What are Crypto Exchanges
Crypto exchanges are essentially platforms where you can trade digital currencies and regular currencies like the Australian dollar and Euro.
Exchanges are necessary since many traditional investment firms do not facilitate cryptocurrency trading. Without a crypto exchange, you would need to find another person who is willing to trade cryptocurrencies at an agreed rate and transfer the coins between each other’s crypto wallets. This is not only convoluted, but it heavily relies on trust. After all, you could send your dollars to this person and find that the cryptocurrencies fail to appear in your wallet, which means you’ve been scammed!
Crypto exchanges eliminate this possibility. They are secure platforms where you can buy, sell, and trade in a variety of cryptocurrencies.
How does a cryptocurrency Exchange Work
How a crypto exchange works depends on the type of platform. Most are centralized exchanges, which mean they function as a brokerage, acting as an intermediary between the buyer and sellers.
You can deposit your money into the exchange to buy crypto or deposit your crypto to trade for other coins, which is known as crypto-to-crypto spot trading. There is usually a fee for making a crypto purchase or converting your crypto.
To fund your purchases, the exchange may accept a variety of payment methods including direct bank transfers, wire transfers, credit or debit card payments or money orders. When you want to withdraw your crypto, you can transfer them to a wallet or your choice. But, there are some platforms that typically have a more rounded focus and offer crypto as an add on to stocks, bonds and other investments that will not allow you to transfer the crypto out of the platform wallet.
While most of the best crypto exchange Australia options are centralized, there are some decentralized exchanges. These are built on the blockchain with no central point of control. These exchanges have servers located around the world, so the network keeps running even if one computer is cyber attacked.
The other key difference between centralized and decentralized exchanges is how they operate. Centralized exchanges function as brokerages, while a decentralized exchange is more like a marketplace, facilitating peer to peer trading.
How to buy and sell cryptocurrency in Australia
Now, we’ve covered the basics of crypto exchanges, we’ll look at some specific exchanges that can help you learn how to buy and sell cryptocurrency in Australia. Here are the best places you can do it.
eToro is certainly worthy of the title best crypto exchange, Australia if you want to use crypto as part of your overall investment strategy.
eToro is best known as an online brokerage, but it also functions as a crypto exchange with access to 50 cryptocurrencies. Where eToro stands apart from other brokerages and exchanges is that it has been built as a social trading platform. Essentially, it is a hybrid trading and social media platform; you can connect with other users, follow news, see what others are trading and even have more experienced traders answer your questions.
Although it is not a dedicated cryptocurrency exchange, eToro does have some great features that make it a good choice for new crypto traders. For example, there is a demo account with virtual money, which allows you to test out your trading strategies without risking your cash. There is also crypto staking and crypto CFDs, where you can profit from crypto pricing without needing to own the underlying asset.
While eToro may not have the biggest selection of cryptocurrencies, the most popular coins are on the list. Just bear in mind that the platform operates in USD, so you will incur a conversion fee if you deposit and withdraw in AUD.
Binance is one of the best crypto exchange Australia options. This platform is open to traders in more than 180 countries and it facilitates over a million transactions per second. Binance Australia has a massive variety of features including margin trading, P2P marketplace and more that will suit advanced crypto investors, but newbies may find it a little overwhelming. Binance is also one of the best crypto exchanges in Canada.
Fortunately, you can use the “Convert” feature to swap to a more basic interface. This removes many of the complicated functions, and you can simply swap currencies. This means there is a basic screen to swap AUD to whichever crypto you are interested in or vice versa.
You can access more than 600 cryptocurrencies and AUD deposits are fee free when using PayID or bank transfer. This makes it a great option for serious traders. There are competitive trading fees from 0.1%. There is also third-party trading bot integration, making it easier to automate your trading strategies.
It is worth considering that Binance is a global company and it has no Australian base. This means that if you do have any issues when you want to verify your Australian ID, you may find the customer service very frustrating. However, this is offset somewhat by the sheer scale of the platform. Since it is such a large company with a massive daily trading volume, it has high liquidity, which means buy or sell orders are filled quickly.
Kraken is one of the popular Australian exchanges and it functions in similar ways to Binance. However, Kraken prioritizes security over the variety of available coins.
This crypto trading platform is based in the U.S, so it needs to comply with some very strict regulations, making it a very secure exchange. In fact, Kraken is considered to be one of the most secure exchanges in the world.
The platform has an easy to use interface, but it has competitive trading fees and some advanced trading features including margin trading, futures and crypto staking. You can buy and sell crypto instantly with fees of 1.5%.
For those based in Australia, it is worth bearing in mind that you can only trade 19 currencies against the AUS, which you may find limiting. However, if you’re only planning on trading in the most popular coins, it should not be a barrier for you.
A stand out feature of Kraken is its 24/7 Live Chat. While many exchanges claim to offer comprehensive support, it usually involves submitting a ticket and waiting for a response. However, Kraken has live support that is manned by real people.
Nexo has established its reputation as a crypto lending platform, but since it began operating in 2018, it has expanded its services. The overall aim of Nexo was to replace traditional banking services, but it uses crypto as its asset.
Nexo began as a crypto lending platform in 2018, but has expanded its services in the intervening years. Nexo aimed to replace traditional banking services using crypto as the asset, but it has now developed into a crypto exchange.
