Sitting comfortably in the top 35 cryptocurrencies by market cap, Tezos is one of the most established tokens within the cryptocurrency market. Many cryptocurrency exchanges support this token, and the list keeps growing each year.
When shortlisting the best Tezos exchange in 2021, you should consider several factors such as the fees charged, reputation and security. The overall goal is to land a platform that makes it easy to buy and sell Tezos. This guide will breakdown all the essential factors you have to pay attention to when selecting the perfect Tezos exchange platform that meets your needs.
Compare the Best Tezos Exchanges
It’s never easy to decide when you are presented with so many similar options. That’s why this guide will list some of the best Tezos exchanges in 2021 along with their features and benefits.
Understanding Tezos Exchange
A Tezos exchange is a digital marketplace where you can easily buy and sell Tezos tokens using fiat currencies or other cryptocurrencies. Tezos exchanges run 24/7, and users rely on the huge market volatility to profit. The exchange serves as a middle man between the buyer and the seller, charging some commission for its services.
To get started on a Tezos exchange, first of all, you have to deposit some money into your account, either in fiat or crypto. After you are done with the deposit, you can use the funds to buy Tezos from other members within the exchange. Once you get your hands on the tokens, you can sell them to others too. As long as you deal with reputable platforms, the level of risk involved is minimal.
Before using a Tezos exchange, there are a few requirements you have to meet. These include joining the platform to register and verify your identity. The steps you have to go through will vary from one platform to another but typically involve establishing you are the account’s real owner to abide by various KYC (Know Your Customer) regulations.
If you would like to keep your identity a secret, you can opt for Tezos exchanges that don’t ask for KYC, but there is always a risk of fraud. Once your account is verified, you can deposit funds into the platform using any of the supported payment modes such as credit/debit cards, bank transfers, e-wallets, third-party payments, and so on.
Different Types of Tezos Exchanges
Different types of exchanges facilitate the buying and selling of Tezos. They all cater to different needs of crypto traders according to their experience and preferences. Some of the well known include centralised exchanges. These are the most common types of exchanges that exist today and are controlled by a single entity. They are well regulated and offer trades in fiat-crypto, crypto-crypto, or both.
Then there are decentralised exchanges, which are the opposite of centralised exchanges. They are non-custodial and don’t have a centralised governing body. These exchanges offer a high-degree of privacy since they use protocols and networks to facilitate the automatic transfer of funds between users.
There are instant exchanges representing another variant of non-custodial Tezos exchanges but are much simpler to use than decentralised exchanges. What makes them unique is that funds can be converted almost immediately.
You will also find derivative exchanges that will allow for the trading of Tezos CFDs. These are derivative products associated with the token where users bet if the price will rise or fall and use leverage to trade.
The final type is a peer-to-peer (P2P) exchange. They facilitate the trading of Tezos tokens and are quite popular in countries that lack traditional banking structure. They can be either custodial or non-custodial.
How to Choose a Tezos Exchange?
The perfect Tezos exchange for you will be the platform that meets your primary objectives. This section will explore some of the critical things to look out for when selecting the right platform. The first thing to consider is the ease of usage. The platform should offer a simple user interface that doesn’t complicate dealing with cryptocurrencies.
Since you intend to buy and sell your tokens as quickly as possible, the platform should boost adequate liquidity, characterised by high trading volumes. Also, it should support payment modes that you are comfortable using. This will allow you to deposit and withdraw funds from the platform easily.
If you intend to engage in trading, then the fee structure is something you will have to check. Fees do accumulate over time and can take a chunk of your profits.
Would you like to trade the real asset or derivative products of the asset? This is another factor to consider since, as mentioned earlier, different platforms will support differing trading styles.
If all you want is to trade in privacy, check out if the platform you choose allows for anonymous trading. This kind of platform should ask for minimum personal information.
And finally, since you will be dealing with valuable assets, security has to be on your top priorities. A platform that adheres to the best security standards and offers users additional means to secure their accounts will inspire confidence.
Advantages & Disadvantages of Using a Tezos Exchange
Should I Buy or Trade Cryptocurrency?
Trading involves regular buying and selling of tokens to realise profits and is short term in nature while investing involves buying and holding for longer periods. Trading requires people who have adequate knowledge of how crypto markets work to make the most of the available opportunities. While investing doesn’t require much know-how. You can simply make small investments and watch your portfolio grow over time as an investor.
The good thing about trading is that you don’t have to own the real asset to benefit. Derivatives platforms will allow you to interact with various financial instruments connected to Tezos, such as futures, options, and CFDs and profit from them without holding the underlying asset.
Futures will allow the user to set a predetermined price at which a trade will be executed on a specific date in the future. They can lead to high profits but carry risk due to huge price fluctuations.
Tezos options allow the trader the right to buy/sell the underlying asset at a predetermined price on a specific future date.
Tezos CFDs stand for contract for differences and allow the trader to speculate on the Tezos price movements by taking long/short positions.
In trading, you don’t have to own the underlying asset to make a profit.
3 Steps to Using a Tezos Exchange
Step 1: Choose a Tezos Exchange
Depending on your needs, choose a platform that will serve you best. Users should evaluate an exchange on several parameters such as security, ease of use etc. before finalising a platform.
Step 2: Signing up/Setting up Tezos Exchange
Different platforms will require differing amounts of personal information while signing up. This includes name, email address, phone number, and residence address. You will also have to upload official documents such as a photo of your official ID card and a utility bill to get the account verified.
Step 3: Deposit initial amount and start using Tezos Exchange
Once your account is verified, it is time to make a deposit and start using the exchange services. When funds reflect into your account, proceed to buy and also sell Tezos.
As mentioned above, your choice of the best Tezos exchange in 2021 will rely on several factors. You will have to consider factors such as anonymity, trading methods supported, payment modes allowed, etc when selecting a suitable Tezos exchange. Additionally, the platform’s reputation and security will be two major factors to consider before putting your funds on the platform.
Frequently Asked Questions
Most trading platforms that support Tezos are permitted to operate in several locations worldwide but check your local laws before using a platform.
As long as you choose to operate with a reputable platform, you shouldn’t worry about your tokens’ safety.
This is extremely rare but the risk is greater on non-regulated platforms.
Most platforms complete the verification process in 24-48 hours.
By setting a strong password and activating Two-Factor Authentication (2FA).
The exchange itself sets the buy/sell rates based on buyers’ and sellers’ actions on the platform and other exchanges’ rates.
This is because Tezos exchanges aren’t linked to each other, and the prices vary depending upon the buy/sell activity on the respective platforms.
Tezos exchanges make money through market making, listing fees, commissions, and more.