Gemini, Kraken, CoinEgg, Binance
— are top in Google search since it’s cryptocurrency exchanges — digital marketplaces where you can buy and trade crypto.
You cannot just buy crypto in your bank or investment firm. Once you’ve decided you want to buy any crypto, you will need to create an account on a crypto trading platform to exchange your $ (or other currency) for digital assets.
What is a Crypto Exchange?
A crypto exchange is a platform on which you can buy and sell cryptocurrency. Exchanges reflect the current market prices of the cryptocurrencies they offer.
You can use exchanges to trade one crypto for another — converting Bitcoin to Ethereum, for example — or to buy crypto using regular currency, as the USD or EUR. You can also convert cryptocurrencies back into the USD or another currency in exchange, to withdraw to your bank account.
Contact our support team to get more information about Crypto Exchange in Collect&Pay – [email protected]
What to Look for in an Exchange?
Your location may prevent you from buying/selling crypto on certain exchanges due to state or national regulations. Some countries, like China, have banned citizens from accessing crypto exchanges at all.
Cryptocurrency isn’t backed by any central institution, and your cryptocurrency holdings aren’t protected the same way as money in the bank or traditional investments.
If you plan to buy, sell, or trade your crypto, the exchange you choose should have enough trading volume to ensure your holdings are relatively liquid, meaning you can sell them when you want.
Crypto prices move very quickly, so when you use an exchange that doesn’t have a lot of trade volume, you could end up paying a higher price than you would on more popular exchanges.
Not every exchange offers each of the thousands of cryptocurrencies that exist. If you’re interested in a popular coin like Bitcoin or Ethereum, you’ll probably find it on any given exchange you’re considering. But newer altcoins, coins with a very small market cap, or meme coins may require a bit more shopping around. Just remember, these types of coins are often even riskier gambles on top of already highly speculative, more established cryptocurrencies.
As if taxes weren’t already complicated enough, reporting cryptocurrency can add another layer of complexity to your tax return.
You need to report any crypto trades you make as capital gains on your tax return. That means you’ll need to know the value of your crypto when you buy it in U.S. dollars, as well as the value of it when you sell.
For example, Robinhood provides a Form 1099-B tracking your cost basis and gains and losses, but that’s not the case on more traditional exchanges.
When you use cryptocurrency exchanges like Binance, Kraken, CoinBase, etc., they don’t give you that form. That’s because exchanges that allow you to move your holdings off their platform can’t track everything in your personal wallet or trades you make on other exchanges.
As experts say, when it comes to crypto, taking the time to learn as much as you can before you put money into crypto is one of the most useful things you can do.
Think about the fee structures and security measures you’re comfortable with, what additional steps you’ll take to store your coins, and your goals.
It’s one thing to haphazardly put money into more stable markets, it’s a completely other things to throw money into volatile markets. So, it’s important to get educated, especially when you’re going to deal with something that’s perhaps more volatile than other risky assets.
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