Choosing a centralized crypto platform is one of the most important tasks that you must do carefully. This is because this platform will be used to invest the majority of your capital, if not all of it. Therefore, the platform must be reliable and regulated, and it must also have the currencies you want to trade with good fees. Let us learn in this article about the 5 most important points that you must take into consideration when choosing a centralized crypto platform in 2024.
In this article
What are the five points?
Legal status of the platform
Currencies listed on the central crypto exchange
Trading fees on the platform
Liquidity and trading volume on the centralized crypto platform
Proof of platform backup and security
Binance platform
OKX platform
What are the five points?
There are 5 points that you should focus on when judging any trading platform in the crypto world. This is so that you can trust this platform completely and these points are:
Legal status of the platform
Currencies listed on the platform
Trading fees on the platform
Liquidity and trading volume on the platform
Proof of platform backup and security
In the following paragraphs, we will focus on each of these five points more to show their importance. But in general, these five points must be available in any platform you want to trade on. If one of the five points is not available, if you are a beginner in the field of crypto, we advise you to avoid the platform completely. However, if you have some experience, in this case we advise you to be careful with the platform and not put the majority of your capital on it. This is to always reduce risks. In the world of crypto and after the fall of the centralized FTX platform in November 2022, investors have become in a constant state of fear of centralized platforms.
Let's learn more about the five points.
Legal status of the platform
In 2023, we learned that the legal status of centralized cryptocurrency exchanges will be important in the future. This is because different governments have sought to regulate and legislate digital currencies and the platforms that operate in this field. For this reason, it is important to make sure of the legal status of the platform and whether it is licensed in any country around the world or not. Not only that, but you should also know the status of the platform in your country.
For example, the Binance platform is licensed in the UAE and is one of the largest platforms in the Arabian Gulf, but the platform has recently started losing customers in Europe. This is because European countries are withdrawing the platformâs license one by one, and currently, digital currency users in Europe can use a platform like KuCoin, which has not been banned yet. On the other hand, the status of KuCoin in Dubai is still unclear, given that the platform has not yet obtained a license to trade currencies in the UAE.
As you can see, each region of the world can use the platform that complies with its laws and the platform that has successfully obtained the local government license.
Binance platform
The most popular and trusted in the world
www.binance.com
Availability
All the world
In general, in the UAE, we always recommend using Binance and OKX. Soon, Bybit will get its license in the UAE, and when that happens, it will be at the top of the list as well.
If your platform is not licensed but also not banned like Binance in Saudi Arabia, then there is no harm in using it but with caution. Always check our website to know the latest news about Binance in Saudi Arabia.
Currencies listed on the central crypto exchange
If the centralized crypto exchange is regulated in your country and its fees are excellent and everything on the platform is good but the currency you want to invest in is not listed on it, then there is no reason to use it. That is why the number of currencies listed on the platform is very important. Usually, OKEx and Binance have a lot of currencies covering many categories of crypto stories such as artificial intelligence, decentralized finance, memes, games, storage, and others. But you should always make sure before anything that the currency you want to trade is listed on the platform you want to choose.
You can simply click on markets on the coin you want to trade on the CoinGico platform to know which platforms you can buy the platform from. We recommend doing this before even searching for platforms and searching for platforms through this move. If your coin is not listed on Binance, what is the need to use the Binance platform?
On the other hand, some traders, when they trust a certain platform, start to search more about the currencies listed on the platform. That is, they only invest in the currencies listed on the platform. But here you should know something important. For example, the Binance platform is a very large platform, so if the currency is listed on it, it will compete with the big ones, which means that the increase may not be very large or huge. This is in contrast to a platform like Coquette, which may list relatively small currencies compared to Binance.
Trading fees on the platform
The third point to focus on is the trading fees on the centralized crypto exchange. This is because you will pay a fee when you buy and another fee when you sell. Therefore, these fees must be reasonable so that they do not affect your profit margin. Some centralized exchanges are known for their very high fees, such as Kraken and Coinbase, for example. But this is because these exchanges are licensed in the United States and have good liquidity and also a very high level of security and trust.
Here you should know the difference between trading fees and liquidity. Trading fees are calculated from the purchase or sale process and usually range from 0.1% to 2%. We recommend platforms such as Binance, OKX and Bybit here because the fees are very good. These fees vary depending on the type of purchase. If you buy at the market price, for example, immediately, you will pay higher fees, especially on the futures market. However, if you place a buy order for cryptocurrencies to buy or sell when the price reaches a certain limit, you will pay slightly lower fees.
Liquidity and trading volume on the centralized crypto platform
Liquidity here is the platform's ability to meet your order without having to raise the price. For example, if the price of a coin is $1 and you buy for $1000, after deducting the fees, you are supposed to receive 999 coins. But sometimes on some platforms you may receive 900 coins, which means that the liquidity is so bad that the price has risen a lot. Note here that the actual price of the coin is $1.1 and not just $1. This means that you have experienced a 10% price slippage. On good platforms like Binance and OKX with high liquidity, you will find that buying and selling operations do not affect the price much, even if you buy a small, not a large coin.
OKX platform
Trading volume here is an important factor in determining trustworthy platforms from suspicious ones. The higher the trading volume on a platform, the more difficult it is for illegal movements to occur on the platform, such as price control by the company running the platform. The higher the trading volume, the better the liquidity.
On CoinGeek you can find the daily trading volume of the platforms and notice how Binance is higher than others all the time. So this is a good sign of the health and strength of the trading market on Binance.
Proof of platform backup and security
The last point when choosing a centralized crypto exchange is security and proof of reserves on the platform. In December 2022, after the fall of the FTX platform, crypto platforms began offering what is known as proof of reserves as a way to gain customer confidence. This is simply the hot and cold wallet addresses that these platforms use to store depositorsâ and usersâ coins.
So you can easily check these proofs on any centralized platform. As a rule, if the platform you are using does not have this proof, stay away from it and do not deal with it at all. This is a very big sign that the platform is not secure.
On the other hand, you should also know about the level of security on the platform. Have you been hacked before? How was the issue dealt with? When was the last incident? What technology is used to protect depositorsâ funds?
This information can usually be found on the platformâs page. Kraken has detailed articles about the types of technology used to secure the platform against hacks.