Cryptocurrency exchanges are online locations that let you buy, sell, or exchange cryptocurrencies.
Exchanges can be between dollars and cryptocurrency, or between different types of cryptocurrencies.
In a moment I'm going to reveal the highest rated US cryptocurrency exchange.
But first let's look at how crypto exchanges work. There are trading platform websites where buyers and sellers make transactions. For each exchange they pay a fee to the platform.
Direct trading platforms let buyers and sellers interact without help from any third party.
Broker websites allow anyone to buy cryptocurrencies. Buyers pay the broker's price and any fees.
Most exchanges require verification of identity, especially for credit card transactions, to protect against fraud and illegal activity.
Almost all cryptocurrency trading is done on centralized exchanges (CEX).
The concern of making exchanges on a CEX is that they need to take possession of your digital assets in order to make transactions.
CEX's in the U.S. are required to enforce KYC (Know Your Customer) and AML (Anti-Money Laundering).
KYC means requiring identification verification.
AML means verifying the sources of customer assets.
KYC and AML are used to counter the financing of terrorism and illegal trades.
Decentralized exchanges (DEX) operate on the blockchain. They do not hold assets or data.
Some DEX's follow KYC and AML regulations.
DEX's allow anonymous transactions between users, often with greater security than CEX's.
According to Vitalik Buterin, co-founder of Ethereum,
Centralized exchanges should “burn in hell.” Now let's look at some of the top crypto exchanges in the U.S.
Kraken is considered to be a very secure exchange and has very low trading fees.
Gemini insures all user funds deposited on the exchange - an industry first. It's best for large volume traders.
Bittrex has robust security, low trading fees and their own mobile app.
So which exchange is the highest rated in the US?
Coinbase tops more best-of-lists than any other exchange in the US.
Coinbase is an easy way to buy crypto in the U.S., with 5 day delivery of coins and a 1.49% transaction fee.
In the next video we'll look at "smart contracts" and what's so great about them.
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