Cryptocurrency Exchanges : User Experience, Value Investing, Diversification of Risk Perspective
Quick tour
➞ Exchange User Experience and Recommendations
➞ Recommended Taiwan exchanges: TWD deposit channels
Foreword
🔗I've been in the cryptocurrency space for nearly two years now and have experienced the USDT delisting and the bankruptcy of FTX, resulting in a loss of one-third of my assets😓. As a software engineer, my faith in this industry remains unchanged, and I continue to use cryptocurrency exchanges for investment purposes. In this article, I will share my experiences with the exchanges I have used and discuss some of the lessons and insights I have gained from learning to invest.
Investment concept
🔗1. Value Investing: The Difference Between Investment and Speculation
First of all, let me explain that I adhere to the philosophy of value investing. In my view, "investment" means believing in the future growth of an industry, company, or individual and providing financial support to them while aligning our fates together.
Of course, in reality, it is not as simplistic as symbiotically sharing life and death. When an investment project is on the brink of failure, there are rumors of a company's lack of competitiveness, or when the overall situation becomes unstable, it is common to take actions to redeem funds. This is what I consider arbitrage or speculation.
To increase one's own assets, some level of speculation is inevitable. However, I do not recommend engaging in excessive speculation, such as leveraging or short-term trading (although it can be entertaining to dabble in them). After all, the purpose of my investments is to have something to do in my leisure time, rather than taking on an additional job or making it my primary occupation (e.g., sneaking glances at the market during work and continuing to monitor it after work or be a professional trader).
2. Investment Method : DCA (Dollar Cost Averaging)
Currently, in the cryptocurrency field, I consider the strategy of Dollar-Cost Averaging (DCA). If you're unfamiliar with this term, you can search for it yourself as I won't provide a detailed tutorial here. 😎 Essentially, it's akin to long-term investing in the stock market. However, due to the cyclical nature of the cryptocurrency market, while I continue with DCA, I also engage in arbitrage (speculation) by selling at high points.
3. Diversifying Risk: How to Spread Your Investments
Actually, I consider myself a novice investor as well. Initially, I didn't see the need to diversify risks. Like many young people, I was full of confidence and would go all-in on whatever project caught my attention. This was a grave mistake. Often, people have to experience losses before they learn their lesson. That's why I recommend starting to invest at a young age when potential losses are relatively smaller. Gaining valuable experience with a smaller amount of money is far better than sailing smoothly through life. There are some people only to realize the importance of risk diversification at the age of retirement, when they encountered Black Swan and all retirement funds are wiped out.
Using the example of the FTX bankruptcy incident, I had a basic understanding of risk diversification. At that time, I had spread my assets across three different exchanges, which ultimately resulted in a loss of only one-third of my investments. Currently, I have my funds distributed across approximately five different platforms, including a cold wallet. (XD)
Cold wallet (Hardware wallet)
🔗Currently, the safest way to store cryptocurrencies is through a cold wallet. As for the detailed principles behind it, I recommend conducting your own search.
Simply put, owning a cold wallet for your cryptocurrencies is the only true ownership. Storing your assets on an exchange means they are actually held in the exchange's own cold wallets. If the exchange were to go bankrupt or run away, you would not be able to retrieve your funds.
Using the real-world example of banks, the money deposited in a bank is not entirely yours until you withdraw and keep it in your own pocket. The perceived sense of security comes from the fact that governments provide guarantees, assuring you that you can redeem your money at any time. However, it's important to carefully consider why the government is willing to provide that guarantee. If a situation arises where the government doesn't benefit from honoring the guarantee (e.g., during times of war or bankruptcy), do you think you would still be able to retrieve your money?
However, due to the high transaction fees involved in transferring funds from exchanges to cold wallets, I, as someone with limited assets, do not frequently transfer cryptocurrencies. Instead, I keep them stored in exchanges to earn some interest. (After all, you wouldn't constantly incur withdrawal fees from your bank, would you?)
On the other hand, for whales (wealthy individuals) whose assets far exceed the transaction fees, and whose profits from each trade greatly outweigh the interest and fees, they typically transfer funds from their cold wallets to exchanges only when they intend to make a trade, and then transfer them back to their cold wallets once the trade is completed.
Feel free to click on the cold wallet link to make a purchase if you're interested.
!!It is essential to purchase a cold wallet through the official website and have it delivered directly from the official source. There are cybersecurity risks associated with purchasing from third-party platforms.
By clicking on the following link, both of us will receive an equivalent of $10 worth of BTC upon purchase. Receive BTC👆
Personally, I believe purchasing the LEDGER NANO S PLUS, the basic version, is enough. It includes all the necessary features, except for Bluetooth functionality.
Exchange selection method
🔗CoinMarketCap is a globally recognized cryptocurrency market information platform that provides comprehensive and accurate data on cryptocurrency markets, prices, market capitalization, and trading volumes. Its website enables users to track market dynamics of various cryptocurrencies, view price trend charts, market rankings, and trading pairs. Additionally, CoinMarketCap offers detailed information pages, news articles, and educational resources about cryptocurrencies to help users understand market trends, technical specifications, and investment strategies.
So, when you hear about an exchange or a new cryptocurrency, you can often start by checking CoinMarketCap - Top Cryptocurrency Spot Exchanges for relevant information. The choice of exchange is evaluated based on factors such as spot trading volume, derivatives trading, lending, and other rankings provided on the website.
