Last Updated on 2022-06-29 by AlexHales
Ethereum is poised to cross 400% in 2022, especially after the Merge upgrade. Smart investors have already chalked out to invest in Ethereum to make the most of the predicted ETH rise in the coming months. A bunch of other digital currencies too are predicted to surge high this year. You can always buy these coins from a leading crypto exchange. Otherwise, if you already hold investments in a particular digital currency or currencies, you can exchange them (or part of them) for another digital currency that appears to be profitable this year. This is where the concept of digital currency exchange comes into play. You can execute the exchange process easily through a digital currency exchange platform at MultiBank.
The notion of digital currency exchange is not limited to digital currency to digital currency only. In other words, a digital currency exchange platform also enables you to exchange digital currency for cash.
How to execute digital currency exchange?
So, how do you perform digital currency exchange? And, what is meant by a digital currency exchange platform?
Cryptocurrency exchange
A digital currency exchange platform, put simply, is an online portal that enables users to perform digital currency exchange. These platforms serve as the financial intermediary that facilitates the process of digital currency exchange between two chosen digital currencies. The portal certainly charges a fee for the exchange service- but the fee might vary from one digital currency exchange platform to another.
The cryptocurrency exchanges, where you buy and sell crypto, double up as a digital currency exchange platform as well. There are two kinds of digital currency exchange portals- centralized and decentralized P2P digital currency exchange platforms.
- Things to keep in mind before you exchange
But before going to the types of crypto exchanges for digital currency exchange, here are some factors to keep in mind:
- Steps to take before you exchange
- Verification procedures and requirement
- Know about minimum exchange amount
- Exchange rate
- Transaction fee
In regard to Exchange rate, you can choose from two kinds of digital currency exchange rates- Floating and Fixed.
The Floating digital currency exchange rate implies that the price between the currency pairs is subject to change, based on certain market factors, demand, and overall supply. On the other hand, the Fixed digital currency exchange rate denotes the exchange price between the selected currency pair will always remain the same.
- Types of crypto exchanges for digital currency exchange
Centralized exchange
A centralized digital currency exchange platform is controlled by one single centralized authority, say the owner of the exchange. The centralized portal takes care of fund management and trading on behalf of users. It’s to note here, a centralized digital currency exchange platform usually follows a strict application procedure to weed out nefarious traders or scammers. If you are planning to create an account with a centralized digital currency exchange platform, you will have to submit KYC and furnish other identity details.
A strict application procedure ensures that you only have authentic traders on the digital currency exchange platform. However, some traders are a little skeptical to join a centralized platform for digital currency exchange as the portal demands them to share their personal details.
Also, centralized exchanges usually demand higher transaction fees than their decentralized digital currency exchange counterparts.
Decentralized exchange
Any centralized authority does not govern a decentralized digital currency exchange platform, rather, the platform follows a decentralized infrastructure. Unlike centralized digital currency exchange portals, a decentralized counterpart does not handle fund management on behalf of users. Also, a decentralized digital currency exchange platform conducts trade through smart contracts.
You can dub a decentralized digital currency exchange platform as a P2P digital currency exchange portal as it enables sharing of information and assets in a trustless manner. Then, you won’t need to submit personal details and fill up KYC forms to create an account with a decentralized digital currency exchange platform.
Steps to exchange digital currencies through a crypto exchange:
- Go to a digital currency exchange platform
- Sign in and go your account
- Choose the currency pair for exchange in given exchange window, say, Bitcoin and Ethereum
- Type in how much amount you wish to exchange
- Choose your preferred digital currency exchange rate
- Type in wallet address
- The digital currency exchange platform will display the crypto amount you chose for digital currency exchange as well as wallet address. This is amount that the user will send to the chosen wallet
- Execute the whole digital currency exchange process in one single transaction
- And you are done!
Steps to exchange crypto for cash
As mentioned previously you can execute digital currency exchange for cash as well. You can easily carry out the exchange or conversion process at the same crypto exchange that serves as a digital currency exchange platform for crypto-to-crypto exchange.
- Go to a digital currency exchange platform
- Sign in and go your account
- Deposit your chosen cryptocurrency for digital currency exchange
- Request for withdrawal and mention your preferred currency, like USD
- The digital currency exchange platform will convert the crypto into your selected local currency and send the whole amount directly to the user’s bank account
Tips to choose the right digital currency exchange platform
There has been a mushroom growth of digital currency exchange platforms but then not all would be equally great for you. You must take thorough market research before choosing the right digital currency exchange platform.
First, you will have to decide whether to go for a centralized or a decentralized digital currency exchange platform. Once you have zeroed in on the type, make a shortlist of at least 4-5 top exchanges and conduct a thorough study on them. Check their reputation, credibility, security measures, and rates. Your chosen digital currency exchange portal should boast a high reputation on the market. Also, a long line of users must follow the same. The platform should also promise affordable rates, wide selection of coins for exchange, and highly advanced security features.
