What Are Altcoin Exchanges?
Altcoins emerged from tweaks to the bitcoin protocol. Hence, they utilize blockchain technology, albeit with slightly different validation mechanisms and security features. In other words, they present varying scalability and use cases. Some of the digital assets that fall under this category are Etheruem, Litecoin, XRP, and Bitcoin Cash. Needless to say, the bull run in 2017 exposed people to the investment opportunities that come with owning altcoins. Even some altcoins generated returns on investments that dwarfed what bitcoin was able to generate.
Since altcoins have become valid investment assets, the number of platforms offering exchange services relating to altcoin has exploded. Thus, prompting the need to filter the growing list of altcoins exchanges to pick out the best. There are three basic types of altcoin exchanges.
Altcoin-Fiat exchanges enable exchanges between altcoins and fiat currencies. This class of exchanges is suitable for people who are on the verge of entering the altcoin market. Depending on the mode of operation of the platform, you can access a fixed price for altcoins or get to access several price options and pick a reasonable one. For the former, the platform functions as a broker and offer to sell altcoins already in their custody to crypto enthusiasts. Note that the simplicity of this mode of operation makes them easy-to-use and the preferred choice for beginners. The latter are mostly trading platforms, which are the intermediaries between the actual sellers and the buyers. Using this definition as a framework, you will agree that sites like Bittrex fall under this category.
This class allows users to exchange an altcoin for another or altcoin for bitcoin. In other words, you can get people on these platforms who are ready to trade altcoins for another altcoin or bitcoin. In most cases, using an exchange that falls into this category might entail that you possess a bit of technical know-how in crypto trading, which might deter new entrants. On the upside, they offer a wide range of crypto pairs, which is good for users who are looking to trade less popular coins. Note that each transaction carried out on these exchanges carries charges.
Decentralized Altcoin Exchanges
In the case of decentralized exchanges, they are platforms that enable autonomous exchanges where users get to trade altcoins without the need for inputs from intermediaries. Hence, users get to retain control over their private keys and access zero transaction fee services. The downside of decentralized altcoin exchanges is that they lack the sort of trading volumes found on centralized exchanges.
What are the factors that you should consider when trying to pick the best cryptocurrency exchange for altcoin?
The Legality of The Altcoin Exchange in Your Location
Before enlisting the services of an altcoins exchange, you must ascertain its legality status in your location. While many altcoin exchanges claim to have a global reach, their legal standing in your country might restrict them from offering you exchange services. This assertion holds as nations around the globe are increasingly enacting regulatory frameworks that would capture the scope of the operations of exchanges within their borders. Altcoin exchanges that cannot meet the requirements set by regulators are, therefore, ineligible to do business in the country in question. In light of this, only sign up for altcoin exchange services that are accessible in your location and completely legal.
One of the regulatory obligations of altcoin exchanges is that they must enable Know Your Customer (KYC) and Anti-money laundering procedures for their clients. As such, any altcoin exchange that is defaulting is running an illegal business, and joining such an exchange comes with great risks.
Once you clear up the legality of the altcoin exchange, the next line of action is to investigate whether the exchange avails customer support in your language. Chances are that you might encounter one or two problems while using the platform’s facilities, and would need to engage with the customer service. You will agree that the speed at which the platform will resolve your queries depends on the representative’s ability to understand your plight. This is where language barriers come in. We always advise that crypto practitioners choose altcoin exchanges that offer customer services in a wide range of languages, or one that is built for traders in your region.
Additionally, you should gauge the exchange’s customer relations culture. If the platform is by no means a proven customer-friendly company, then it is not worth joining. Note that 24/7 support is now a standard for crypto exchanges. The inability of an exchange to subscribe to this standard indicates that it is inefficient.
User Experience and Beginner-Friendliness
As mentioned earlier, platforms that exchange altcoins come with a variety of functions and tools relating to crypto trading. The number of tools adopted, as well as their complexity, tells us the class of altcoin traders who will find its services attractive. For beginners, it is advisable to go for exchanges that take a simple approach to the selling and buying of altcoins. You should ensure that the procedures for listing your coins or accessing sellers are straightforward and short.
On the other hand, an expert trader might find such platforms a bit bland. This set of users revels in the ability of an exchange to offer various trading tools that will help them make price projections, track market trends, and minimize trading risks. For them, the more the tools available on an exchange, the better. Hence, we advise that you gauge your expertise in altcoin trading, and explore the features of an altcoin exchange, before listing or registering. By so doing, you can ensure that bad user experience will never get in the way of your activities.
Likewise, it is important to check out the website’s design and its mobile framework. These details come together to define the quality of user experience on hand on the platform.
