By clicking “Accept All Cookies”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. View our Privacy Policy for more information.
However, there are huge differences between the various exchanges out there. Some are region specific and small. Some have managed to lock in deals and regulatory compliance with multiple worldwide authoriteis to become some of the biggest in the business.
Choosing which is right for you is a difficult task. but you'll problaby want to start with the exchanges known as "tier 1" crypto exchanges.
The question is, what is a Tier 1 crypto exchange?
What is a Tier 1 crypto exchange?
A tier 1 crypto exchange refers to the largest and most reputable trading platforms in the cryptocurrency market. They are the pioneers of crypto trading and have managed to establish themselves as industry leaders.
They often either serve a singular market that is very large in size (think the US), or have managed to spread to multiple regions. The other key aspect that makes a crypto exchange a tier 1, is that they have a full range of features, including:
High Trading Volumes - A defining feature of tier one exchanges is that they facilitate trading volumes in excess of $1 billion on a daily basis. The high volumes indicate they have substantial user bases and liquidity. For example, Binance handles over $30 billion in trades every day, making it the crypto exchange with the highest 24-hour trading volume.
Excellent Liquidity - Tier one exchanges have huge liquidity pools due to the enormous trading volumes. This allows traders to easily buy and sell crypto assets without causing major price slippage. There is minimal spread between the bid and ask prices on tier one exchange order books.
Global Reach - The top crypto trading platforms operate globally without restrictions in most countries. They support multiple languages, accept users from around the world, and enable deposits/withdrawals in several national currencies. This gives them universal appeal.
Robust Security - Tier one exchanges implement institutional-grade security measures, including cold wallet storage, encrypted online wallets, KYC procedures, and insurance policies to protect user funds. Their trading platforms are designed to be extremely resilient against outages, hacks, and cyber attacks.
Easy Fiat On-ramps - Users can seamlessly deposit and withdraw fiat currencies like USD and EUR using various payment methods, including bank transfers and debit/credit cards. This provides a convenient bridge between crypto assets and traditional money.
Wide Selection of Cryptos - Leading platforms list hundreds of cryptocurrencies to give traders exposure to a diverse range of digital assets beyond just Bitcoin. New promising altcoins are quick to get listed on tier one exchanges.
In summary, the combination of massive trading volumes, liquidity, security, international accessibility, fiat integration, and coin offerings make tier one exchanges the go-to platforms for both new and professional crypto traders worldwide.
You're basically looking at the exchanges who have built a complete offering allowing users to complete the majority of trading and investing actions in one space.
Benefits of using a Tier 1 crypto exchange?
Going with the "big guns" in the crypto world does have a couple of advantages for traders and investors.
These benefits include...
More Liquidity - The massive trading volumes and liquidity pools on tier one exchanges allow users to execute trades quickly and at competitive market prices. Traders can buy and sell digital assets without having to wait for orders to fill. Prices also do not get affected significantly with large orders. This results in minimal slippage and enables entering/exiting positions efficiently.
Enhanced Security - Tier one exchanges implement robust security measures to safeguard user funds and prevent hacking attacks. These include cold storage of majority funds in offline wallets, encrypted online hot wallets, multi-signature technology, and comprehensive KYC identity verification processes. Some exchanges also carry insurance policies to cover losses in case of security breaches. This provides peace of mind to users regarding the safety of their holdings.
Easy Fiat Conversion - Major exchanges offer multiple fiat gateways to facilitate smooth conversion between government-issued currencies and cryptocurrencies. Users can deposit funds via bank transfer, credit card, debit card or electronic wallets. This simplifies the process of buying crypto assets for fiat currency holders. The fiat on-ramps are generally cheaper too compared to smaller exchanges.
Established Reputation - Tier one exchanges have been operating successfully for many years which establishes their credibility and reputation in the crypto space. They are professionally run like institutional financial platforms with proper licenses and regulatory compliance wherever required. This provides users confidence in the legitimacy of the exchange and comfort in trusting them with funds.
But it's not all sunshine and roses out there. There are a few downsides to Tier 1 crypto exchanges.
Cons of Tier 1 crypto exchanges
When a business in any industry hits a certain size, you tend to find that a lot of the nice touches are lost. It's part of the journey sadly as, when something becomes too large, it becomes difficult to manage.
This usually shows up as declining customer support and a slow approach to embracing change.
A couple of the key downfalls of these massive crypto exchanges include...
Higher fees - Tier 1 exchanges can charge higher trading fees, withdrawal fees, and other service fees compared to smaller exchanges. Their fees range from 0.1% to 0.5% per trade which can add up for active traders.
More stringent KYC - To comply with regulations, tier 1 exchanges enforce stricter know-your-customer (KYC) and anti-money laundering (AML) policies. Users have to submit personal documents for identity verification which compromises privacy.
Lower interest rates - The interest rates offered on savings accounts and staking from tier 1 exchanges are generally lower compared to those offered by smaller platforms. Rates can range from 0-5% versus sometimes 10-20% on smaller exchanges.
Higher chances of technical issues - The complex architecture and enormous traffic on tier 1 exchange platforms increases chances of technical glitches, unexpected downtime, and other issues. Users may face obstacles during periods of peak trading volumes.
Vulnerable to regulatory crackdowns - Tier 1 exchanges' large size puts them on regulators' radar. Any regulatory changes or licensing issues can severely impact their operations globally, as seen in the case of Binance.
Listing delays - Tokens have to fulfill stringent criteria to get listed on tier 1 exchanges. Promising new coins are often available sooner on smaller platforms first.
