The Best Bitcoin Exchanges In 2021
When it comes to finding the Best Bitcoin exchange things are not all that easy. Many of the best Bitcoin exchanges to buy Bitcoin are only recently online. Bitcoin reached the highest peak recently, and experts are already touting steeper climbs in the future. Seeing this potential, many more people have joined the band of traders looking for profit-making opportunities through Bitcoin trading. Thankfully, numerous Bitcoin exchanges exist from where the new traders can operate.
The problem with these exchanges is that not all of them are capable of the service people expect. It is difficult to shortlist an exchange from the many options available. This is why we prepared this piece to help you to select some of the best Bitcoin exchanges in 2021.
Our Top Picks of The Best Bitcoin Exchanges
What Is the Purpose of a Bitcoin Exchange?
A Bitcoin exchange is a market where you can buy or sell Bitcoin using fiat currency or any other cryptocurrency. You will find different exchanges referring to themselves as either centralised or decentralised. Well, these are the two major types of Bitcoin exchanges.
A centralised exchange is that which controls most of the functions of your account, including finding buyers/sellers, as well as moving funds between accounts. Conversely, a decentralised exchange is simply a platform where buyers and sellers transact as peers.
You will find smaller iterations of exchanges below the main categories of centralised or decentralised. For instance, instant exchanges offer instant buy services, while derivative exchanges offer access to the cryptocurrency derivatives market. Other options are fiat and pure crypto exchanges. Fiat exchanges allow users to transact using fiat currency, while pure crypto exchanges exclusively accept crypto as a means of transaction.
Buying/selling Bitcoin via an exchange is fast and reliable. The exchange brings together a large pool of buyers/sellers, enabling faster transactions. Also, you need an exchange because the trading platform is secure. Some exchanges offer insurance protection for users.
You might be wondering how a Bitcoin exchange works. Well, you first register for an account where you will provide personal information for KYC (Know Your Customer) verification. Some exchanges skip identification details because of anonymity, but they offer less security in return. You can buy Bitcoin after you fund your account, though this is not a requirement on many exchanges. The only important thing to do is to connect a payment method to your account.
How To Find The Best Bitcoin Exchange
Check Regulations and Security of Bitcoin Exchange
Bitcoin is now regarded as a taxable financial instrument in some jurisdictions, meaning Bitcoin exchanges are regarded as financial institutions that have to observe relevant regulatory guidelines. Your funds are safe with a regulated Bitcoin exchange because you can be certain the platform is not a scam.
Check Fees of Bitcoin Exchange
Different platforms charge varying fees (this also depends on whether the exchange is centralised or decentralised). Lower the fees, the more returns you earn from your Bitcoin trading transactions. As part of due diligence before account registration, always check out the fees that an exchange charges.
Additional Features of Bitcoin Exchange
A Bitcoin exchange is primarily a marketplace for buying/selling Bitcoin. Great exchanges come with additional features, such as the loan service for CEX.IO or Binance Academy that lets users learn more about cryptocurrency. Binance also offers its token called Binance Coin as an additional feature. The coin is used to settle transactions and provides incentives in the form of discounts for its users.
Is a Bitcoin Exchange Trustworthy?
First, let us describe what a trustworthy Bitcoin exchange looks like. Such an exchange has all the necessary licenses showing that it plays by the rules of your jurisdiction. Also, the exchange must have the necessary security measures in place to protect users’ details and funds.
Can you trust a Bitcoin exchange? You can if it checks out against the issues highlighted above, and there is more. The cryptoverse is notorious for the hacking activity that has stolen cryptocurrency worth millions of dollars from people. As such, you can trust an exchange if it has mechanisms in place to prevent such hacks, such as storing coins in cold wallets.
Some of the Best Bitcoin Exchanges offer crypto custody services where they store the coins in a vault. This is not a physical vault as those used in banks, but it serves the purpose well. But what happens if, despite all the mechanisms put in place, the coins disappear? This is why you should ensure that a Bitcoin exchange has an insurance protection program in place.
Furthermore, trustworthy Bitcoin exchanges are those that offer security for your details. Most exchanges use two-factor authentication to prevent unwarranted access to user accounts; additionally, reputable exchanges secure on-platform transactions using SSL protocols.
Should You Keep Your Crypto on an Exchange or Transfer to a Wallet?
When you buy Bitcoin from an exchange, you will get actual coins in return, which means you need somewhere to keep them. The question is this, what is the best option for storing Bitcoin?
