A crypto broker and a crypto exchange are two intrinsically different concepts. Although both platforms let you trade cryptocurrency, the broker offers indirect trading. A crypto broker acts as a middleman between traders and the market. On the other hand, a crypto exchange is also an intermediary between traders. Apart from this, both of them have many other differences. It is hard to say which one is better between the two. For some situations, you may find a crypto broker better; for others, a crypto exchange might be a better option. Read More
Thus, to understand which of the two platforms is better for you, you must be thorough regarding the differences, advantages and other aspects of the crypto broker and the crypto exchange.
What Is A Cryptocurrency Broker?
A cryptocurrency broker is more of a transitional concept, meaning it’s a traditional forex broker only but provides access to the crypto market. Thus, cryptocurrency is not a priority operation of these brokers but a part of several financial instruments such as fiat, currency indices, forex and more.
Pros Of Crypto Brokers:
- Many instruments available apart from crypto CFDs
- Numerous deposit/withdrawal options are available
- Accessibility to copy trading service
- Fully regulated
- Excellent customer support
Cons Of Crypto Brokers:
- Crypto trading is not direct
- Limited crypto pairs for contracts
What Is A Cryptocurrency Exchange?
The best thing about a crypto exchange is that they offer a wide range of cryptocurrencies compared to crypto brokers. Unlike crypto brokers, a crypto exchange only prioritizes crypto trading and thus does not offer other financial instruments for trading purposes. Thus, they only provide crypto-crypto and crypto-fiat pairs for trading. Additionally, it’s direct trading and not CFD trading.
Pros Of Crypto Exchange:
- Wide selection of cryptocurrencies available
- Direct crypto trading
- Low trading fees and commissions
Cons Of Crypto Exchange:
- No other instruments available other than cryptocurrencies and their derivatives
- Most of the crypto exchanges are not regulated
Cryptocurrency Brokers And Exchanges: A Comparison
Choice Of Trading Instruments:
Crypto brokers offer indirect cryptocurrency trading. They are instruments formed by groups of securities. Fiat pairs such as EUR/GBP, EUR/USD and USD/JPY constitute a big part of their trading volume. Additionally, they offer access to shares of big companies.
On the other hand, cryptocurrency exchanges are completely different. Many traders choose crypto exchanges to purchase crypto and then sell it at a better exchange rate. But, one must never forget that the real capability of a crypto exchange is much wider. For example, they might offer conversion of one crypto to another at the current exchange rate.
Commission And Fees:
The top crypto exchanges charge a fee for crypto trading, a certain percentage of the trade value. Additionally, there is a withdrawal fee, which is fixed irrespective of the withdrawal amount. Crypto brokers also charge a trading fee, just like crypto exchanges. However, this fee is in the form of the spread (difference between the highest buy price and lowest sell price). Crypto exchanges charge lower fees as compared to cryptocurrency brokers. While brokers determine a lot according to their company policy, tariff plan, assets and market conditions, on the other hand, exchanges charge trading fees which are easily understood even by a crypto beginner as they are fixed.
Deposit And Withdrawal Methods:
Crypto brokers offer numerous deposit and withdrawal options such as Visa and MasterCard, debit and credit cards, bank wire transfers and electronic transfers via Skrill, Neteller, Perfect Money and more. Similarly, top crypto exchanges also provide access to multiple deposits/withdrawals through debit or credit cards and bank wire transfers. The majority of cryptocurrency exchanges also accept payments through cryptocurrency wallets.
Whether you wish to buy cryptocurrency or plan to trade it, you must open a trading account with the platform you have chosen. However, there are no major differences between the two regarding the account opening. Both require you to register on their official website and provide your personal information, such as scanned copies of IDs. It may take several days for verification to take place, and once you have passed it, you are given full access to the comprehensive features of the trading platform.
Crypto brokers are different from crypto exchanges. Brokers don’t allow crypto trading directly, only through CFDs, and they always have limited crypto assets to offer. However, apart from cryptocurrencies, they have other instruments to offer. Unlike exchanges, brokers are regulated by reputable regulatory authorities. Therefore, a crypto exchange is a preferable option if you want to trade cryptocurrencies only. But, if you are also interested in other assets, it would be wider to go with a crypto broker. Hence, the type of platform you must choose is entirely based on your trading goals.