Currently, Nexo supports over 35 cryptocurrencies and the Nexo exchange is equipped with the features and benefits you could expect from the best crypto exchange. Canada based traders can not only enjoy fast transactions, but there is a potential to earn interest on swaps. All of your newly acquired assets will be deposited into your Nexo Savings Wallet as a default action. So, there is the potential to earn up to 20% interest.
The main advantage of the Nexo Crypto Exchange is that the platform has made a commitment to facilitate minimal slippage. Slippage refers to the difference between the price you see and the price at the time the transaction is actioned. Nexo fixes the rates at the moment you place an order, so there are no surprises and you can enjoy a predictable execution. Nexo appreciates that the crypto market moves quickly, so exchanges need to be prompt and swift.
Gemini is a U.S based crypto exchange that has been operating since 2014. The platform needs to comply with the comprehensive security measures in the US, so it places great emphasis on security.
The platform has identity verification to open your account and there is two factor authentication account security. There is also hot wallet insurance that protects your funds should the platform suffer a security breach.
Gemini supports over 75 cryptocurrencies, but it is designed for more advanced traders. Newbies may find the numerous features a little overwhelming. However, if you do gain your confidence with this platform, there is a Gemini reward card that allows you to pay for purchases using your crypto.
Another complicated issue with Gemini is its fee structure. There is a main trading platform and an active trader platform that each has different fees. The main platform is targeted towards smaller traders with fixed amount trading fees. Just be aware that if you go above a $200 cap, the fee increases to a hefty 1.49%. If you are planning on trading in larger amounts, the active trader platform would represent better value, since the fee reduces as you grow your trading volume.
Although the fee structure is a little on the high side for many casual traders, if you have security concerns, you are likely to appreciate paying a little more for Gemini’s robust security features.
How to Find the Best Cryptocurrency Exchange
While we have covered some of the best crypto exchanges Australia based traders can access, if you’re still unsure about which is the best for you, there are a number of things you should consider. This will help you to find the best exchange for your specific needs and preferences.
The first thing you need to look at is whether the platform supports the cryptocurrencies you are interested in buying and selling. While having a massive choice of crypto may be a draw for some traders, don’t overlook the platforms that have a more modest selection if you are only interested in the most popular coins.
Security is the most important factor when using any exchange. If the exchange does not have adequate security, you could not only have your funds stolen, but any linked bank accounts or cards could be vulnerable to cyber criminals. There are several aspects of exchange security that are worth checking to ensure that your potential platform is legit and secure:
- Two Factor Authentication: For safety and login protection, the site should require that you provide a username, password and a piece of information only available to you.
- Cold Storage Deposits: Any deposits on the platform should be stored offline, which is commonly known as “cold storage”.
- Fund Insurance: Since crypto exchanges lack the protections of banks and major financial institutions, you should check if the platform offers some form of fund insurance. This is not automatic and not all platforms have this coverage. Essentially, the insurance provides reimbursement if your funds are lost due to a platform security breach.
- Legal Transparency: Finally, the exchange should be very transparent about the location of its headquarters and the company ownership. Be wary of sites and platforms that don’t like to reveal this basic legal information.
Another important consideration when looking at how to find the best crypto exchange is the platform’s liquidity. The higher the trade volume, the greater the liquidity. In simple terms, liquidity allows the platform to perform transactions more quickly and easily. This minimizes price volatility.
For example, if you action a buy order for one coin when the rate is $1,000 per coin, but the exchange has low liquidity, by the time the trade takes place you may end up paying $1,100.
Some exchanges appreciate the difficulties of this issue and offer “locked in” pricing. This guarantees that the price at the time you placed your order is what you will get even if it doesn’t immediately settle.
However, you should be aware that liquidity can vary for different trading pairs. For example, it may be higher for BTC/EUR compared to BTC/AUD. So, it is worth assessing the specific liquidity as it relates to AUD, particularly when you’re not looking at Australian crypto exchanges.
You can’t choose a crypto exchange platform without considering fees. Fees will play a massive role in the profitability of your currency exchanges. You should compare all the fees involved in exchange transactions. They are typically 1% or less per transaction, but some exchanges have a sliding fee scale, which decreases the cost as you increase your trading volume.
However, you also need to look at whether the exchange charges withdrawal fees and whether they are reasonable. Some platforms have very low trading fees, and then you get stung when you want to retrieve your funds.
This can likewise apply to deposit fees. You may find that some platforms impose a fee for your preferred deposit method, particularly if you prefer not to use wire transfers.
The User Experience
This is far more subjective, as you will need to consider what is important to you and what will deliver a good user experience. If your priority is anonymity, you are not likely to appreciate an exchange that requires detailed identity information. If you want to trade on the go, you will prefer a platform that can be used on a desktop and mobile device with the same user experience.
It is well worth checking out some customer reviews of potential platforms to see what existing and previous users are saying. While some people do like to complain about minor things, if there are issues repeated across several reviews, it could be a cause for concern.
Hopefully, we’ve demonstrated that when it comes to finding the best crypto exchange, Australia based traders do have plenty of options. Each platform has its own perks, potential disadvantages, and features. You will need to think about what you are looking for and whether your cryptocurrency strategies can be easily implemented with a specific platform. It is important to consider your priorities and requirements, so you can find a platform that meets your current and future needs.
If you want to find a crypto exchange to use in another country, check out our crypto exchange comparison page.