Crypto Exchanges — Getting Started in Trading

If you’re new to crypto and are interested in trading, read on to learn more about how you can get started at a crypto exchange.

Crypto exchanges are similar to online brokerages: they are essentially online marketplaces to buy and sell cryptocurrency. You can either deposit fiat currency (money regulated by governments) and exchange it for cryptocurrencies, or you can trade cryptocurrencies for other cryptocurrencies — e.g. exchanging Bitcoin (BTC) for Ethereum (ETH) or vice versa.

There are two types of exchanges: centralized and decentralized, with centralized exchanges being much more common. Centralized exchanges are run by an intermediary (such as the Tokenize team running our exchange platform) and usually require some form of KYC identification checks, whereas decentralized exchanges have no intermediary and do not require identity verification — meaning users can often just sign up to the platform and start trading immediately. There are pros and cons to both, but in this article, we’ll be focusing on how beginners can get started on a centralized exchange.

The first step — before even opening an account — is to figure out which exchange is best suited for your needs. Some considerations before opening an account on an exchange include:

• Fees (what are the fees for depositing/withdrawing fiat and crypto as well as trading?)
• Currencies listing (which cryptocurrency pairs are supported?)
• Security (how are the cryptocurrencies stored and what are the security protocols in place?)
• Order types (what are the order types supported — market, limit, stop, swap?)
• Trade & transfer limits (any limits imposed by the exchange?)
• Types of fiat funding (how can one add fiat currency to exchange for crypto?)

Let’s dive into each of these in a little more detail.

Fees

Crypto exchanges usually charge a small fee for processing transactions, whether it’s fiat-to-crypto or crypto-to-crypto — it’s how these exchanges make money. Fiat-to-crypto fees generally tend to be a little higher due to the friction of converting between fiat and digital currencies. On Tokenize, we have three different tiers of trading fees: for our Platinum users, we charge only 0.10% for both fiat-crypto and crypto-crypto pairings; for our normal and Platinum users, there’s a tiny difference between fiat-crypto and crypto-crypto fees.

Some exchanges offer a discount on trading fees if you use the exchange’s own cryptocurrency token. Here on Tokenize, you can enjoy a 30% discount on fees if you pay with our exchange token — TKX.

Currencies

What currencies are you interested in trading? It’s estimated that there are over 7,500 cryptocurrencies in circulation right now, with the number ever-changing due to new token launches and other coins becoming obsolete. Bitcoin, as the oldest coin first launched in 2009, is also the largest by market-cap with market cap dominance hovering around 43%. Some exchanges specialize in crypto-crypto offerings, while others accept fiat deposits for conversion into crypto.

Security

There are two aspects to security to consider: at the individual user level and at the exchange-wide level. At the individual user level, it’s about ensuring that unauthorized personnel doesn’t gain access to your account — while setting a strong password is the least you could do, some exchanges may offer enhanced security measures. For example, Tokenize offers 2-factor authentication (2FA) and IP whitelisting for that extra peace of mind.

On the exchange-wide level, considerations include cold vs hot storage, insurance, and even bug bounty programs. Crypto exchanges, like many other websites, are a target of hackers, with cold wallets generally much more secure since they are stored offline — unlike hot wallets which are connected to the internet and thus vulnerable to hacking. In the unfortunate event where your exchange is affected in a hack, it’d be ideal if the exchange had insurance to cover your losses — so a great option would be to find an exchange that stores its user assets in a cold wallet protected by insurance, and even better if the exchange also ran a bug bounty program.

Supported order types

Like stock exchanges, crypto exchanges also typically trade with different order types, such as the three most basic: market, limit and stop. While most crypto exchanges support these three types, there are exchanges that facilitate swap orders exclusively.

Trading & Withdrawal Limits

How much fiat or cryptocurrency are you intending to trade or withdraw in a day? Limits may vary and depend on the currency being traded/withdrawn: for example, while some exchanges don’t have strict trading limits on cryptocurrencies, they may have certain limits on withdrawals which may differ depending on whether you’re withdrawing cryptocurrency or fiat. For Tokenize, see our full list of withdrawal limits here.

Funding

If you’re brand new to crypto, you’ll need to exchange your fiat currency to digital currency (whether it’s Bitcoin or a stablecoin) first — a process known as “on-ramp”. While some exchanges allow you to deposit fiat currency directly to exchange for digital assets (via means such as direct bank transfer or debit/credit card), others only accept digital currency and you’ll need to enlist a third-party exchange or service to convert your fiat money first. Depending on which method you choose, there’ll also likely be some sort of fee involved. For Tokenize, we accept a variety of deposit methods for SGD including StraitsX transfer — for the full article and exact how-to, see this article.

Now that you’ve got an idea of the different considerations behind choosing an exchange, the second step is to open an account with your chosen exchange! This step is variable; you’ll need to check with the exchange for the specific requirements. Opening an account with Tokenize is fairly straightforward: for Singapore users, Singpass verification is supported and we only require proof of address (utility bills, bank statements are all acceptable — for the full list, refer to our helpful article on the Knowledge Base!)

Once you’ve opened an account, you’re ready to start trading! Look out for our next article covering techniques such as DCA (Dollar Cost Averaging) and Crypto Earn on Tokenize — but in the meantime, do refer to our Knowledge Base if you have any questions, and happy Tokenizing!