Best Crypto Exchanges & Apps: Dec 2023 | The Motley Fool (2024)

• • Crypto platform security. There are two components to cryptocurrency safety -- security and investment volatility.

  Let's first look at the security of your cryptocurrency investments.

  Security

  Security is a major issue for cryptocurrency investors because crypto assets don't have the same protections equities in a brokerage account or cash in a bank. If your crypto platform fails, you could lose the assets deposited there. It's important to use a reputable exchange or broker and to look at the crypto exchange's security features.

  Watch out for these factors:

  • Percentage of assets kept offline in "cold storage." Most of the top cryptocurrency exchanges keep the bulk of their digital assets in cold storage. This means they are stored offline, making them harder to hack or steal. In the earlier days of cryptocurrencies, there was a greater risk of exchanges being hacked, but these issues have largely been dealt with.
  • Whether it has private insurance. Third party insurance could cover your funds in the event of platform failure or a security breach.
  • Third party audits. Some crypto exchanges publish proof of reserves to demonstrate that they have enough funds to cover client deposits. Look for platforms that use reputable external auditors.
  • Whether the platform has ever been hacked. If the exchange has been hacked, look at how it handled the issue and whether it made customers whole.

  Bear in mind that you'll need to take steps to secure your account too -- even the best app for cryptocurrency won't be protected if you don't enable two-factor authentication and set up strong passwords.

  You may also opt to keep your cryptocurrencies in a separate digital wallet of your own. You could even use a hardware wallet to create your own offline storage. This gives you more control over your crypto, but also pushes more responsibility onto you. For example, if you lose your security credentials, you could lose access to your crypto completely.

  Now let's consider safety from an investment perspective.

  Investment volatility

  It's important to point out that cryptocurrencies -- even Bitcoin, the largest and most-established one -- are a young asset class and are rather volatile. This is especially true for the smaller cryptocurrencies in the market. So, you need to be ready to withstand major price swings over time.

  Many experts recommend allocating no more than 5% of your portfolio to riskier assets like cryptocurrency, but it depends on your risk tolerance. If you want to build long term wealth, try to create a balanced portfolio that also includes other assets such as stocks, bonds, cash, real estate, and commodities like gold. And, just as with other investments, don't invest money you can't afford to lose.

• • Different types of cryptocurrency available: There are over 25,000 cryptocurrencies, but even big exchanges only offer 50 to 150 coins.

  Many cryptocurrency investors only want to buy Bitcoin and one or two other major currencies. However, if you plan to invest in some of the smaller coins, you'll need an exchange that has some variety.

• • Crypto staking fees & crypto coin interest. Some cryptocurrency exchanges offer ways to earn interest on your coins.

  When it comes to platform staking fees & interest, make sure you understand and are comfortable with how the interest is generated. The exchange may loan out your money, or it may pay you staking fees if you commit to leaving your coins alone for a set period.

  Be aware that these interest-paying options can carry risks, and may put your assets at risk. The SEC argues that platforms involved in lending or staking crypto assets may be subject to the federal securities laws. As a result, several U.S. crypto platforms have already withdrawn these products.

• • Crypto trading fees. Fees can really eat into your profits, especially if you trade regularly. The best U.S. cryptocurrency exchange apps will let you trade, deposit, and withdraw your money at a minimal cost.

  If you're looking for the best cryptocurrency application, fees play an important role. Paying unnecessary fees is throwing money away, whether you're choosing a bank, a brokerage, or the best cryptocurrency exchange.

  Here are some crypto platform & broker trading fees to watch out for:

  • Trading fees. Fees vary depending on the exchange and type of trade. You can expect to pay between 0.1% and 0.5% per trade. Fees usually get lower if you trade high volumes or use the advanced platforms. Fee-free trading does exist, but in these cases you'll often pay a higher spread.
  • Deposit fees. A lot of the best crypto trading apps let you transfer money from your bank account for free. But it is worth checking for crypto transaction fees, as some will charge 1.5% or more, especially if you use a debit card. If you want to pay by credit card, be aware that you're likely to get charged at least 3.5% and your bank may also treat it as a cash advance.
  • Withdrawal fees. You can't currently withdraw your digital assets from many traditional brokerages that are trading cryptocurrencies. The exchanges usually charge a set fee depending on the currency you want to withdraw. You can check the exact fees on their websites.
• • Crypto app transaction options. Before you open an account, make sure the platform offers all the transaction types you may need.

  Find out how much it costs to deposit, withdraw, and trade before you open an account. It's also worth checking the withdrawal and deposit options to make sure they work for you. For example, you may not be able to withdraw fiat money from some crypto exchanges. Equally, some crypto brokerages don't allow you to move your crypto off the platform.

• • Crypto app customer support. 24/7 customer service transaction support is a must if you're new to cryptocurrency investing.