Your intention with the coins will determine how you keep them. Let us say you want to use the coins for trading or staking, and the coins need to be on hand for faster transfer. In this case, therefore, you should keep your crypto on the exchange.
Let us consider another buyer who would like to keep the coins for long-term investing. In this case, you will not need frequent access to the coins, and transferring them to a wallet looks like the best move.
Talking of wallets, which one should you consider? First, let us discuss the types of cryptocurrency wallets and their merits. A cryptocurrency wallet is either hot or cold. A hot wallet is internet-connected, which exposes it to exploitation by hackers. A cold wallet, on the other hand, is one that can safely store funds offline. However, this is just the primary category of crypto wallets.
Another category is hardware versus software wallets. Hardware wallets are those that store private keys on hardware devices, such as a thumb drive. Software wallets are similar to hardware wallets in functionality, but they are installable software. You can install the software on your smartphone or desktop.
The last wallet type we will discuss is a paper wallet. This piece of paper has a QR code printed. The QR code contains all the details of a wallet that you would find on any other wallet type. Paper wallets are exclusively cold wallets, which makes them the most secure.
Which are the largest exchange platforms to buy cryptocurrency?
Generally, the biggest Bitcoin exchanges to buy cryptocurrency will be toward the top of the above list. For example, eToro, Binance, Bitfinex, Coinbase Pro (GDAX), Bitstamp, Coinbase (also the best USD Bitcoin exchange) all represent large volume proportions. Daily volume varies, and therefore the world’s largest cryptocurrency exchange vary each day. CoinMarketCap is one of the best sources to check which are the top bitcoin exchanges by trading volume.
Other Useful Links
If you are new to cryptocurrency exchanges then check out our exchange finder section which breaks down all exchanges by different criteria. We rank exchanges by the following criteria:
- Best exchanges in different countries
- Best exchanges per exchange type
- Best exchanges that offer different fiat transactions
- Best exchanges for different payment methods
- Best exchanges for beginners
- Exchanges with the lowest fees
- Exchanges with the easiest verification process
- Largest exchanges by volume of transactions
We rank the exchanges first and foremost by their security measures and how trustworthy they are considered to be. User feedback is essential for us to create a rounded view of each exchange, make sure to give your input on exchanges you regularly use and those that you have tried and discarded immediately.
Bitcoin exchanges are making it easy and convenient to buy Bitcoin. The platforms also offer high-security levels for the users’ and transaction details. Your funds are comparatively safer with a regulated Bitcoin exchange.
Some Bitcoin exchanges come with additional features, such as a loan service or staking through which clients can earn an additional passive income. Others provide extra security for your funds by storing them in dedicated vaults. In short, Bitcoin exchanges provide an easy and secure option to buy Bitcoin for crypto enthusiasts.
A Bitcoin exchange works as a marketplace that brings together buyers and sellers of Bitcoin.
No. A Bitcoin broker allows trading in derivatives products while an exchange mostly allows its users to buy/sell cryptocurrencies.
You start using a Bitcoin exchange by opening an account. The exchange will request certain details from you, such as proof of residence in compliance with anti-money laundering and know-your-customer regulations. After your account is set up, you can link a payment method and then start trading. Some exchanges will ask you to link a crypto wallet.
You need to link a cryptocurrency wallet to your account because this is where the exchange will deposit your coins. Some exchanges offer custody services at a fee.
No. Only a few exchanges that have the resources to protect clients’ bitcoins do so.
Bitcoin exchanges have customer support departments dedicated to dealing with issues raised by users. Some exchanges have a live chat function on their web platforms to hasten access to assistance.
A centralised Bitcoin exchange has control over your account's functions as well as playing an intermediary between buyers and sellers. Contrarily, a decentralised exchange is merely a platform that connects buyers and sellers, and the users transact on a peer-to-peer basis.
This is an exchange that has all the right licenses from reputable regulators. Also, the exchange has sufficient security mechanisms in place to protect users’ funds and information.
