Best Cryptocurrency Exchange Fees

​​You’ll Be Surprised to Learn the Most-Used U.S. Crypto Platform

​​You'll Be Surprised to Learn the Most-Used U.S. Crypto Platform
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Find out which cryptocurrency platform has seen the most trading volume.

the main points

  • The report shows that Uniswap outperformed Coinbase in terms of trading volume.
  • Decentralized exchanges do not have an intermediary to facilitate trades.
  • You will need a crypto wallet to use the decentralized platform.

Americans dedicate a greater share of their purchasing power to cryptocurrencies than almost any other country, according to a recent report by Chainalysis. The report, which investigates the global adoption of cryptocurrencies, shows that the volume of cryptocurrency transactions in the United States is on the rise.

What are the most popular platforms? There are many cryptocurrency exchanges in the US, but what is interesting is that it is a decentralized exchange (DEX) that has recorded the largest trading volume.

Uniswap outperforms central exchange Coinbase to take the crown. Both recorded more than $100 billion in transactions between July 2020 and June 2021.

  • According to the report, the three most popular centralized exchanges in North America are Coinbase, Gemini, and Binance.
  • The largest decentralized platforms in terms of transaction volume are Uniswap, dYdX, and Compound. Compound is a lending platform, not DEX.

Decentralized exchanges versus centralized exchanges

If you are wondering about the difference between centralized and decentralized exchanges, you are not alone. Simply put, when you use a centralized exchange, there is a broker involved to facilitate trade – it uses an order book system similar to a traditional stock broker.

A decentralized exchange allows users to exchange tokens without intermediaries. For example, Uniswap does not need to involve a central party in its trading. This is done through something called an automated liquidity protocol, where investors are rewarded for adding liquidity, and this liquidity means that there are tokens available to the traders.

Uniswap also has a governance (UNI) token which is used to reward users and make decisions on the platform.

One thing to watch out for if you are a regular DEX user is the upcoming regulation. The anonymous nature of DEXs means that authorities are concerned that these platforms could be used to launder money or finance terrorism. As US lawmakers contemplate stricter regulation of cryptocurrency, decentralized exchanges may bear the brunt of the new rules. Uniswap is already the subject of an SEC investigation.

From a user perspective, the following are the main differences between centralized and decentralized exchanges:

central exchange

decentralized exchange

Usually you have to provide your personal information to open an account

No need to register your personal information

Stock exchanges often have guardianship portfolios

You will need to connect an external wallet such as MetaMask

It is much easier to deposit fiat (traditional) money like US dollars

You will likely need cryptocurrency (not US dollars) to get started

Limited number of coins available

Bigger collection of coins

Fees are usually the norm

Ethereum (ETH) gas fees can be exorbitant

Get the right crypto wallet

One key idea worth exploring in more detail is the difference between a conservation portfolio and a non-spontaneous portfolio. A crypto wallet is where you store the keys to your cryptocurrency. Your crypto-key is like a PIN to access your bank account, it’s a password that controls access to your assets.

Most centralized exchanges keep cryptocurrencies in a custodian, which means they control your crypto keys. If the platform gets hacked, for example, you could lose your money. The exchange also has the ability to freeze your account and can be subject to disruption.

If you use a dishonest wallet at DEX, you are in complete control of your cryptocurrency – and you never have to send your assets to the exchange. But you are also responsible for the security of the wallet. For example, when setting up your wallet, you will generate an initial phrase – usually 12 random words. If you lose your initial phrase, you will not be able to access your funds.

Conventional cryptographic wisdom says that it is always best to use a non-custodial wallet and control your keys. But this may not be the case for novice investors who just want to buy and hold a small amount of cryptocurrency.

In the early days, exchange hacks were more common and outweighed the risks of, for example, losing the password to your wallet or losing the wallet altogether. These days, many small investors prefer the more user-friendly custodial portfolios offered by centralized exchanges.

There are risks associated with both approaches. But if you want to transfer your crypto assets to a dishonest wallet, most centralized exchanges make it easy. Although you may have to pay a withdrawal fee.

There are also different types of non-custodial wallets. The most secure is a hardware wallet which is a physical device that is kept offline. In contrast, a hot wallet is usually used on the web or on a mobile device. It is less secure but can be more practical to use with DEX.

Both types of exchanges have their place

Just as you might not put all of your money in one bank account – you might have some in a checking account, some in a savings account, and some in a stock brokerage account – there is no one-size-fits-all digital currency account or wallet.

I have accounts with both centralized and decentralized exchanges, and I have cryptocurrency in both custodial and non-custodial wallets. Keep the cryptocurrency in it for various purposes. As you explore more of the cryptocurrency world, you may decide to follow suit. But there is no right or wrong answer, it all depends on the type of investor you are.

Buy and sell cryptocurrencies on an exchange chosen by experts

There are hundreds of platforms around the world waiting to give you access to thousands of cryptocurrencies. In order to find the right feature for you, you will need to decide which features are most important to you.

To help you get started, our independent experts have tested the options to bring you some of our best cryptocurrency exchanges for 2021. Check out the list here and start your crypto journey, today.

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