This is the 4th article within Crypto guide for beginners. Read other ones:

• What is cryptocurrency and how does it work?,
• What is blockchain technology and how does it work?
• What is crypto exchange and how does it work?

As we have already discussed, a crypto exchange is the place where crypto users get access to trading, selling, and buying crypto. Of course, this is not the only way to get crypto, there are also peer-to-peer (P2P) platforms, investment apps, and even crypto wallets. Let’s explore how crypto exchanges work and how crypto holders can trade there.

How do crypto exchanges work?

There are several types of crypto exchanges: central, decentralized, and hybrid. The most common type is centralized crypto exchanges though the growing rate of decentralized exchanges nowadays is high. 

When you go to the crypto exchange, you set up an account. Having an account with the exchange platform lets you buy Bitcoin, Ether, Polkadot, Litecoin, etc. There are some exchanges that let you buy crypto with fiat, for example US dollar, or euro. Usually, such exchanges allow users to withdraw crypto as well. Other exchanges are not connected to the financial world of web2 and are not connected to banks or other financial institutions. It means that on their platforms you can only trade crypto for crypto. 

Depending on the scale of the platform, the range of cryptocurrencies to trade differs. The bigger the exchange is, the more trading pairs it contains. Anyway, before setting up an account with the crypto exchange platform, check the availability of trading pairs as well as the options to move your crypto off the platform. Also, there are platforms that allow the withdrawal of crypto funds, but the platform fee for such an action can be very high. Another amazing feature of crypto exchanges is their availability. Unlike traditional exchanges, crypto exchanges are operating 24/7.

How can one trade on a crypto exchange?

Step 1. Set up an account

It’s vital to set up an account to be able to trade at the crypto exchange. Depending on the type of exchange the verification checks might differ. Anyway, all centralized exchanges require KYC verification, which could be confirmation of identity through ID checks, utility bills with the home address, driving license, or passport. MInd that from region to region KYC regulations differ.

Step 2. Fund your account

There are several ways to fund a crypto exchange account. You can do it either with fiat money or crypto when you send crypto from your wallet to a crypto exchange wallet. The majority of crypto exchange platforms require a minimum deposit. 

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Step 3. Select a trading pair

Cryptocurrency exchanges offer the most common trading pairs. If none of the pairs matches your expectations, you can navigate the list of crypto assets and make a pair you want.

Step 4. Come up with a trading strategy

If you are a newcomer to the crypto field, you can check a guide or two, listen to some bloggers, or follow the strategy offered by the exchange itself. 

Step 5. Start trading

As soon as the crypto exchange account is funded and you are ready to employ the chosen trading strategy, cryptocurrency exchange transactions can be initiated. These can be done either through the desktop app on the computer or in your mobile phone app. The selling and buying transactions are put in the order book of the exchange. To proceed you have to pay crypto trading fees which differ from platform to platform. The fee may vary from 0.5% of the sum to 5% and even higher. It’s also important to remember that crypto exchanges do not set the prices for crypto, they are set by the market. The majority of crypto exchanges show up-to-the-minutes pricing. 

Summing up

rading on the crypto exchange is not as easy as trading stocks and bonds in a traditional way. Though sometimes there is minimal identity check required, crypto exchanges are still unregulated. Moreover, centralized cryptocurrency exchanges are vulnerable to fraud, hacks, and theft. Also, if something happens to the exchange platform for example it goes down, users don’t get access to their crypto wallets. 

To be protected and trade safely you can either have an account with a decentralized currency exchange or use a crypto wallet with the trading features. One such wallet is the Spatium Feeless MPC wallet. It’s a multi-currency wallet enabling feeless transactions. 

Stay protected in web3 with Spatium Feeless Wallet. It’s easy to operate and securely to use. Spatium Feeless Wallet is free to download. It’s available on Android and iOS devices. Visit our website to learn more about the wallet. Get it on your phone, test it, and enjoy your financial freedom!

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