Cryptocurrency Exchange Rating Methodology

How do we tend to rate every cryptocurrency exchange?

Cryptocurrency exchanges are platforms that enable you to shop for, sell, and trade cryptocurrency. However, because the crypto market grows, additional and additional exchanges are becoming accessible, and every exchange varies slightly in terms of security, fees, features, and offerings. Given the numerous choices accessible, determining which exchange is true for you’ll be a troublesome task. To make the method easier, we tend to review and rate twenty-eight common crypto exchange exploitation criteria relevant to prospective customers. This guide explains our analysis method. 

We suggest the most effective merchandise through the associate freelance review method, and advertisers don’t influence our picks. We usually receive compensation if you visit certain partners that we recommend. Our publisher’s revelation for additional data If you’d prefer to trade or invest in cryptocurrency, a gap-associated account with a crypto exchange may be a straightforward way to get started.

Investing in cryptocurrencies, redistributed finance (Defi), and different Initial Coin Offerings (ICOs) is very risky and speculative, and therefore the markets are often extraordinarily volatile. Professional or certified professional before making any financial choices. This text isn’t a recommendation by Investopedia or the author to take a position in cryptocurrencies, nor will the accuracy or timeliness of the data be secure.

Our rating method

To objectively assess every exchange, we tend to collect information on and compare twenty-eight corporations across the subsequent categories:

Availability of Security Fees Offerings

Mobile App Features

Within every class, we tend to think of many factors, like the number of spot currencies and order sorts supported. total countries wherever the exchange is accessible, mercantilism fees, and more.

We tend to score every issue on a 0-to-1 scale (or as a zero or one, depending on the factor), with zero being the worst doable score and one being the very best doable score.

 We then allotted a shared weight to those scores associated with each exchange and established an overall 1-to-5-star rating for every exchange. One star is the lowest doable rating, and five stars are the very best. Data assortment was a key part of our analysis method.

We tended to gather knowledge from the company’s websites and media contacts to make sure. We had the most correct info doable to rate every crypto exchange objectively. Our analysis team collected over a thousand knowledge points and weighted quite twenty criteria to work out company ratings.

Security

For those inquisitive about crypto mercantilism and finance. Security is a necessary issue to think about once selecting an associated exchange. With this in mind, we tend to evaluate many security-related factors. Assigning a zero or one score to each and a shared weight based on importance: Cold storage (10%)Know-Your-Customer (KYC) standards (2%)FDIC insurance (4%)

Cold vs. Hot Wallets

We additionally thought of whether or not the crypto exchanges we tend to evaluate offered hot or cold wallets or a mixture of each. Hot wallets are internet-connected, whereas cold wallets don’t seem to be. In general, cold wallets are thought of as safer.

However, it’s easier to shop for and trade cryptocurrency using a hot wallet. Exchanges giving cold wallets or a mixture of hot and cold wallets received a score of 1, whereas those giving no storage received a score of zero. These scores conjure up 100% of our overall star ratings.

KYC Standards

Know-Your-Customer, or KYC, standards were developed to help minimize instances of fraud and hiding on money platforms. Crypto exchanges that follow KYC standards need users to verify their identities. Typically, this involves sharing some personal information or providing a replica of a government-issued picture ID. Like a passport or driver’s license.

Exchanges following KYC standards received a score of 1 in our analysis. Whereas those not following KYC standards received a score of zero. These scores account for two of our overall star ratings. 

FDIC Insurance

While cryptocurrency isn’t FDIC-insured, some crypto exchanges provide corp insurance for U.S. dollar amounts held on their platforms. Generally, this insurance is provided through partner banks. In our analysis, crypto exchanges that gave corporate insurance through partner banks received a score of 1. Whereas those that didn’t provide it received a score of zero. These scores conjure four-dimensional images of our overall star ratings.

Fees

Fees will vary greatly depending on the cryptocurrency exchange you’re dealing with. This is often a vital thought for crypto traders and investors. We tend to compare numerous fees across exchanges. We hierarchal every exchange’s fees on a 0-to-1 scale, with exchanges that provide lower fees receiving scores nearer to one. Scores were then weighted as follows, for a total of forty-five percent of the star rating: Trading fees (20%) Fees for deposits (ten percent) for withdrawals (15%).

