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UK Crypto Exchanges – Three Major Types and Their Main Features

bitcoins, a laptop and a phone If you’re looking to start trading bitcoin or any other cryptocurrency in the UK, you’ll need to choose the right UK crypto exchanges for your purposes. While there are so many out there, the best ones make it easy to trade crypto coins with regular, fiat currency. 
Crypto exchanges often enable users to store their coins. However, If security is a priority for you, you should store your coins in a non-custodial wallet, which you have 100% control of. Before you go ahead and sign up for a crypto exchange, you should be aware of the different kinds of UK crypto exchanges available and what to look for when finding the right one for you.
You might want to begin by looking at which coins are offered by the exchange you’ve considering. There are many coins in circulation besides bitcoin. Popular altcoins include ethereum, XRP, litecoin, tether, and cardano.
Not only that, but you should also pay attention to the fees. While all exchanges impose fees, they aren’t all the same. So you should obviously favour those with lower fees, certainly when all else is equal. Of course, you shouldn’t compromise on those features you value the most. Let’s start by looking at the different types of crypto exchanges there are out there.

The Three Types of Crypto Exchanges

  • Brokers

  Crypto brokers often provide the most basic and convenient method of acquiring coins. Buying a coin from a broker is basically the same as making a purchase from a crypto shop, i.e. the broker buys coins at wholesale rates, adds a margin, and then sells the currency on to you. 
Dealing with a broker is a great way to make your first foray into cryptocurrency. The platforms are made to be user-friendly, and you can use fiat currency to purchase your coins, often including a debit or credit card.
The main disadvantage of a broker is the cost involved, as you’ll need to pay higher than the market rate for your crypto, in addition to any transaction fees. 

  • Trading Platforms

  Crypto trading platforms are the most commonly used platforms for trading digital currency. These platforms connect buyers and sellers for a facilitation fee for each transaction. Oftentimes best UK crypto exchange platforms offer extra features such as stop-loss orders.  They also often provide charting tools designed to assist you in planning your trades. 
Trading platforms tend to offer a more diverse currency range than brokers. Cryptos can be exchanged here at either a specified limit or the market rate.  They also tend to charge lower fees and higher exchange rates than brokers.
What you can’t do, however, is directly exchange a coin for any digital currency you want. You can only trade pairs that your favoured platform supports. The most commonly traded currencies are bitcoin and ether, which feature in pairs, along with a wide range of altcoins. New users can find trading platforms confusing when just starting out.

  • Peer-to-Peer Exchanges

  These platforms enable direct peer-to-peer trading between people all over the globe. The exchange is essentially a middleman, with the seller deciding on their own price and payment methods. 
The primary advantage of a peer-to-peer exchange is that it allows you to anonymously and quickly trade coins with almost all kinds of payment methods or trades you want. The disadvantage is that you’ll often pay over the market prices, and it can present a greater risk than the other options.
In a bid to offset any risks, some platforms include reputation systems and escrow features to identify legitimate and reliable traders.  

Choosing a Crypto Exchange

  It goes without saying that you should trade at the exchange that suits your purposes. Here are a few things to take into account when choosing the right bitcoin exchange for you.

  • User Friendliness

  The UK’s best crypto exchanges make user-friendliness a priority. So you should look for a platform with a user-friendly interface for deposit and withdrawal options, user balances, and other trading tools available on the site. 

  • Security

  It’s well-known that hackers target crypto exchanges. So world-class exchanges apply the latest score standards available to ensure that users assets remain secure. They also provide security features to users, such as mandatory strong and unique password, and two-factor authentication.

  • Fees

  An experienced trader understands the savings they can make by trading on exchanges with low trading fees and related bonuses. So make sure you compare the fees of any exchanges you’re considering trading on.

  • Supported Coins

  If you trade with multiple currencies, you should look for an exchange that accepts more than just bitcoin. Preferably find one that enables you to trade as many different coins as possible. Be mindful, however, of any exchange that lists valueless tokens. Always do your due diligence before you make an investment.

FAQ

  • Are all cryptocurrencies listed on each of the UK crypto exchanges?

  The short answer is “no”. The available coins vary widely between exchanges. Some offer bitcoin exclusively or just a few select currencies, while others offer hundreds of coins. There’s no guarantee, however, that all of your preferred coins will be available on a single platform.

  • Why do some exchanges request I verify my identity?

  UK exchanges are subject to counter-terrorism financing and anti-money laundering regulations. To comply, exchange operators are required to collect details from their customers, which is the reason behind the identity verification process. 

  • What’s the best way to place large-volume trades, say £50,000 or more?

  While regulators are implementing guidelines and laws to help combat fraud, dodgy exchange operators still exist. Falling foul of theft remains a concern for any crypto buyer. There are things you can do to minimise the risk of falling foul of disreputable or fake exchanges.

  • How do I avoid crypto exchange scams?

  You can view trading volumes for UK crypto exchanges on sites such as CoinMarketCap. While these numbers are available around the clock, be aware that they aren’t 100% accurate all of the time, as some exchanges attempt to deceive the rankings with fake numbers.