In the recent past, cryptocurrency has emerged as a preferred investment option among investors. A large number of people, especially the youth, are investing in cryptocurrencies. Before investing in cryptocurrency, it is important to know some important terms related to it. This helps them to invest in the right way. One of these is also a cryptocurrency exchange. Let us understand and know about it in detail.
People invest in cryptocurrencies with the understanding that they will get big returns in the short term. It is also risky as it keeps on fluctuating. The easiest and most straightforward way to invest in cryptocurrencies is by trading (buying and selling) it. You can trade any crypto coin like Bitcoin, Ethereum, Dogecoin, Cadence etc. These are done through an online exchange, where investors can open an account and start trading.
What is a cryptocurrency exchange?
A cryptocurrency exchange is a digital marketplace where you can buy and sell cryptocurrencies. With the help of these platforms, you can trade cryptocurrencies digitally and in exchange for rupees or dollars. These platforms act as an intermediary between the buyer and seller and charge a commission or transaction fee. CoinDCX, CoinSwitch Kuber, and UnoCoin are some examples of online exchanges that exist in India. An investor can also use the online exchange to convert crypto coins back into rupees or dollars. After that they can withdraw the amount from their bank account.
How does a cryptocurrency exchange work?
A cryptocurrency exchange acts as an intermediary or brokerage company between the buyer and seller of cryptocurrencies. Through this, the buyer can deposit money using several methods like direct bank transfer, UPI, using credit or debit cards etc. A commission or fee has been fixed on every transaction for using its services.
The first thing a buyer or investor has to do is to find the right online exchange. This includes the history, reliability of the platform and the benefits it will give you for trading. After this you have to open a trading account, which is very easy.
You have to select the exchange, download its app and create an account. It will ask you for some information such as an email address. Then, a verification email will be sent to that email address and KYC details may also be asked. Verify the address on your email ID and complete the KYC process. After that enter the password on the app and you are ready to invest in cryptocurrencies.
Don’t lose any passwords associated with the app, wallet or exchange. It cannot be recovered later.