Trading Fees

In our assessment of mercantilism fees, we tend to think of maker fees, taker fees, and derivative mercantilism fees. We tend to compare fees across every exchange and assign a 0-to-1 score for every fee type. These scores were then accustomed to calculating the associate’s degree overall mercantilism fee score, which accounts for 2 hundredths of our total star rating for every company.

Deposit Fees

We jointly checked out each crypto and decided on deposit fees for every exchange, and corporations that offered no fees or lower fees received higher scores on our 0-to-1 scale. We tend to then assign an associate’s degree overall deposit fee score. Which makes up 100 percent of every company’s star rating.

Withdrawal Fees

Crypto exchanges conjointly charge withdrawal fees in certain cases. Throughout our analysis, we tend to check out every company’s crypto and decree withdrawal fees and assign a 0-to-1 score to everyone. We then used the crypto associate degree withdrawal fee scores to develop an overall score. This score accounts for V-J Day of every company’s total star rating.

Offerings

In our analysis of every exchange, we tend to think of its offerings in terms of what percentage of cryptocurrencies are supported. We have a tended knowledge of the subsequent criteria and assigned a share coefficient of supported importance:

Crypto-assets (3%)Derivatives (1%)Order sorting (1.5%) Over-the-counter (OTC) mercantilism (2%)Third-party mercantile bots (0.5%). Crypto AssetsCertain exchanges provide a wider selection of supported cryptocurrencies than others. People who offered the next variety of supported assets scored higher on our 0-to-1 scale.

Whereas people who offered a restricted variety of assets scored lower. These scores accounted for a third of every company’s total star rating.

Derivatives

Derivatives are a sort of contract between a client and a merchandiser, and therefore the price of the contract is tied to the associate degree underlying plus. In the case of crypto, a derivatives contract’s price aligns with the worth of the underlying coin or token. Many sorts of derivatives contracts may be used for various functions.

As an example, traders might use a derivative to take a position on the longer-term worth of an associate degree plus. And therefore the contract may stipulate sure purchase and sell commitments. In our analysis method, we tend to think about whether or not every crypto exchange offers derivatives.

Especially because of the sorts of services they provide. We tend to score every company on a 0-to-1 scale supported by the number of derivatives it offers. Exchanges with many derivatives choices received higher scores. These scores conjure up 1/5 of our total company star ratings.

Order sort

Different cryptocurrency exchanges might provide different order sorts. As an example, some might provide limit orders, which permit you to specify the most valuable thing. You’ll purchase an associate’s degree plus or a minimum worth that you’ll sell an associate’s degree plus. Others might not provide this order. 

We gathered information on the various order types that each exchange provides and then used this information to rate each company on a 0-to-1 scale. Exchanges with a greater variety of order sorts received the next score than those with a smaller variety. These scores accounted for one.5% of a company’s overall star rating.

A cryptocurrency exchange supports unlisted mercantilism. It permits two parties to conduct transactions directly rather than through the exchange. Unlisted mercantilism is commonly utilized by those that wish to shop for or sell an outsized quantity of cryptocurrency. Some exchanges provide this selection for institutional traders or high-net-worth individuals trying to form massive transactions. 

We collected information on whether or not every crypto exchange we tend to evaluate supports unlisted mercantilism. People who supported this selection received a score of 1, whereas those who failed to received a score of zero. These scores conjure up two of a company’s overall star ratings.

Third-Party mercantilism larva

We also considered whether the cryptocurrency exchanges we have support third-party mercantilism bots. These mercantilism bots, which permit users to customize their mercantilism expertise, will integrate with the associate degree exchange’s API.

They’ll provide another price to high-volume users or those trying to change their trades. Exchanges that support third-party mercantilism bots received a score of 1 in our analysis, whereas people who don’t receive a score of zero. These scores correspond to 0% to 5% of our total star ratings for each company.

 Availability

During our analysis method, we tend to think of the handiness of the supply and the provision of every crypto exchange on our list. We tended to check out the subsequent factors during this class and scored every exchange on a 0-to-1 scale that supported its availability. Then we tend to assign a share coefficient to everyone and use those percentages to calculate our overall star ratings.

Countries Available

countries out there (1.5%) Strategy for funding (2%)to regulative factors, crypto exchanges are usually not accessible in each country. As an example, Bitfinex isn’t accessible within the U.S. 1 Exchanges that were out there in additional countries receive the next score in our analysis, and these scores account for one.5% of our overall star ratings for every company.

