Converting cryptocurrency: how to choose an exchanger

An exchanger is a platform where you can buy or sell cryptocurrency. In principle, this concept can be ambiguous, as can the term “exchange” itself in English. This includes, for example, full-fledged crypto-exchanges. The latter also provide exchange services, but it is worth separating exchangers and exchanges for their original purpose. The exchanger is a service created exclusively for currency exchange. The exchange is designed for speculative trading. On it, you can also buy and sell cryptoassets, but its functionality is not limited to this.
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Types of exchangers

There are two types of exchangers: offline and online. Offline exchangers can include crypto machines (ATM-like terminals in which you can exchange cash and non-cash money for cryptocurrency), as well as conditional “exchangers,” which are rooms where people directly conduct transactions;

Online exchangers can be either centralized, where the administration of the resource actually acts as your counterparty to the transaction, or P2P, where the counterparty is another user. To put it simply, in the first case you buy or sell cryptocurrency directly from the exchanger, and in the second case the exchanger pairs you with a counterparty willing to buy or sell you the cryptocurrency;

Most often the term “exchanger” implies the first algorithm of work, and the number of such sites is much higher than the number of crypto-exchanges and P2P-services. However, they often have lower liquidity and number of supported altcoins.

In general, the principle of exchangers is simple: cryptocurrency from the wallet is exchanged for other assets – usually fiat currency, but it is also possible to exchange one cryptocurrency for another. By and large, the process is just like a normal currency exchange: you deposit some money and receive another.

Basic precautions

How you look for a “good” exchanger is also pretty similar: you look for the exchange rate you are happy with, you check the list of available cryptocurrencies, you check the commission, you try to make sure that you are not dealing with a scammer, and you go to the selected exchanger. As with currency exchange, you should be wary of too favorable rate, because there is a high risk of running into unscrupulous exchanger, which, for example, will give you counterfeit money, as well as the lack of information about the site;

In addition, it is never superfluous to look around: to evaluate the site of the exchanger, the quantity and quality of information disclosed about the service, and the adequacy of the rules for using the services (if you use online exchangers); to pay attention to the availability of adequate equipment (a banknote counter and a banknote authenticity detector), the completeness of the information provided and the general decency of the place, reputation, reviews (if you exchange currency offline, in a conventional “exchanger”).

Specifics of cryptocurrency exchange

In addition to the basic precautions, many of which are quite relevant for cryptocurrency exchange, there are other specifics. Let’s start with the KYC and AML protocols;

Gone are the days when cryptocurrencies were something incomprehensible and uninteresting for the authorities. Over the years, states have learned some “tricks”, or rather peculiar administrative barriers, about which it is important to know. Many exchanges and exchangers follow the above protocols. And the first step in choosing the right exchanger – to understand whether he follows them and what his reputation. Especially if you later have to put digital currency on the CEX exchange with similar restrictions;

That is, if the exchanger itself does not abide by such rules, it can become a problem when dealing with other exchangers where the funds will be sent later due to its questionable reputation if a transaction is received through it. Given the implementation of MiCA in Europe on the one hand and the increased scrutiny of CEX platforms in the US by the Securities and Exchange Commission (SEC) on the other, the trend toward more administrative oversight can be seen with the naked eye.

KYC is a procedure for verifying a customer’s identity. Organizations are required to collect information about who uses their financial services. This provides protection against fraudsters and terrorists. A list of information requested about you may include full name, mail, phone number, passport information, and address. Overall, KYC is an important indicator that the platform is following current security protocols and complying with regulatory requirements.

The second such indicator is AML validation, which is no longer about the “cleanliness” of the client but about the “cleanliness” of the currency itself. It aims to prevent money laundering. Blockchain provides the ability to trace the history of any cryptocurrency transaction, and AML verification is a guarantee that you will have a “clean” cryptocurrency that was not involved in dubious transactions. This is important because it ensures that your cryptocurrency, when you want to dispose of it, will be accepted everywhere. If you don’t check to see if the cryptocurrency you’re purchasing has passed AML, there is a risk that you simply won’t be able to sell it the way you want to later on.

A good tactic when dealing with an exchanger is to “tread water” first, before you dive in. Before making a large operation, try a small one and evaluate the experience. It is better to lose a little than to lose everything. And yes, keep an eye on the size of the commission.

Also, try to insure against your own inattention and carelessness – carefully check the fields you fill out. Cryptocurrency transactions have no reversal. Don’t forget about dust attacks and fake address scams either. Cryptocurrency is a highly personally responsible area.

Exchange Aggregators

For the convenience of users there are aggregators of exchangers. You can find one of these on our website. They allow you to find the best deals and work similarly to exchange rate aggregators at different banks. What information do they provide? First of all, the cryptocurrency rates themselves and the list of supported digital assets. Try to find information on liquidity as well;

Secondly, you can find the name of the exchanger there and go to its website to read more about the conditions and make your initial opinion of the site. It is also useful to know the business hours of the site and to make transactions at that time.

Thirdly, you can see the rating and read or leave feedback about how the site works on the aggregator. This is extremely important because in the crypto world a lot of things are based on reputation. Judicial protection for crypto transactions is hardly an option yet, so caution and prudence are our everything.

Fourth, aggregators typically specify a minimum and maximum transaction amount, as well as a reserve – the amount of money that the exchanger has at the moment. Make sure your requests match the capabilities of the particular exchanger, including deposit and withdrawal methods.

In addition, keep in mind the limits of your payment system – make sure your side of the equation matches the request. And, of course, the amount of service fees.

In addition to these recommendations, it is also worth mentioning phishing. There are “fake” sites that use the reputation of reliable sites, creating their “clones”. When you go to a site, it’s worth double-checking its address, and it’s better to go from a trusted source, including an aggregator.

In some cases the two-factor authentication feature may also be helpful. Keep in mind that if your balance is stored centrally on the exchanger’s site, attackers will also have access to the cryptocurrency if they get your login and password, and transactions with it are irreversible;

Two-factor authentication acts as an additional-but not an absolute! – security feature. In general, when buying cryptocurrency, it is better to think in advance about its long-term storage in a non-custodial (decentralized) wallet, where only you will have access to private keys.

But remember, the aggregator is not responsible for the actions of the venues listed on it. It is only a tool that collects data that is shared with it. So the burden of possible mistakes is on you alone, be cautious and don’t make them.

This material and the information in it does not constitute personal or other investment advice. The editorial opinion may not coincide with the opinions of the author, analytical portals and experts.