered by the cryptocurrency exchange. However, you have to fund the trading account (in a currency supported by the exchange) and use it to buy ETH. If the platform doesn't allow direct purchase of ETH, you can buy bitcoins and convert them to ether.
One of the easiest ways for crypto investors and traders to buy and sell ether is via Ethereum exchanges. Cryptocurrency exchanges offer more considerable liquidity than other platforms, and this article touched on the basics of Ethereum exchanges and everything you should know about them. This article highlighted the best Ethereum exchanges in 2021 and how to identify and use them efficiently.
Frequently Asked Questions
ID verification is needed to help keep your ETH stash safe on the crypto exchanges. With ID verification, your exchange account is protected and makes it almost impossible for others to transact using your account.
Most crypto exchanges provide Ethereum wallets to store your ETH. However, it is best to move the ether to a cold storage wallet if you intend to hold the coins for a long time.
Bitcoin and Ethereum are the leading cryptos, and that makes them the primary target. Hence, protecting your BTC and ETH by storing them in a wallet is important.
The legality of Ethereum exchanges depends on your jurisdiction.
Storing your ETH on a crypto exchange isn't a good idea. It is best to store your ether in a cold storage wallet.
Ethereum is a top cryptocurrency, which means it is available on almost all exchanges. However, some exchanges only support Bitcoin trading.
The Ethereum exchanges make money by charging you fees and commissions for facilitating your trades in the market.
No, the prices aren’t the same since the Ethereum exchanges are not linked to each other.