Cryptocurrency exchanges are a dime a dozen, but there are only a few we think make sense for long-term crypto investors.
The volatile, speculative nature of cryptocurrency investing presents risks for investors no matter how and where you buy it. We believe safety of your investment should be a top priority when choosing a cryptocurrency exchange, and each of our favorite exchanges clearly detail which security measures they have in place to protect consumers. In general, we think cryptocurrency exchanges that have been around the longest are usually a safer bet than newer ones.
“I would go with any of the old guard,” says Theresa Morrison, a CFP with the Beckett Collective. “The ones who’ve been doing it for a long time, that’s where I go first.”
No matter where you buy it, it’s important to remember that cryptocurrency is a highly speculative asset with a relatively short track record (at least compared to the stock market). That’s why experts say you should never invest more than 5% of your portfolio into crypto, and why they say it’s smart for investors to stick to Bitcoin and Ethereum, which are available on each of the exchanges we recommend.
So for the long-term value investor who is more concerned with saving for retirement than getting rich quick, here are our picks for the best crypto exchanges:
BEFORE YOU INVEST IN CRYPTO
Experts say it’s smart to keep your crypto investments under 5% of your overall portfolio. Crypto prices fluctuate wildly by the day, and experts also say you’d be smart not to invest more than you’d be OK losing if the market dropped out altogether. Crypto investments should never get in the way of other financial priorities like saving for emergencies, paying off high-interest debt, and saving for retirement using more conventional investment strategies.
Best Cryptocurrency Exchanges of 2021
- Good for Beginners: Coinbase
- Good for Experienced Investors: Gemini
- Good for Practicing Crypto Trading: eToro
Coinbase was the first cryptocurrency exchange to go public on the Nasdaq in 2021, but it’s been around since 2012. The cryptocurrency exchange offers over 50 cryptos, and a free wallet service with private key access.
Why We Like it
Coinbase’s simple interface is easy to use and understand for beginners, but there’s also the option to upgrade to a more advanced version, Coinbase Pro, if you want additional features for trading cryptocurrencies.
Coinbase shares its security measures openly, and keeps the majority of users’ crypto in secure, offline storage to protect it from threat of hacking and digital theft. Plus, any cash that you keep in Coinbase is FDIC-insured up to $250,000. We also like Coinbase’s education platform that helps educate investors about cryptocurrency.
Coinbase’s fee structure puts it on the pricey end compared to other exchanges, but we like the platform’s ease of use and upfront security measures, especially for beginners. When you make a transaction, you’ll be charged both a spread and a Coinbase fee.
The spread fee is the difference between what the crypto costs and what you pay to buy it (or receive for a sale). The spread is approximately 0.5% of your cryptocurrency sales and purchases, but can be more depending on the cryptocurrencies you’re trading.
The Coinbase fee on top of your spread fee varies based on your location, payment method, and other factors. However, crypto-to-crypto transactions (like trading Bitcoin for Ethereum) are not subject to the Coinbase fee. You’ll also incur different fees for things like using certain methods to fund your Coinbase wallet or for withdrawing your investment.
Cryptocurrency is not protected under any federal regulation, unlike FDIC-insured investments. But Coinbase is transparent about its security measures and says it stores 98% of customers’ cryptocurrency in offline, cold storage. The remaining 2% is used to facilitate trading.
While your investments aren’t FDIC-insured, Coinbase itself has an insurance policy to protect crypto holdings. Even so, there’s no guarantee that your coins or cash will be fully returned to you if a hack occurs. While your coins are not protected by the government, any cash you keep in your wallet is FDIC-insured up to $250,000.
Read our full review: Coinbase Review 2021: Great for Crypto Beginners and Long-Term Investors
Gemini was launched in 2015, and is good for both beginner investors and active traders. Gemini offers over 40 cryptocurrencies, and a suite of products that can add value for more seasoned investors.
Why We Like It
Gemini is very open about its security measures and keeps the majority of your cryptocurrency in an offline cold storage system. Gemini offers tools and upgrade features that can be helpful for more advanced traders, but also has a simpler interface to help beginners get their grounding.
Plus, people with more crypto knowledge could find value in Gemini’s suite of additional products: Gemini Earn, Cryptopedia (a learning hub), Gemini Wallet and Gemini Custody, ActiveTrader, and Gemini Pay.
You’ll be charged a convenience and transaction fee when you buy or sell cryptocurrency on Gemini. The total fee will be displayed as your “quoted price” before the transaction is finalized.
