Here at Token Metrics, we understand that our most valuable asset is you, our audience.
With your help, we have put together a guide to the Top 3 Crypto Exchanges of 2020, as voted upon by you.
So sit back, relax, and enjoy the Moon Awards.
What is a Crypto Exchange?
A crypto exchange is an online platform with two primary uses. The first use of a crypto exchange is for swapping cryptocurrency and fiat money. The second usage comes from an exchange’s capacity to trade a cryptocurrency for another cryptocurrency.
Swapping cryptocurrency for fiat money, or vice versa, works like any currency exchange you would find at an airport or bank.
When you trade one cryptocurrency for another cryptocurrency, a crypto exchange works more like a stock exchange. Like a stock exchange, you are speculating on the rise and fall of those assets’ market value.
Essentially, a crypto exchange works as a gateway between the fiat and crypto world while also serving as the connecting platform between different cryptocurrencies.
Top 3 Crypto Exchanges of 2020:
“Binance is the biggest crypto exchange in the world. They’re at the forefront of innovation amongst exchanges, and the future is bright for the company and BNB token.” – Ian Balina, Founder and CEO of Token Metrics
With a dominating 77% of the total vote, Binance is the clear leader in cryptocurrency exchanges. These results come as no surprise as Binance has been the largest cryptocurrency exchange in the world in terms of trading volume since January of 2018.
Binance was founded in July 2017 by Chinese software developer Changpeng Zhao. Before creating Binance, Changpeng Zhao constructed systems for the Tokyo Stock Exchange and developed futures trading software for Bloomberg’s Tradebook.
Initially located in China, the Binance headquarters has remained fluid and has moved around quite a bit since then.
The first relocation of Binance’s servers and headquarters was to Japan in anticipation of the Chinese government’s ban of cryptocurrency trading enforced in September of 2017.
Soon after, Japan also began to enforce stricter regulations on cryptocurrency, and the Binance headquarters reportedly moved to Malta. Even this recent location is not accurate, though, as the island country recently announced that Binance is not under its jurisdiction.
When asked, CEO Changpeng Zhao also refuses to state Binance’s headquarters, citing its many offices across the world and desire to be a decentralized exchange.
Binance was designed to be a platform capable of trading a variety of cryptocurrencies within minutes. The platform currently supports over 150 different coins and boasts its low fees for trades and withdrawals. Transactions are further discounted if the user is holding Binance’s native token Binance Coin (BNB).
Regarding fiat currency offerings, Binance supports over 45 different fiat currencies that can be exchanged for 17 various cryptocurrencies.
“Coinbase is a fiat on-ramp for crypto, and it’s typically the first exchange Americans use when buying crypto. It is a very smooth, clean, easy way for long term investors to invest in crypto. I have used Coinbase to store my bitcoin for many years.” – Sam Monac, Head of Research, Token Metrics
Coming in a distant 2nd is the cryptocurrency exchange Coinbase. That’s not to diminish the achievements of Coinbase, though, as the exchange has become increasingly popular amongst investors, particularly beginners.
Founded in June of 2012 by Brian Armstrong and Fred Ehrsam, Coinbase’s goal was to be the most trusted name in cryptocurrency exchanges. Coinbase has been mostly successful in this endeavor and remains relatively unrivaled on this claim.
Coinbase is headquartered in San Francisco, California, and maintains this high level of trust by being a regulated US financial institution. This status makes Coinbase a centralized exchange instead of a decentralized exchange like Binance.
Coinbase is also FDIC insured for US deposits up to $250,000 and is compliant with crucial EU financial regulations.
Another attractive feature of Coinbase is its insurance guarantee outside of the FDIC. In this guarantee, Coinbase promises to cover any customer funds lost due to a breach of its online storage. Coinbase’s online storage holds only 2% of customers’ funds to enhance security further. The rest of the funds are in Coinbase’s offline storage.
While Coinbase’s centralized nature goes against crypto’s primary goal of decentralization, their federally backed promises of security and enhanced focus on trust have made it the most popular exchange amongst beginner crypto investors.
Other than Coinbase’s centralized nature, another downside of the enhanced focus on trust is the limits placed on the exchange.
Coinbase is limited to roughly 20 cryptocurrencies on the exchange, but that small list does include all the top coins. Coinbase also limits who can use the exchange as users must come from a list of roughly 30 countries located in North America, Europe, and Oceania.
“In a space where exchanges are always under attack by hackers, Kraken has differentiated itself with sophisticated security measures and is known as the most secure exchange in crypto. I’ve had great experiences with their OTC branch in South America” – Diego Lara, Token Metrics Advisor
In 3rd place is one of the world’s oldest and largest cryptocurrency exchanges, Kraken. Kraken is led by founder and CEO Jesse Powell. Like Coinbase, Kraken is also currently headquartered in San Francisco, California.
Following Mt. Gox’s security breach in June 2011, where over 2,500 bitcoins had their value artificially lowered and sold for $.01, Powell visited the Mt. Gox exchange’s offices.
After his visit, Powell determined that the Mt. Gox would eventually be permanently closed and that a replacement exchange would be needed. A crypto exchange with an enhanced focus on security. One month after his visit, Powell founded Kraken to be that replacement.
After two years of rigorous development and testing, Kraken’s exchange officially launched in September of 2013 right before Mt. Gox’s permanent closure in 2014. Since its launch, Kraken has always been an exchange for both crypto and fiat currencies, but its initial options were limited.
At first, Kraken only offered exchanges for bitcoin, Litecoin, and the Euro, but the list has snowballed since. Kraken now offers trading for 33 different cryptocurrencies and 6 different fiat currencies. To see how Kraken pairs these different currency offerings, visit their website here.
Although Kraken’s exchange is accessible for beginning traders, the platform caters more towards advanced traders by providing margin, OTC, and futures trading. Kraken also further entices advanced traders by offering low fees that scale down with volume size.
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