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Cryptocurrency is revolutionizing digital finance worldwide, with many believing it to be the future of finance. In South Korea alone, it is estimated that an impressive 31% of adult residents are involved in the crypto market, with many more suggesting they are interested in becoming so in the future.
Getting involved in the crypto world can be a life-changing decision for anyone, whether they are investors or simply looking for a more secure payment method than traditional banking. However, many people think crypto is too complex for them to get involved with.
This isn’t necessarily the case, but rather, sometimes people just need to know where to start when thinking of involving themselves in the rapidly evolving world of cryptocurrency. With this in mind, let’s take a look at five different kinds of crypto exchange platforms and who they might be suited for.
Number One: Centralized exchange platforms
Centralized exchange platforms are the most widely used form of cryptocurrency exchange service. These are exchange platforms that are run by separate companies, such as Binance or Kraken, meaning these companies oversee all trades that happen within them. Despite crypto aiming to be decentralized in general, the centralization of a crypto platform ensures that the users are kept safe and secure against the potential for digital threats.
These platforms are a valuable option for those new to the world of cryptocurrency who would benefit from ease of use and readily available customer service. They also make the trade of crypto infinitely easier than some of the other options on this list.
Number Two: Decentralized exchange platforms
If centralized platforms are crypto exchanges that are overseen by a large company, then it makes sense that a decentralized exchange platform allows for the trade of cryptocurrency without an overseeing entity.
Decentralized exchanges are often chosen by more experienced crypto users who want to benefit from their low transaction fees and high security, as well as those who prioritize their anonymity (source: https://icobench.com/kr/best-dex-exchanges/). In essence, these exchanges work in very much the same way as a brokerage platform, but usually don’t take custody of your assets.
Number Three: Crypto Retailers
Crypto retailers are emerging in various areas across the globe, and are becoming quite a regular site in Korea. These are vendors, or even outside machines, that allow residents to buy and sell crypto directly from the retailer in a legal manner.
Although this is not the most effective way to earn money from crypto, it can be a good way for beginners to easily enter the world of crypto and take possession of their own crypto coins for the first time.
Anyone who uses this service, or any of the others in this list to purchase crypto, must also ensure that they have an effective crypto wallet in which to store their digital assets. There are multiple options, including hot and cold versions, when it comes to choosing a type of crypto wallet best suited to the individual investor.
Number Four: Peer-to-Peer (P2P) Exchanges
Peer-to-peer crypto exchange platforms are the go-to exchange service for dedicated crypto enthusiasts who value the decentralized nature of cryptocurrency. These services are specifically designed for crypto trading between two individuals. Because of this, they do not take your assets into custody nor can they provide any specialized financial services.
They simply exist as a way to allow crypto enthusiasts to connect with other crypto owners and aid them in negotiating a sale. No other parties are involved in the trade, and it remains solely between the two people involved in the transaction.
Many crypto investors gravitate towards this because of the additional anonymity it gives them, as they do not have to give out personal information to a third-party company and can trade with the buyer or seller directly.
Number Five: Derivative Trading
Derivative trading is a form of trading that relies on the volatility of crypto assets. In this context, volatility refers to the tendency of crypto to rise or fall in value over time. Some cryptocurrencies are highly speculative in this regard, and their value can change rapidly based on supply or demand.
When partaking in derivative trading, investors do not trade digital assets themselves, but rather crypto derivatives, which are contracts tied to the price of a digital asset. The most popular example of this is futures. This is an agreement that is made to buy or sell crypto at a later time, usually a specified date in the future, irrespective of where the coin is valued on the market.
Derivative trading is one of the most effective ways to make money with crypto, but it is also the riskiest out of all crypto exchange methods.
Conclusion
Cryptocurrency is all about having options, and when it comes to selecting which exchange service to use, this is no exception. Those new to cryptocurrency are likely to benefit most from purchasing crypto from cryptocurrency retailers or using centralized exchange platforms.
As they grow in confidence during their crypto journey, they might then branch out to some of the more risky, yet often more rewarding, ways of trading crypto, such as using peer-to-peer exchanges or trying their hand at derivative trading.
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