Everything You Need to Know About Crypto Exchange
Have you ever tried your luck with crypto trading? Have you ever heard of terms like Bitcoins, Dogecoin, Ethereum, etc.? Well, if you have, you must be familiar with the terms like crypto exchange! And if not, you have arrived at the right place. If you are looking to dip your toes in the world of cryptocurrencies, consider reading till the end to educate yourself on basic concepts such as crypto exchange and how it works.
Like the stock exchange, a crypto exchange is an intermediary between a buyer and seller of a cryptocurrency. Online exchange platforms like the Australian crypto exchange facilitate trading in cryptocurrencies while charging a minimal amount as a commission or transaction fee. The traders can trade in cryptocurrencies for their fiat or digital currencies.
Have you been following the news concerning the crypto market recently? As of March 2022, after much deliberation and speculation globally, the Australian government has confirmed to attribute crypto exchange with a “badge of honour”. So, now is as good a time as any to hook yourself into the whole crypto scene!
How Does Crypto Exchange Work?
Crypto exchanges work in the same way as stock exchange works. The only difference here is that crypto exchange works by matching sellers with buyers looking to invest in cryptocurrencies.
Steps to Get Started With Crypto Trading
- Before investing in cryptocurrencies, the buyer has to find a suitable online exchange that one will use for trading in the future. It is, however, advised to research well about the credibility of the platform and the benefits it provides. Online exchanges like the Australian crypto exchange provides numerous facilities to their traders while charging a minimal transaction fee.
- After choosing the right crypto exchange, the first thing a buyer has to do is create a trading account that will be used for investing. For this, one has to clear some basic formalities like verification and KYC.
- After this, the trader must set a password for the trading account. The password must be set so that it is not easy to decipher. Also, it is advised to store the password somewhere, as once forgotten, it cannot be recovered.
- The trader can then buy or sell cryptocurrencies or even keep track of cryptocurrencies for future reference.
- Crypto exchange keeps track of all the orders placed on the platform, which it stores in a digital book known as an order book.
- The order book stores the information of all the cryptocurrencies the trader wants to buy or sell and their desired price.
- It then uses this information to match the buyers with the potential sellers. The crypto exchange makes a commission for every transaction the user makes on its platform.
How Do Crypto Exchanges Earn?
Centralised crypto exchanges earn in the following ways:
1 Transaction Fee
Crypto exchanges charge a nominal commission fee for every transaction a user makes on their platform.
2 Crypto Withdrawal Fee
Crypto exchanges also charge a fee if users move their cryptocurrencies out of the exchange platform.
3 Fees for Cryptocurrency Listing
Crypto exchanges may also charge a fee for listing a new cryptocurrency on their platform.
The world has seen an exponential rise in crypto traders in the last decade. Promising big returns in a short period, the world of cryptocurrencies is both risky and volatile. Various crypto exchanges offer facilities that help traders find legit ways to trade to make crypto trading easy. With nearly five million Australians owning cryptocurrency, a little risk shouldn’t worry you if you have a firm attitude toward crunching numbers and making smart investments. All this goes to say, happy trading!