Limited customer support - With millions of users, tier 1 exchanges often struggle to provide personalized customer service and adequate dispute resolution processes. Users may feel treated like a ticket number.
Examples of tier 1 crypto exchanges
With the basics outlined, I've dropped a simple list of the most notable tier 1 crypto exchanges available.
I'll provide a little info on them, and also provide. a link to their website and their review page here on DR so you can see what other users think of them.
Binance is currently the world's largest cryptocurrency exchange by trading volume, serving over 120 million users globally. The exchange was founded in 2017 by Changpeng Zhao and has its headquarters in the Cayman Islands.
Some key facts about Binance:
Consistently handles over $30 billion in daily trading volume across its spot and derivatives platforms.
Offers one of the most liquid trading environments in crypto, with over 500 trading pairs.
Supports deposits and withdrawals of over 150 cryptocurrencies as well as multiple fiat options.
Provides staking services, savings accounts, loans, DeFi platforms, NFT marketplace, and more.
Implements robust security including SAFU fund, offline cold storage, and mandatory KYC.
Rapidly lists new cryptocurrencies and provides IEO platform for new token projects.
Developed its own blockchain, Binance Chain, and DEX platform, Binance DEX.
Expanded via acquisitions of Trust Wallet, CoinMarketCap, Swipe, etc.
Binance checks all the boxes of a tier 1 exchange given its unparalleled liquidity, extensive crypto selection, global availability, and continued innovation across its product suite. It enjoys a first-mover advantage but also faces regulatory scrutiny due to its size.
Coinbase is one of the largest and most popular cryptocurrency exchanges, based in San Francisco. It has over 98 million verified users and operates in over 100 countries.
Key facts about Coinbase:
Was founded in 2012 and is licensed to operate in the United States.
Consistently handles over $4 billion in daily trading volume across its platforms.
Allows trading, storage, and transaction of around 150 cryptocurrencies.
Provides extensive fiat gateways including bank transfers, debit/credit cards, PayPal and more.
Follows strict KYC and AML processes to comply with regulations. Offers insured custodial wallets.
Went public in April 2021 via a direct listing on Nasdaq, making it the first crypto company on the US stock exchange.
Provides additional services like staking, crypto loans, NFT marketplace, custodial accounts, and institutional trading.
Has presence via subsidiaries in key global markets like UK, EU, Singapore, Japan.
Currently valued at over $40 billion, cementing its status as a bluechip crypto exchange.
Coinbase is a pioneer among crypto exchanges focused on making cryptocurrency accessible to the masses. Its public listing and compliant approach make it a model for mainstream adoption of digital assets.
Kraken was founded in 2011 and is one of the oldest and most reputable bitcoin exchanges in the world. The company is based in San Francisco and provides services globally to over 8 million clients.
Key facts about Kraken:
Consistently handles over $4 billion in daily trading volume across spot and derivatives markets.
Offers trading and staking for over 100 cryptocurrency assets as well as fiat-to-crypto pairs.
Strict KYC and compliance procedures followed while operating in hundreds of jurisdictions.
Provides both spot exchange and futures trading via encrypted platform and mobile apps.
Boasts excellent liquidity and tight spreads thanks to its active trader base.
Offers margin trading and OTC desk services for institutional investors.
Known for its strong security with 95% of assets held in offline cold storage. Also provides insurance fund.
One of the few exchanges where users can stake popular assets like ETH, DOT, KSM directly on the platform.
Valued at over $10 billion in latest funding round, cementing its spot among the top exchanges.
Kraken caters well to pro-traders, institutions, and staking enthusiasts - making it both a popular on-ramp for first-time users and a powerful platform for advanced crypto trading.
Bitstamp was founded in 2011 in Slovenia, making it one of the oldest and most established bitcoin exchanges. It serves active traders worldwide with robust trading platforms.
Key facts about Bitstamp:
Consistently handles over $1 billion in daily trading volume across spot and derivative markets.
One of the largest EUR cryptocurrency exchanges in terms of BTC/EUR trading volumes.
Offers trading for over 50 major cryptocurrency pairs against USD, EUR and BTC.
High liquidity makes it popular among active institutional and retail traders in Europe and beyond.
Implements thorough KYC and AML procedures to comply with regulations across jurisdictions.
Offers additional services like staking, crypto lending, OTC trading, and custodial accounts for institutional clients.
Boasts excellent security practices such as 95% of assets held in geographically distributed cold storage vaults.
insured client funds through broker insurance policies up to $500 million.
Developed a matching engine capable of handling 100,000 trades per second to avoid downtime during volatility.
Bitstamp combines robust technology, security, liquidity, and regulatory compliance to cement itself as a reliable fiat gateway for professional crypto trading across Europe and globally.
Launched in 2017, KuCoin is a global crypto exchange based in Seychelles. It has grown rapidly to become one of the top 5 exchanges by trading volume, serving over 20 million users.
Key facts about KuCoin:
Facilitates over $2 billion in daily trading volume across 600+ trading pairs.
Supports the trading and staking of over 600 cryptocurrencies.
Provides a advanced trading platform with features like margin trading.
Operates KuCoin Shares (KCS) token that lets users earn passive income from exchange fees.
Offers P2P fiat-to-crypto trading services for enhanced liquidity.
Follows standard KYC procedure but also allows unverified accounts with lower limits.
Known for listing potential gem and micro-cap coins earlier than other major exchanges.
Raised over $150 million in venture capital to expand worldwide and add new services.
Growing suite of offerings including lending, derivatives, indexes, institutional services.
KuCoin distinguishes itself with a wide array of altcoin listings, robust trading tools, and innovative crypto services - cementing itself as a top choice among advanced crypto traders globally.