  Nobody wants to wade through pages of FAQ to get help because money hasn't arrived in their account. Be aware that only a couple of top cryptocurrency exchanges offer 24/7 telephone support. Others offer assistance via live chat or email.

• • Crypto app features & ease of usability. Make sure the app has the features you want to use, and if you've never traded before, pick one that is beginner-friendly. Note: some U.S. crypto exchanges cannot operate in every U.S. state. Make sure the exchange you choose covers your state and complies with U.S. crypto regulations.

  Cryptocurrencies have become far more accessible for the average American after their recent rise in popularity. Some of the best crypto exchanges have made the process more user-friendly than ever, especially those with high-quality, intuitive, cryptocurrency trading apps.

  So, whether you go with a crypto broker or a crypto exchange, make sure it has the functionality you need. For example, if you want to buy cryptocurrency on your mobile, look for the best cryptocurrency app.

  • Ease of crypto app use. Cryptocurrency apps have developed rapidly as more people want to invest. However, at times that fast development has come at the cost of user-friendliness.
  • Crypto knowledge. Cryptocurrencies are a relatively new kind of investment, so the more you can learn, the better. Some apps include cryptocurrency learning centers as well as information on specific coins.

• Cryptocurrency wallets are a safe way to store your digital assets. Consider opening one if you plan to amass large amounts of crypto assets, want to spend your crypto easily, or are worried about platform failure.

  Some of the best exchanges for cryptocurrency, like Coinbase and Gemini have built-in wallets. Like any good exchange, each lets you transfer your currency to an external wallet as well, though you may have to pay a withdrawal fee. You may have to find a wallet that is compatible with your exchange.

  There are two main types of crypto wallets:

  • Cold wallet. This is usually a piece of hardware that is kept offline, making it extremely difficult to hack. Cold wallets cost between $50 and $150, and are often considered the safest way to store digital currencies.
  • Hot wallet. Hot wallets are connected to the internet, so they are not as secure. However, like normal wallets, they are a convenient place to keep small amounts of crypto you might want to use.

  The cryptocurrency you own is protected by public and private keys -- a bit like your PIN and bank account number. You use a wallet to store your encrypted keys and keep them safe.

  In the early days, several cryptocurrency exchanges fell victim to hacks. And at that point, if your crypto was stolen, there was no way to get it back. So long-term crypto enthusiasts use exchanges only for trading, and store their coins in their own wallets.

  These days, investors are more likely to use crypto wallets to protect themselves against platform failure. The collapse of FTX highlighted the lack of investor protection in crypto -- in many cases, crypto assets are not covered by SIPC insurance or FDIC insurance.

  That said, several companies do insure the crypto assets they hold. The best app for cryptocurrency will also have excellent security and store your assets offline in cold storage.

  Moreover, some platforms don't give you the option to move your digital currencies. For example, the crypto platform offered by Fidelity is designed for investment purposes. So if you bought Bitcoin with them, you wouldn't be able to move it out of your account.

  Think about what you plan to do with your cryptocurrencies before you buy them. If you are investing long term and want to buy and hold, you may be happy to entrust your crypto keys to the exchange or brokerage. But if you plan to trade regularly or want to spend your coins, a wallet may make sense. In which case, you'll need to look for the best app to buy crypto that will connect easily to your wallet.

  Learn more: How to safely store cryptocurrency

FAQs

• If you're wondering where to buy cryptocurrency, you have several options.

  • cryptocurrency exchanges
  • cryptocurrency brokers
  • Peer to Peer cryptocurrency exchanges (P2P cryptocurrency exchanges)

  The best places to buy cryptocurrency can generally be separated into two main baskets:

  • Brokerages. A brokerage is a company that facilitates the purchase and sale of investments, such as stocks, bonds, and mutual funds. Several of the best stock brokers now allow investors to buy and sell cryptocurrencies alongside their stocks, mutual funds, and other investments. These platforms can be desktop-based, app-based, or both.
  • Exchanges. A cryptocurrency exchange facilitates the buying and selling of digital currencies. The biggest difference is that brokerages offer other investment vehicles. Cryptocurrency exchanges don't.

  What about person to person ( P2P crypto exchanges )? It's also possible to buy cryptocurrencies directly from other people, though that can get a little complicated. This used to be far more popular in the early days of Bitcoin.

  Check out our expert picks above for some of the best cryptocurrency exchanges

• A cryptocurrency exchange is a company that facilitates cryptocurrency transactions. A cryptocurrency exchange facilitates the purchase and sale of cryptocurrencies only.

  By definition, a broker is an intermediary between two parties. It typically involves a financial transaction. For example, a real estate broker facilitates transactions between buyers and sellers of real estate.

  So, technically speaking, cryptocurrency exchanges can be considered brokers. However, as we discussed above, a crypto broker is a type of investment platform. And brokerages that offer cryptocurrency trading alongside other investments, like stocks and bonds, might allow users to buy and sell cryptocurrencies as well as stocks, mutual funds, and other types of investments.

