Best Crypto Trading Platform Reddit: How Cryptocurrency Exchanges Work in 2021, 3 Ways

By: | September 14, 2021 | Tags: , , ,
best crypto trading platform Reddit

Are you looking for information about crypto trading?

Here you will discover how cryptocurrency exchanges work and the best crypto trading platform Reddit and Discord groups offer.

How Cryptocurrency Exchanges Work

More than ten years on, and the cryptocurrency buzz is still going. Initially, the only way to own cryptocurrency was either through mining or if a person decides to sell their coins to you. That’s what brought about crypto trading as people started looking for other options to get the currencies. 

That has given rise to the development of numerous crypto exchanges, and many are still being developed. There have been billions of dollars traded in these exchanges. Even now, many people are looking to join in and share in the benefits of cryptocurrency. The number one motivator being the potential the industry holds in profits. 

It’s still not late to start trading cryptocurrency. In this blog, you’ll learn how a crypto exchange works.

What is a Cryptocurrency Exchange?

This is a platform that facilitates the fulfillment of crypto trading orders. Simply, it allows traders to buy or sell their coins at their convenience. The exchange also enables traders to convert one currency to another, including fiat currency. For instance, you can convert Bitcoins to Ethereum or US dollars and vice versa. 

The first step in crypto trading is to find the most suitable exchange platform. This requires you to research an exchange platform’s history, reputation, credibility, fees, and the trading benefits it offers.

When you settle on a platform, you’ll need to open a trading account, and the process is usually fairly straightforward. You also need to have a digital wallet, such as the Bitcoin or Eth wallet

A wallet is where you store your digital coins for your control and carrying out transactions. When you set up your account, be careful with the passwords, including your wallet password, and you may not recover should you lose them.

Types of Crypto Exchanges

The two main types of crypto exchanges are centralized and decentralized. While they typically work the same, they differ considerably in how they function. 

  • Centralized Exchanges

These are more managed and go through a central authority that oversees the exchange’s daily operations. Trading is not anonymous, meaning Know Your Customer (KYC) is a requirement.

  • Decentralized Exchanges

As for this type of exchange, anonymity is allowed, and they have no central governing authority or intermediary. Traders engage directly with each other on a peer-to-peer network through an automated process.

How to Trade on a Crypto Exchange

A crypto exchange platform’s work is to designs orders for people looking to sell their coins on one end with information such as quantity and price. These orders are stored in a ledger referred to as the order book. On the other end are people looking to buy coins. The buyers peruse the order book looking for suitable deals.

If they find a good order, they create their order, something like a proposal. When buyers submit their order, the exchange platform plays matchmaker between the buyer and the seller. This is how the trade is completed. A buyer needs to fund their exchange account before making a purchase order on an exchange. 

They can fund their exchanges through cryptocurrency or their local currency. Most exchanges also readily accept bank transfers or credit or debit cards. Others accept online payment services such as PayPal and others. However, the entire process is time-consuming and requires a lot of research on market trends and prices. 

You can automate the process with trading bots to make things easier where the software automatically analyzes the market and order book. Depending on the trading parameters and strategy you use, it automatically executes trades on your behalf. 

How Crypto Exchanges Set Prices

The crypto market is moved by supply and demand and is less affected by political or economic shifts that affect the fiat currency market. In essence, crypto exchanges do not set prices, and cryptocurrencies have no official set price. 

The exchange rates depend on the market activity of the buyers and sellers and other circumstances. Each exchange sets prices based on the training volumes and supply and demand. When the exchange is higher, the prices become more market-relevant. Cryptocurrencies have no fair or stable price. It’s all determined by the market.

Here are other factors that can impact cryptocurrency prices and drive the crypto market:

  • The number of coins being supplied against the rate at which they are being lost or destroyed.
  • The value of the existing coins and user perception on how they are developing
  • The way cryptocurrencies are integrating into the existing structures, such as use in payment systems by merchants, among other uses.
  • Any key events concerning cryptocurrencies such as security breaches, government regulations, or influential people’s take on cryptocurrency. 

How Crypto Exchanges Make Money

If you’re thinking about how to build a cryptocurrency exchange and wondering you’ll make money out of it, there are several avenues that exchanges use to earn.

Here are the most common:

  • Commission on trading fees

Cryptocurrency exchanges, just like traditional exchanges, charge commissions on each trade. This is something like facilitation fees for helping bridge the gap between the buyer and the seller. The commissions vary from one exchange to another. The lower the commission, the higher the trading volume, as the low “facilitation” cost will attract most traders. 

  • Market Making

This is a significant avenue stream for crypto exchanges. It involves creating liquidity to the market for a particular financial instrument. This is where you sell your digital asset stock and a price slightly higher than others. They swap to another exchange when the trade closes on the exchange platform, offsetting the previous trade. The difference is what the exchange makes as profit. 

  • Listing Fees

Newly created crypto exchanges face steep competition and have unavoidably defined trading volumes. Therefore they cannot rely on commissions are the only revenue source; instead, they list coins and tokens to generate revenue. Through Security Token Offerings (STO), Initial Exchange Offerings (IEO), and Initial Coin Offerings (ICO), an exchange collects an exchange will get a percentage of the funds raised. 

Best Crypto Trading Platform Reddit

Reddit subreddits are Reddit communities that offer information about various topics.

Here you will find the best crypto trading platform Reddit offers:

Related Reading: Here you will find information about Reddit vs Quora.

Best Crypto Discord Groups

Crypto Discord servers (Discord groups) exist.

According to RushRadar, here are the best crypto Discord groups:

  • Filthy Rich Futures
  • Axion
  • Elite Crypto Signals

One important note though…

You need to be invited to join Discord groups.

Here you will find more information about Discord servers.

Takeaway: Best Crypto Trading Platform Reddit and Exchange Information

The crypto market is very volatile and requires traders to watch the trends that can easily influence prices. However, although it may seem complicated at first, cryptocurrency trading is not difficult.

What you need is to take the time to learn about exchanges and the crypto market in general. There are a lot of online resources, including tutorials, that can be quite helpful. 

Readers, please share so cryptocurrency traders discover the best crypto trading platform Reddit offers.

I look forward to your comments. Do you know of an additional best crypto trading platform Reddit has?

This post was contributed and made possible by the support of our readers.

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