The convenience fee is usually about 0.5% of the Gemini market price for a given trade, though it can vary, and is charged in the crypto that you purchase. The transaction fee is based on the amount you’re trading. Crypto-to-crypto trades — like Bitcoin to Ethereum — are charged a standard 1.49% transaction fee. For buying and selling, the transaction fee varies by type of cryptocurrency.
Gemini says it holds the majority of your cryptocurrency in an offline, cold storage system, but a small portion is kept online in a hot wallet that’s insured against theft from a security breach, hack, a fraudulent transfer, or employee theft.
Read our full review: Gemini Review 2021: Easy for Beginners, Plus More Options for Experienced Investors
eToro opened to investors in the U.S. as a cryptocurrency exchange in 2018. Crypto trading on the platform is limited to 43 states, with Delaware, Hawaii, Minnesota, Nevada, New Hampshire, New York, and Tennessee being excluded from participating. This is the only platform we recommend that’s not available in all 50 states, but we think it has features that make it interesting for people in the states where it is available. eToro offers a simple interface and over 20 cryptocurrencies to choose from.
Why We Like It
eToro offers fewer coins than other exchanges — just over 20 — but experts recommend sticking with the two most-popular coins anyway, Bitcoin and Ethereum, which are available on the platform.
eToro offers a unique feature: eToro Virtual Portfolio, which lets you practice investing up to $100,000 worth of crypto and track its progress. This tool can help users get a sense of how volatile cryptocurrency is.
The fees you pay on eToro are based solely on spread (the difference between what the crypto is selling for and what you pay for it). Spread can fluctuate depending on the cryptocurrency you choose and current market prices.
eToro has a mix of hot and cold storage to protect your assets, and any U.S. dollars in your account are held in FDIC-insured custodial accounts.
Read our full review: eToro Review 2021: Practice Crypto Trading, Plus Novel Social Features
Best Crypto Exchanges of 2021
|Coins||50+ cryptocurrencies||40+ cryptocurrencies||20+ cryptocurrencies|
|Fees||• 0.50% spread
• Trading fee between 1.49% and 3.99% (or $0.99 to $2.99 flat fee)
|• 0.50% convenience fee
• $0.99 to $2.99 transaction fee
• 1.49% transaction fee for trades over $200
|• 0.75%-4.9% spread (varies by crypto)|
|Wallet storage||Keep coins on Coinbase account, Coinbase Wallet option, or transfer to your own wallet||Keep coins on Gemini account, Gemini Wallet option, or transfer to your own wallet||Keep coins on eToro trading platform account, move them to an eToro wallet, or transfer to your own wallet|
|Minimum trade||$2||Equal to the smallest amount of each coin that can be traded (0.00001 BTC)||$25 ($50 deposit minimum)|
What Is a Cryptocurrency Exchange?
A cryptocurrency exchange is a platform where you can buy and sell cryptocurrency. You can trade one coin for another, like Bitcoin for Ethereum, or you can buy crypto using a regular currency like U.S. dollars.
These platforms facilitate crypto purchases, allow you to convert cryptocurrencies back into dollars, and transfer them out of the exchange. Different exchanges come with different features, which may sway you toward choosing one exchange over another.
How to Choose a Cryptocurrency Exchange
There are a few different factors to consider when looking for a cryptocurrency exchange. Here are a few we recommend you look into before choosing one:
- Accessibility: Not all states or countries allow access to every crypto exchange, so make sure whichever exchange you choose is available where you live
- Security: Different exchanges offer different security measures and insurance policies
- Fees: Understand what it will cost you to buy and sell crypto on the exchange you choose
- Coins offered: Some exchanges offer only a limited amount of coins
- Storage: Many exchanges come with an associated crypto wallet offering to help you keep your investment secure
Other Places to Buy Cryptocurrency
While you can’t purchase cryptocurrency from an online investment brokerage like Fidelity or Charles Schwab, there are a few more options available to investors besides traditional cryptocurrency exchanges.
Popular online payments platforms like Venmo, Paypal, Cash App — and mobile stock trading platform Robinhood — have recently expanded their services to allow customers to buy cryptocurrency on their platforms. Experts say these apps can be an easy alternative for beginners who don’t want to mess with figuring out a cryptocurrency exchange, which can be complex for new users.
But if you buy crypto on these platforms, it may be more difficult later on to transfer your cryptocurrency off-platform to a cryptocurrency wallet, which can offer more security for your investment. In fact, you can’t move your holding off of platforms like Venmo or PayPal at all, while traditional exchanges will let you move your cryptocurrency off platform if you want to.