  Check out our expert picks above for some of the best cryptocurrency exchanges

• Cryptocurrency exchanges allow users to buy and sell cryptocurrencies only. Cryptocurrency exchange customers can buy and sell various digital currencies. They may also be able to do the following through the exchange's platform (not an exhaustive list):

  • Exchange one type of cryptocurrency for another at prevailing exchange rates.
  • Exchange cryptocurrency for fiat currency (like U.S. dollars), or for cryptocurrencies tied to fiat currencies.
  • Spend cryptocurrencies, for example, using a linked debit card.
  • Access educational resources to learn about digital currencies.

  Many of the best U.S. crypto exchanges have mobile apps which offer convenience if you plan to trade digital assets on the go

  Check out our expert picks above for some of the best cryptocurrency exchanges

• The best cryptocurrency app for beginners is Coinbase. It has a user-friendly design that makes it easy to buy and sell crypto, a wide selection of coins, and modules with educational content. Coinbase even rewards you with free crypto when you complete its educational modules.

  Check out our expert picks above for some of the best cryptocurrency exchanges

• The best Bitcoin trading app depends on your personal needs, and there are many good apps on the market. Before you download an app, think about everything you want it to do. For example, if you want to buy and hold Bitcoin, your needs are different from those of a person who plans to build up a diverse portfolio of coins.

  Cash App makes it easy to buy, sell, or send Bitcoin and could be a good option for first time investors. Gemini stands out as one of the best cryptocurrency trading apps because you can do more than just buy Bitcoin.

  Learn more: Best Places to Buy Bitcoin in 2023

  Check out our expert picks above for some of the best cryptocurrency exchanges

• Reputable cryptocurrency apps take security seriously and are safe to use. Two of the best options in terms of safety are Gemini and Coinbase, which are known for employing industry-leading security measures. Even so, know that cryptocurrency platforms don't have the same investor protections as other investment types such as stock investments or cash in the bank.

  If you're trying to figure out whether a specific cryptocurrency app is safe, research the security features it offers and check if it has been hacked before. Look to see if it carries out a third party audit of its reserves. The most secure crypto apps use two-factor authentication (2FA), keep the majority of customer funds offline in cold storage, and have bug bounty programs.

  Check out our expert picks above for some of the best cryptocurrency exchanges

• The cost to buy and sell cryptocurrencies depends on the platform. Some charge a percentage of each transaction as a "markup." Others simply make their money on the spreads between a bid and ask price. Either way, the cost of trading is one of the main points to compare between the different brokers and exchanges. Read more about cryptocurrency transaction fees.

  Check out our expert picks above for some of the best cryptocurrency exchanges

• Several popular cryptocurrency apps have hundreds of available cryptos. For example, Crypto.com has one of the largest lists of cryptocurrencies available for U.S. traders to buy and sell. Coinbase and Gemini also have a wide range of cryptos.

  Some decentralized exchanges, including Uniswap, SushiSwap, and PancakeSwap, have much larger selections with thousands of different cryptocurrencies. However, they don't allow you to buy crypto using fiat money and can involve a steep learning curve. You can only trade cryptocurrencies on these exchanges, which means you need to already have your own cryptocurrency ready to trade.

  Check out our expert picks above for some of the best cryptocurrency exchanges

• It depends. There are more than 25,000 (not a typo) different cryptocurrencies in existence, and some are far more legit than others. Most investors should stick to Bitcoin and other large, established digital currencies. Avoid the newer and smaller varieties.

  Check out our expert picks above for some of the best cryptocurrency exchanges

Matt is a Certified Financial Planner® and investment advisor based in Columbia, South Carolina. He writes personal finance and investment advice for The Ascent and its parent company The Motley Fool, with more than 4,500 published articles and a 2017 SABEW Best in Business award. Matt writes a weekly investment column ("Ask a Fool") that is syndicated in USA Today, and his work has been regularly featured on CNBC, Fox Business, MSN Money, and many other major outlets. He’s a graduate of the University of South Carolina and Nova Southeastern University, and holds a graduate certificate in financial planning from Florida State University.

Emma lives in Bogota, Colombia, where she owns the English-language newspaper The Bogota Post. She began her editorial career at a financial website in the U.K. over 20 years ago and has been contributing to The Ascent since the summer of 2019.

Nathan Alderman has worked with The Motley Fool since 2005, making errors his arch-enemies in a variety of roles including a six-year stint as the dedicated fact-checker for The Motley Fool's premium newsletter services. As The Ascent's Compliance Lead, he makes sure that all the site's information is accurate and up to date, which ensures we always steer readers right and keeps various financial partners happy. A graduate of Northwestern University's Medill School of Journalism, Nathan spends his spare time volunteering for civic causes, writing and podcasting for fun, adoring his wife, and wrangling his two very large young children.