5 Pros and Cons of Using Multiple Crypto Exchanges for Trading
Despite the fact that cryptocurrencies have been around for almost one and a half-decade, numerous things surrounding them are still shrouded in mystery. At least for the common folk who are not financial and tech experts, virtual currencies are still something abstract and outlandish. The concept may be familiar and most people have probably heard of terms like blockchain, mining, bitcoin, and Ethereum, but there is still knowledge lacking there when trading is concerned. Luckily, people responsible for the industry and those who offer the customers, investors, and traders their services recognized this and came up with a universal solution. What the market got were cryptocurrency exchanges, online platforms where all of the crypto business can be done.
These one-stop destinations for all things cryptocurrency have allowed many newcomers to join the industry and start making more money than before. Over time, many exchanges appeared and some of them proved to be the leaders on the market. But what makes them different from each other? Are there any that are definitively better than the rest, and if so, which ones? More importantly for those wishing to maximize their trade potential, does it make sense to use more than one crypto exchange? This is the topic of our article here so join us in determining the pros and cons of using multiple crypto exchanges for your trading needs. For more information on cryptocurrency in general as well as bitcoin and exchanges, make sure to check out bitcoinscodepro.com/de/login.
Since the positives are usually the more interesting and more important than the negatives to the general public, we start with the pros. In the following sections you will learn what good does using multiple crypto exchanges bring to you.
1. Different Platforms have Different Features
The most obvious reason why using more than one exchange for your trading needs is rather simple and has to do with the fact that not all of them are completely the same. While every exchange has to have the same basic principle, many of them specialize in certain areas and this specialization makes them better than the competition. It could even be said that there are different types of exchanges, and that not all of them are interchangeable. For example, some exchanges are better for buying crypto with traditional (fiat) currencies than others. Others have certain benefits for crypto to crypto transfers and trading. The list goes on and on. If you want to use the best of all worlds, the most straightforward way of doing this would be to use a few of them at once. Just make sure you pick the ones that will truly benefit you and never do it just for the sake of having more than one exchange.
2. Diversifying is Always Welcome
Since you plan to trade digital currencies, you should also know the golden rule of any kind of investments. Diversify your portfolio unless you want to risk losing everything. The old saying tells us never to put all of our eggs in the same basket. The very same applies in trading digital currencies as you have to invest in at least a few, one of them of course being bitcoin. Why is this important for exchanges? Well, the same principle applies to the platforms where you do the trading. There are different types, sure, but you can also be more secure and have different coins in different wallets. Additional security in the cyber sector is always a plus and using more than one crypto exchange gives you exactly that. You will be reaping the benefits of multiple services but also doing more in terms of protecting your assets. If one exchange suddenly goes down or if it experiences some kind of a cyber-attack, you will sleep better knowing that not all of your assets are lost or frozen.
Now that you know the biggest benefits, it is time to talk about the negative sides of having active accounts on a few crypto exchanges. Positives do not always outweigh the negatives and the same can be said here.
3. Difficult to Focus on One
The biggest problem with diversifying is stretching yourself too thin. This means that you will never be fully devoted to a single thing as your attention, time, money, and other resources will all have to go on multiple sides. If you focus too much on bitcoin at your main exchange, the rest of the altcoins you have spread out on other platforms will suffer. Constantly logging in and out of all of the platforms is time-consuming too, and it is not something that is beginner-friendly either. Be prepared to always worry about multiple fronts and be wary of problems coming from as many sides as you have crypto exchanges in use.
4. Transactions Will Take Longer
The transactions themselves will still take the same amount of time, but the time you spend between different exchanges and volumes will be increased several times over. When everything is in one place it is much easier to use it. As soon as there are multiple sides to cover, you will be overwhelmed and you will lose the ability to do things almost instantly. That means if you find a good deal, more time will pass before you can close it. Tracking the portfolio in real-time is much more complex and you will never really be able to do things simultaneously. Combined with not being able to focus on a single exchange, discussed above, this problem of everything taking longer and the lack of the ability to take advantage of the opportunity is huge.
5. You Will Always Think Others Are Better
No matter which combination of exchanges you use, and if you even use the top platforms like Binance, Coinbase, eToro, or others, there will always be that voice in your head that is telling you to try one more. Having multiple accounts like this can lead to a vicious cycle of opening account after account on new exchanges every so often. This eventually becomes a huge problem and before you know it you are in over your head with nothing making sense anymore. Unless you have a legitimate plan to use, multiple platforms are not worth the additional work, money, and time.