Best Bitcoin Broker
If you are looking to trade bitcoin and altcoins, you must find a way to buy and sell your crypto assets online. Interestingly, while bitcoin and its ilk are meant to facilitate peer-to-peer transactions, you can only acquire them through a third party.
You can always choose to get paid in crypto for your work, in which case you can get some digital assets in a peer-to-peer manner. In every other case, however, you need the services of a broker or exchange. Brokerages and exchanges also let you trade cryptocurrencies directly and through derivatives.
Bitcoin Brokers and Exchanges
What is the difference between a bitcoin broker and an exchange?
- Brokers offer online trading platforms people can use toinvest in cryptocurrency-based financial derivatives. When you trade such derivatives, you merely speculate on the price variations of the underlying asset. You don’t take possession of any bitcoin or altcoins. So if you want to own bitcoin, a broker is not the right destination. These brokers offer crypto options, futures, and CFDs.
- A cryptocurrency exchange uses an online platform to match bitcoin and altcoin buyers and sellers. If you want to sell your bitcoin, you post it for a price. If someone deems it a good deal, they will buy it from you. You can also buy cryptocurrency through the exchange in a similar manner. By using an exchange, you can gain possession of the digital assets you buy. Unlike brokers, cryptocurrency exchanges give their users hot wallets they can use to store their coins. Exchange users can also move their bitcoin off exchanges and into their self-hosted hardware wallets.
How to Find the Best Bitcoin Broker?
Most brokers operate with the approval of the regulatory authority of their jurisdiction. Regulated brokers fall under a legal umbrella that protects users and guarantees their rights.
That said, many brokers trade against their clients, induce slippage, and re-quote prices to have their clients lose money. Statistically, the majority of traders who venture into CFDs and other similar financial derivatives lose money.
How to Find the Best Crypto Exchange
Despite emerging regulations, the cryptocurrency world is still a bit lawless. It is rife with hacks and scams that can claim your crypto funds in a heartbeat. Never trust anyone offering you crypto for free or to double whatever you send them. Never send anyone any bitcoin, regardless of the promises they make. Only send bitcoin to people to whom you want to send bitcoin as payment for guaranteed goods and services.
A good bitcoin exchange is a regulated one. Be aware that in line with their KYC (know your customer) policies, regulated exchanges collect your personal information and make it available to authorities per the applicable laws.
The best bitcoin exchanges keep the majority of the assets under their management in cold storage. This way, they can protect them from hackers.
The Best Crypto Exchanges
The top cryptocurrency exchanges are well-established and publicly listed operations that offer users solid guarantees.
Coinbase is one of the first bitcoin exchanges. And it is popular with cryptocurrency investors and traders alike. Founded in 2012, Coinbase offers outstanding liquidity on a huge selection of digital assets.
The exchange is beginner-friendly, featuring a beginner-facing trading platform in addition to an advanced one.
Unfortunately, it suffers from some of the shortcomings plaguing most other exchanges:
- Its support is hardly adequate at times.
- The wallet it offers is a custodial one. While you may own the digital assets in your account in theory, you don’t have control of the private keys which confer true ownership.
The prominent sponsor of many a high-profile sporting event world-over, Crypto.com offers an excellent mobile trading platform. It supports a wide range of digital assets and even has some crypto trading products to spice up the experience. On the downside:
- The Crypto.com support is ineffective.
- The site charges relatively steep trading fees.
Gemini is a security-focused crypto exchange, also well-known in the crypto community. The exchange does not trust the safety of its users’ assets to its robust security protocols alone. It also insures the funds of its clients.
Gemini offers high liquidity, strong security, and a legal presence in all 50 US states. On the downside:
- Gemini does not support as many tradable cryptocurrencies as some of its competitors.
- Gemini’s trading fees are relatively high.
If you are looking to buy and hold cryptocurrencies, you don’t need a broker. You need an exchange like Coinbase or Crypto.com.
If you only want to trade the volatility of crypto assets, you can trade derivatives with a broker.
The best bitcoin broker/exchange is the one that protects your funds and does not trade against you.