Liquidity and Volume
Volume and liquidity are important information that you should assess when researching altcoin exchanges. On one hand, trade volume describes the number of transactions and orders the exchange processes on a daily basis. On the other hand, liquidity defines the number of trade pairings available on the platform and the altcoins list. Needless to say, you should consider platforms that boast a high volume of trades, as it is a clear indication that the exchange as the capacity to fill your order in a matter of seconds – regardless of the time of the day or how big the trade is.
Also, an exchange offering enough liquidity has enabled a wide range of trade pairs that would allow users to exchange their altcoins for another effortlessly. As such, trading pairs are important factors to consider while carrying out your assessments. It is advisable to go for altcoin exchanges that have a reasonable amount of trading pair for your desired altcoin. This notion also depends on the type of altcoin you are looking to trade. If it is a popular altcoin, there is every reason to expect top altcoin exchanges to offer an adequate number of pairings. However, if your preferred altcoin is not widely known, or does not have what it takes to meet the requirements for listing on big exchanges, then you might have to choose a smaller exchange or a decentralized one.
Judging by relentless attacks on crypto exchanges, it is safe to say that security stands as a recurring shortcoming of exchange platforms. Hence, you should take your safety seriously by ensuring that the platform you pick has security measures that would make it a tad difficult to fall victim to hacks. We advise that you verify that the platform has two-factor authentication systems coupled with biometrics validation processes. With this, you can ascertain that your first point of defense is not susceptible to frailties associated with authentication systems that only utilize the username and password framework. Similarly, you should check whether trading on an exchange does not erode your privacy. The moment attackers can link your holdings to your identity, it becomes easier to steal from you. As such, we advise that you estimate your exchange’s capacity to protect your identity and private information you might have submitted while signing up.
Custody and Private Keys
One of the differentiating factors between centralized and decentralized exchanges is the fact that the latter function as custodians of their users’ holdings. They provide wallet services, which put them in full control of the private keys assigned to users' assets. On the other hand, decentralized altcoin exchanges eliminate such functions, as users utilize smart contracts to facilitate their trades. While this is a given, traders are still more comfortable with centralized exchanges for the obvious reasons.
And so, if you believe that centralized altcoin exchange is the right choice for you, then you should do comprehensive research to identify the safety precautions taken by the platform to protect your holdings. In this case, a factor you should consider is the type of crypto custody services available for users. Are all of the exchange’s crypto holdings held in one single wallet, or is the management of the platform responsible enough to see the benefits of distributing their holdings between two or more wallets?
You should find an altcoin exchange that has more than one wallet for crypto assets to ensure that they do not lose all their funds to attacks. Nonetheless, this is not enough as each wallet must have a multi-signature feature. This feature entails that two or more executives have inputs to the authentication process, thereby curtailing cases of losses resulting from single-point attacks or lost private keys.
Additionally, altcoin exchanges are increasingly enlisting the help of crypto custody platforms to beef up security. Exchanges partnering insured and licensed custodians can refund assets lost to hacks.
Recall that centralized exchanges charge fees for every transaction processed on their platforms. These charges vary from one platform to another. And it is important to pick out the one that offers reasonable trading fees. While an altcoin exchange rate could seem negligible at first, compounding it over time could, however, put a strain on your profit (that is if you are looking to trade altcoins regularly). Hence, when considering transaction fees, you should not only focus on the short-term but try to examine its long-term effects on your crypto earnings.
The Track Record of The Exchanges and Its Management Team
After you must have researched all the factors listed above, you should go a step further to assess the historical background of the altcoin exchange, the standings of the management team in the crypto space, and its track record as regards to security. This assertion is important because doing this gives you a broad overview of the company’s credibility. Top altcoin exchange must have the right tools in place to engage its community of traders. Also, they do enough to influence the crypto space positively. And even when they fall victim to attacks, their response says a lot about their competence.
Cryptolink’s List of Best Altcoin Exchanges
We are aware that it takes ample time to choose from the long list of top altcoin exchanges available today. In light of this, we have done rigorous work to put together the list of best cryptocurrency exchange for altcoins that should be on your radar. Note that all the recommendations listed in this guide feature prominently in our review. Therefore, you can be rest assured that nothing was left to chance while making this list.
We checked the legality of the platform that made it on our altcoin exchange list and picked the ones that offer wide coverage to crypto practitioners from different locations. However, we advise that you do more research to confirm their legal standing in your country. Also, we checked each exchange’s customer relationship culture as well as the security features accessible on each. The transaction fees of the platform also played a vital role in our analysis. The same is true of the company’s track record. Lastly, we compared the volume and liquidity to verify the capacity of the exchange to fill orders effortlessly.
At the end of our comprehensive analysis, 15 altcoin exchanges made our list. You can use the information compiled on each altcoin exchange review to fast track your research.