Bitcoin exchange fees are a pain, there’s no doubt about it. However, if you shop around you can avoid getting totally ripped off when you buy Bitcoin. Bitstamp boasts deposit fees as low as 0.05% and, depending on how much Bitcoin you want to buy, you’ll be charged a transaction fee of between 0.25%-0.1%. If you deposit/withdraw your money via SEPA (Single Euro Payments Area) you won’t be charged any hidden commissions, as is the case with some sites. I’d say Kraken is also a good shout if it’s low fees you’re after. Their fee schedule can be found here: https://www.kraken.com/help/fees The good thing about Kraken is you can buy using FIAT and they charge you next to nothing to withdraw your funds. Most other sites charge higher fees when you buy and then again when you withdraw so you get bitten twice, so to speak. Coinbase’s rates are relatively low if you pay via a connected bank account (although the downside is this can take up to five days). When you buy via bank transfer, Coinbase usually charges a 1.49% commission on Bitcoin purchases (this varies slightly depending on what country you are in). If you are in Europe and in a country which participates in SEPA (Single Euro Payments Area), you are charged next to nothing to withdraw funds (€0.15 with Coinbase) which is great. The same goes for all sites which support SEPA. Kraken, for example, charges €0.09 for withdrawals. Unfortunately, if you’re in the US, Canada, Australia or most other parts of the world, you’ll be charged a bit more to withdraw funds. This is annoying because you’re effectively paying commission twice: once when you buy and once when you withdraw. Lowest fees are probably on LocalBitcoins because you’re buying directly from other people and the site doesn’t take much, per trade. Using LocalBitcoins maybe requires a tad more technical know-how but the site is good and reliable and guides you through the process of signing up and initiating a trade nicely. LocalBitcoins charges a flat 1% fee on each purchase.
Plenty of exchanges allow you to buy Bitcoin instantly but you’ll usually have to pay a bit more for the privilege. Coinbase, for example, has an Instant Buy option but you must use a credit or debit card so the transaction can be authenticated instantly and they charge 3.99% per purchase, rather than the usual 1.49%. Many other sites offer a similar service but, like with Coinbase, it will usually cost a bit more than to buy via a connected bank account or wire transfer. LocalBitcoins is another great way to buy Bitcoin quickly. Setting up an account doesn’t take long and, as long there are enough sellers, it is usually pretty easy to execute an order.
There are loads of places where you can buy and sell Bitcoin in the US. In fact, some of the world’s most popular Bitcoin exchange sites are American. Coinbase is one of America’s most popular Bitcoin exchange site and probably the fastest and easiest way to buy Bitcoin in the US. The site has an ‘Instant Buy’ option for credit or debit card purchases and setting up an account is quick and easy with no long waits for verification (this can be an issue with some exchange sites). If you wish to buy Bitcoin via bank transfer on Coinbase, it can take up to five days which is a bit annoying. Although, if you do buy using a connected bank account, Coinbase charges a much lower fee for purchases – it’s 3.99% for credit/debit card purchases and only 1.49% for bank transfer purchase. I’d say Coinbase is the easiest way for newbies to buy Bitcoin because the site specifically caters to those who may not be all that familiar with cryptocurrencies. Admittedly, the fees are a little on the steep side compared to, say, LocalBitcoins and Kraken, but the good thing about using Coinbase is that you don’t have to worry too much about security. Coinbase gives users the option to store coins in what it calls ‘the Vault’ (a more secure location because allegedly not even Coinbase can access coins in the Vault). This is good because security can be a concern with some of the lesser-known sites. In short, Coinbase is a trustworthy brand and a safe and secure place to buy Bitcoin. Oh, and additionally, Coinbase accepts payment via PayPal, which many sites are yet to cater for. As well as Bitcoin, Coinbase also offers support for Ethereum and Litecoin. Of course, Coinbase isn’t your only option if you want to buy Bitcoins in the US. There are countless other sites, some of which charge lower fees than Coinbase so it’s worth considering other options. If it’s lower fees you’re after, LocalBitcoins is another good option because the site simply puts buyers and sellers in contact with one other and offers an escrow service to ensure nobody gets ripped off. It is solely for Bitcoin trading but a benefit it has is that it operates in all countries and buyers can pay for Bitcoins however they like, though most pay via cash deposit. Just remember to follow the rules of the site and beware of scammers. Finally, if you want low fees but still want to go the traditional exchange route, I’d recommend either Gemini, a New York-based site which offers some of the lowest fees around (but doesn’t operate in all states so check first to see if your state is catered for), or Kraken, which also charges low fees but can be a bit tricky for new users and the customer service isn’t all that great. To be clear, I’ve only talked about sites where you can buy Bitcoin using FIAT money. There are other sites you can use if you already have another cryptocurrency and want to use that to buy Bitcoin. If you are interested, this is a good page to give you information on buying Bitcoin in the US.