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Cryptocurrency exchanges are a dime a dozen, but there are only a few that we think make sense for crypto investors in the long run.
The volatile, speculative nature of cryptocurrency investing carries risks for investors no matter how and where you buy it. We believe that the safety of your investment should be a top priority when choosing a cryptocurrency exchange, and each of our favorite exchanges clearly states the security measures they have in place to protect consumers. In general, we think that cryptocurrency exchanges that have been around the longest tend to be more secure than newer ones.
“I would go with anyone from the old guard,” says Theresa Morrison, a GVB with the Beckett Collective. “Those who have been doing it for a long time, there I go first.”
Wherever you buy it, it’s important to remember that cryptocurrency is a highly speculative asset with a relatively short track record (at least compared to the stock market). That’s why experts say you should never invest more than 5% of your portfolio in crypto, and why they say it’s smart for investors to stick with Bitcoin and Ethereum, which are available on each of the exchanges we recommend.
So for the long-term investor who is more concerned with saving for retirement than getting rich quick, here are our picks for the best crypto exchanges:
BEFORE YOU INVEST IN CRYPTO
Experts say it’s smart to keep your crypto investments below 5% of your total portfolio. Crypto prices fluctuate wildly by the day, and experts also say it would be smart not to invest more than you could lose if the market were to collapse altogether. Crypto investments should never get in the way of other financial priorities such as emergency saving, paying off high-yield debt, and saving for retirement using more conventional investment strategies.
Best Cryptocurrency Exchanges of 2022
Illustration / NextAdvisor
Coinbase was the first cryptocurrency exchange to go public on the Nasdaq in 2021but it has been around since 2012. The cryptocurrency exchange offers more than 50 cryptos and a free wallet service with private key access.
Why we like it
Coinbase’s simple interface is easy to use and understand for beginners, but there is also the option to upgrade to a more advanced version, Coinbase Pro, if you want additional features for trading cryptocurrencies.
Coinbase openly shares its security measures and keeps most users’ cryptocurrencies in secure, offline storage to protect it from threats of hacking and digital theft. Plus, all the money you keep in Coinbase is FDIC-insured up to $250,000. We also like Coinbase’s education platform that helps educate investors about cryptocurrency.
Coinbase’s fee structure makes it on the pricey side compared to other exchanges, but we appreciate its ease of use and upfront security measures, especially for beginners. When you make a trade, you will be charged both a spread and a Coinbase fee.
The spread fee is the difference between what the crypto costs and what you pay to buy it (or receive it for a sale). The spread is about 0.5% of your cryptocurrency sales and purchases, but could be more depending on the cryptocurrencies you trade.
The Coinbase fee on top of your spread fee varies based on your location, payment method, and other factors. However, crypto-to-crypto transactions (such as trading Bitcoin for Ethereum) are not subject to the Coinbase fee. You also pay various fees for things like using certain methods to fund your Coinbase wallet or withdrawing your investment.
Cryptocurrency is not protected by federal regulations, unlike FDIC-insured investments. But Coinbase is transparent about its security measures, saying it stores 98% of customers’ cryptocurrency in offline, cold storage. The remaining 2% is used to facilitate trading.
While your investments are not FDIC-insured, Coinbase itself has an insurance policy to protect crypto holdings. Still, there is no guarantee that your coins or cash will be refunded to you in full if a hack occurs. Although your coins are not protected by the government, all the money you keep in your wallet is FDIC-insured up to $250,000.
Read our full review: Coinbase Review 2022: Great for Crypto Newbies and Long-Term Investors
Illustration / NextAdvisor
Gemini was launched in 2015 and is good for both novice investors and active traders. Gemini offers over 40 cryptocurrencies and a range of products that can add value for more experienced investors.
Why we like it
Gemini is very open about its security measures and keeps most of your cryptocurrency in an offline cold storage system. Gemini offers tools and upgrade features that can be helpful to more advanced traders, but also has a simpler interface to help beginners find their way around.
Additionally, those with more crypto knowledge can find value in Gemini’s suite of complementary products: Gemini Earn, Cryptopedia (a learning center), Gemini Wallet and Gemini Custody, ActiveTrader, and Gemini Pay.
Convenience and transaction fees are charged when you buy or sell cryptocurrency on Gemini. The total fee will be shown as your “stated price” before the transaction is finalized.
The convenience fee is usually about 0.5% of the Gemini market price for a particular trade, although it can vary, and is charged in the crypto you buy. The transaction costs are based on the amount you trade. For crypto-to-crypto transactions, such as Bitcoin to Ethereum, a standard transaction fee of 1.49% is charged. The transaction costs for buying and selling differ per type of cryptocurrency.
