Points to identify a trusted cryptocurrency exchange in 2019
Trust is one of the most important factors. And exchanges being the most powerful in this space, have the highest chance of abusing their power. In fact, 2019 has recorded the highest number of exchange-related exit scams.
This has led to many questioning whether it’s even worth trading on new exchanges anymore. While old and big exchanges provide trust and security there are many times one would need to use another exchange.
The number one factor in choosing a new exchange is for the trading of a particular coin. Not all coins are available everywhere and some of the small token’ are only available in smaller exchanges.
But do not let the fear of being scammed hold you back on the trading of your favorite cryptocurrency. This helpful guide by us will help you in choosing a trustworthy cryptocurrency exchange.
The factors that indicate a trusted exchange,
1) Founders and Team
One of the most fundamental aspects of exchange is whether they clearly define who the founder is and where is the exchange based out of. One more import factor to look for, whether the founder/team is active on social media.
Example, CZ, the CEO of Binance, by being always active on social media he clears doubts regarding the exchange thus increasing the trust.
2) Fiat Exchange
One of the important aspects of a legit exchange is the ability to provide fiat pairs. Fiat pairs require strict banking/KYC laws which builds more trust with the user.
Example, CoinDCX, the Singapore based exchange provides fiat to crypto purchases which builds trust with the investors.
Note: This feature is not mandatory as there are many cryptocurrency exchanges that trade crypto-crypto pairs only. But it is always wise to look for fiat pairs to entrust an exchange with your trades.
Exchanges in certain countries require a license to operate where they are governed by their laws. Countries such as Japan, Singapore, etc have strict regulation which thwarts any possibility of a scam. If an exchange isn’t licensed there is no point trading on it.
Example, Coinbase is licensed by US SEC, which means investors are protected.
4) Number of Visitors
Tools like Similarweb provide the number of visitors to a website. The number of visitors could be a good indication of a popular website.
Example, Okex, currently the world’s second largest exchange in terms of volume gets 2.32 million people monthly.
5) Look for past complaints
Platforms like Twitter and Reddit can provide information regarding experiences of current or past users of an exchange. A quick search with the following terms “<Exchange Name> experience/scams/review/good” can reveal a lot of past information.
Example, Cobinhood- complaints regarding the Taiwan based exchange started emerging on social media before they shut down.
6) Founding Date of the Exchange
The founding date of exchange can play a crucial role in detecting whether an exchange is trustworthy. The general rule of thumb, newer the exchange the more untrustworthy it might be.
7) Social Media Presence
The Social media of exchange can tell a lot about the exchange. Higher the number of posts and engagements higher the trust value.
Note: Many scams use bots to drive up engagement. Do go through comments to look for scammish patterns. Major patterns include same or similar kind of comments “Best exchange”, “thank you”, “great news” etc.
8) Media Presence
A good exchange spends time and effort on good PR. If media agencies are writing about the exchange, then it could be an indication that its a trustworthy exchange.
These 8 factors can give a good indication of whether an exchange is trustworthy or not. Although do note, an exchange could check all the above points and still turn out to be a scam. Canada based QuadrigaCX is a major example.
To protect yourself, use a personal wallet to store funds instead of storing them in the exchange. And always test the exchange for deposits and withdrawal with small amounts first (amounts that you are comfortable losing).
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Disclaimer: Blockmanity is a news portal and does not provide any financial advice. Blockmanity's role is to inform the cryptocurrency and blockchain community about what's going on in this space. Please do your own due diligence before making any investment. Blockmanity won't be responsible for any loss of funds.