Funding Methods

Funding strategies assess availability from a funding perspective. We tend to think of the funding strategies every company offers. During this class, we will learn about 3 different funding strategies, as well as funding via online services, ACH transfer, and wire transfer. We tend to then come up with associate degree overall decree funding scores, and these scores account for two of our overall star ratings for every company.

Features

Features When you’re examining crypto exchanges, you would like to confirm that every exchange has the options you would like. As an example, you would possibly have an interest in applying for a MasterCard that earns crypto rewards or earning interest on your crypto.

Some exchanges might provide these options, whereas others might not. In our analysis of options, we tend to think of the subsequent criteria as scored on a 0-to-1 scale and assigned share weightings to support their importance: Financial alternatives (5%) and customer service (8%).

Other benefits (3%) Financial options Certain exchanges provide valuable products and options like co-branded credit cards that enable you to earn crypto rewards for your daily payment, the power to earn interest on crypto, and therefore the choice to confiscate a loan against your crypto holdings. We tend to the thought of if exchanges offered this product and options in our analysis, and this issue accounted for five of every company’s total star rating.

Customer Support

Since several crypto exchanges are comparatively new, they’ll not provide several choices for client support. However, as a client, having the ability to access client support is crucial if you encounter issues or have questions about your account. Given this, we tend to collect knowledge on client support choices and score every exchange on a 0-to-1 scale that supports the number of choices out there. Client support scores conjure up 8 May 1945 of our overall company star ratings.

Other Rewards

Certain exchanges provide rewards for specific actions, like concerning a follower or maintaining a high balance of a particular plus. Rewards might be available in a couple of forms, as well, such as bonus earnings or discounted fees. We tend to assign an assigned course to every exchange supported by the number of rewards it offers. Our alternative rewards scores accounted for a third dimensional of our overall company star ratings.

Mobile App

We conjointly thought of whether or not every crypto exchange we tend to evaluate includes a mobile app, as well as mobile app accessibility, ratings, and practicality.

We tend to gather information on the following criteria and assign a share coefficient supported importance: (5%), app availability (5%), and customer feedback (0.5%).

Update Frequency

Data privacy (0.5%)Compatibility (0.5%)App availableness In our analysis, we tend to the thought of if every exchange offered a mobile app out there for humanoids and Apple. We tend to then score every exchange on a 0-to-1 scale of supported mobile app availability.

Mobile apps that were out there on each in-operation system scored over people who were solely out there on one. These scores accounted for five of our overall company star ratings.

Customer Rating

In addition to availabilities, we tend to think of how mobile users rate every app on Google Play. We tend to then assign a score of 0–1 to the supported client ratings. Apps that received high ratings from customers in Google Play scored nearer to one, whereas apps that failed to receive higher scores.

We then came up with an associate’s degree overall score for this class, which accounted for five of our overall company star ratings. Update frequency is a part of our analysis.

We tend to think of how often every crypto exchange’s mobile app was updated. We tend to sign each exchange’s mobile app with an updated scan of 0-1. Mobile apps that were updated a lot oftener receive higher scores. These scores accounted for zero.5% of our overall company star ratings. Data privacy checked out knowledge privacy as we tend to evaluate every company’s mobile app.

We tend to factors like knowledge points connected to the user and if the mobile app caterpillar-tracked user knowledge, and used this info to come up with a 0-1 score for every exchange. These scores accounted for zero.5% of our overall company star ratings.

Compatibility

In addition to app accessibility across operating systems, we tend to think about compatibility with totally different Apple devices, such as the iPhone, iPad, iPod Touch, Apple Watch, and Mac.

Exchanges with mobile apps that were compatible with a lot of devices scored nearer to one, whereas those compatible with fewer devices scored nearer to zero. These scores make up zero. to 5% of our overall company star ratings.

Choosing the Proper Cryptocurrency Exchange

For those curious about mercantilism or investing in crypto, selecting the proper exchange is very important. However, many factors can affect your call. Using publicly available info, we tend to evaluate many high cryptocurrency exchanges and rate them as supported factors of importance to prospective customers.

As a part of our analysis method, we tend to think of security measures, fees, offerings, availability, and alternative factors. Although we tend to strive to be as objective as doable in our ratings and reviews of every crypto exchange we tend to evaluate, you’ll rely upon your wants and preferences.