Gemini says it keeps most of your cryptocurrency in an offline, cold storage system, but a small portion is kept online in a hot wallet that is insured against theft from a security breach, hack, fraudulent transfer, or theft by employees.
Read our full review: Gemini Review 2022: Easy for Beginners, Plus More Options for Experienced Investors
eToro opened to US investors in 2018 as a cryptocurrency exchange. Crypto trading on the platform is restricted to 43 states with Delaware, Hawaii, Minnesota, Nevada, New Hampshire, New York and Tennessee excluded from participation. This is the only platform we recommend that isn’t available in all 50 states, but we think it has features that will make it interesting for people in the states where it’s available. eToro offers a simple interface and more than 20 cryptocurrencies to choose from.
Why we like it
eToro offers fewer coins than other exchanges – just over 20 – but experts still recommend sticking with the two most popular coins, Bitcoin and Ethereum, available on the platform.
eToro offers a unique feature: eToro Virtual Portfolio, which allows you to practice investing in cryptocurrencies worth $100,000 and track its progress. This tool can help users get an idea of how volatile cryptocurrency is.
The fees you pay on eToro are based solely on spread (the difference between what the crypto is selling for and what you are paying for it). Spread can fluctuate depending on the cryptocurrency you choose and current market prices.
eToro has a mix of hot and cold storage to protect your assets, and all US dollars in your account are held in FDIC-insured custodial accounts.
Read our full review: eToro Review 2022: Practice Crypto Trading, Plus New Social Features
Best crypto exchanges of 2022
CoinbaseGeminieToroCoins50+ cryptocurrencies40+ cryptocurrencies20+ cryptocurrenciesFees • 0.50% spread
• Trading fees between 1.49% and 3.99% (or $0.99 to $2.99 flat rate) • 0.50% convenience fee
• $0.99 to $2.99 transaction fee
• 1.49% transaction fee for transactions over $200• 0.75%-4.9% spread (varies by crypto)Wallet storage Hold coins in Coinbase account, Coinbase Wallet option, or transfer to your own wallet Store coins in Gemini account, Gemini Wallet option, or transfer to your own wallet Store coins in an eToro trading platform account, move them to an eToro wallet or transfer them to your own walletMinimum transaction $2 Equal to the smallest amount of any tradeable coin (0.00001 BTC) $25 (minimum $50 deposit)
What is a cryptocurrency exchange?
A cryptocurrency exchange is a platform where you can buy and sell cryptocurrency. You can exchange one currency for another, such as Bitcoin for Ethereum, or you can buy crypto with a regular currency such as US dollars.
These platforms facilitate crypto purchases, allow you to convert cryptocurrencies back into dollars and transfer them out of the exchange. Different exchanges have different features, which may lead you to prefer one exchange over another.
How to choose a cryptocurrency exchange?
There are a few different factors to consider when looking for a cryptocurrency exchange. Here are a few we recommend checking out before choosing one:
Accessibility: Not all states or countries offer access to every crypto exchange, so make sure the exchange you choose is available where you liveSecurity: Different exchanges offer different security measures and insurance policiesCost: Understand what it will cost you to buy and sell crypto on the exchange you chooseCoins Offered: Some exchanges only offer a limited number of coinsStorage: Many exchanges come with an accompanying crypto wallet offering to help you keep your investment safe
[READ MORE:] Do you want to buy cryptocurrency? Here’s What To Look For In A Crypto Exchange
Other Places to Buy Cryptocurrency
While you cannot buy cryptocurrency from an online investment brokerage such as Fidelity or Charles Schwab, there are still a few options available to investors in addition to traditional cryptocurrency exchanges.
Popular online payment platforms such as Venmo, Paypal, Cash App – and mobile stock trading platform Robinhood – have recently expanded their services to allow customers to buy cryptocurrency on their platforms. Experts say these apps can be an easy alternative for beginners who don’t want to mess with figuring out a cryptocurrency exchange, which can be complex for new users.
But buying crypto on these platforms can make it more difficult to transfer your cryptocurrency off-platform to a cryptocurrency wallet later on, which can provide more security for your investment. In fact, you can’t move your holdings from platforms like Venmo or PayPal at all, while traditional exchanges allow you to move your cryptocurrency from the platform if you want to.
[READ MORE]: You can buy Crypto on Venmo and Robinhood. Read this before you do it