Let me explain my selection criteria. Basically, I consider factors such as scale, trading volume, and company's tenure. A longer tenure signifies experience gained over time, while a large trading volume indicates a company that is making profits. Although a large scale, high trading volume, and long tenure do not guarantee absolute safety since the money is still entrusted to others, the underlying concept is that profitable companies usually have better systems, higher salaries, and skilled engineers, which significantly reduces security risks. However, exceptions can be made for exchanges like FTX, where the CEO's actions have been questionable. In general, there is usually no compelling reason to choose a small, relatively unknown exchange.
Exchange User Experience and Recommendations
🔗Next, I recommend several exchanges that I am still using.
- Binance
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Binance, founded by Changpeng Zhao in 2017, is the world's largest cryptocurrency exchange platform. It provides a platform that combines digital asset trading, investing, and financial services, allowing users to easily buy, sell, and exchange various cryptocurrencies.
Binance currently holds the top position in terms of spot trading and derivatives trading volume. It also weathered the panic and run on assets following the bankruptcy of FTX, demonstrating that it is indeed a resilient company.
User Experience : Binance was the exchange I started using after entering the cryptocurrency space, and compared to others, its interface and operations are smooth. It offers a variety of financial products, and the process of staking and earning interest is quite straightforward. Recently, they even introduced features like a dollar-cost averaging bot and products related to index investing, which can be considered at the forefront of the industry. It seems that not using Binance in the crypto world might surprise some people.🤣
- Bybit
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Bybit is a globally renowned cryptocurrency derivatives trading platform, established in 2018. It focuses on providing derivative trading services for Bitcoin and other cryptocurrencies, including perpetual contracts (which are contracts without an expiration date) and futures contracts.
User Experience : It is evident that Bybit is an exchange that initially focused on futures contract trading. It holds the third position in derivatives rankings on CoinMarketCap. Experienced traders who engage in futures contracts generally find the trading interface and smoothness of Bybit satisfactory. Although its spot trading ranking may not be as high, the trading volume of derivatives remains at a certain level. Personally, I have invested in BitDAO, a project sponsored and promoted by this platform, and have staked Bit (soon to be renamed Mantle) on Bybit. Aside from contract trading, I believe that the spot financial services on Bybit are not as smooth as those on platforms like Binance and OKEx. Improvements in this aspect could potentially attract more retail investors rather than solely catering to contract traders.
- Pionex
Pionex offers a variety of features and tools to cater to the investment needs of different users. The platform provides an intuitive user interface and user-friendly functionalities, making it easy for both novice and experienced traders to engage in trading activities. Security is a top priority for Pionex, and it implements advanced security technologies and measures to safeguard user assets and personal information. Additionally, Pionex offers automated trading bots to assist users in executing trading strategies automatically, enhancing trading efficiency. Whether you are an investor or a trader, Pionex provides a comprehensive and reliable platform that allows you to participate in the global digital asset market and achieve your investment goals.
User Experience : Pionex is considered the pioneer of quantitative trading exchanges, offering a wide range of quantitative trading bots. It is suitable for individuals without a professional background in trading who wish to engage in quantitative trading. It also caters to those who aim to mitigate the risks associated with emotional trading, such as panic selling or chasing price highs.
Personally, I believe that quantitative trading is a profitable endeavor. After all, if we compare making money or losing money to gambling, the more times you gamble, the closer your win rate will be to 50%. If you can rely on certain indicators to make judgments, as long as your win rate exceeds 50% in the long run, you will make money. Currently, I have participated in a Haze 800-grid ETH/BTC spot trading strategy on Pionex, and I am curious to see how much profit it will generate when the market enters a bullish phase.😎
- OKX
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OKEx is a globally leading digital asset exchange platform established in 2017, operated as a subsidiary of OKCoin. The platform provides cryptocurrency and digital asset trading services worldwide and continuously strives for security, stability, and innovation. CEO Jay Hao plays a crucial role in driving the development of OKEx.
As a significant participant in the cryptocurrency field, OKEx offers trading services for a wide range of cryptocurrencies globally. It also provides advanced features such as contract trading and options trading, enabling users to implement various investment strategies. OKEx prioritizes security and implements multiple layers of identity verification and state-of-the-art security technologies to protect user assets and personal information. Whether you are a novice or an experienced trader, OKEx offers a reliable and convenient platform to participate in the global digital asset market.
User Experience : Considering its establishment time, OKEx has also proven to be a seasoned exchange that has withstood the test of time. However, it was only after using Binance, Bybit, and Pionex that I decided to give OKEx a try. From my experience, I find OKEx to have the smoothest user interface among the exchanges I've used. From an engineering and UI/UX perspective, it is truly impeccable. Therefore, recently, I have started allocating some of my assets to OKEx as well.
- Bitget
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Bitget offers a variety of cryptocurrency and digital asset trading services, including derivatives trading. As an innovative blockchain financial platform, Bitget provides a secure, efficient, and innovative trading environment, allowing users to easily participate in the global digital asset market. The platform supports trading for multiple cryptocurrencies and offers advanced tools such as contract trading, options trading, and leverage trading to cater to the diverse investment needs of users. Bitget prioritizes user experience by providing an intuitive and user-friendly interface. It continuously optimizes and enhances its user interface and functionalities to ensure users can conveniently and swiftly carry out their trading operations.
User Experience : Bitget is considered one of the emerging exchanges that focuses on copy-trading systems. This system allows users to effortlessly profit by replicating trades made by professional traders. While personally, I prefer not to entrust my trades to others, I have observed that the platform provides various preventive measures and implements a reward-penalty mechanism for the copy-trading system. I believe that by investing more effort in finding skilled traders, it is possible to make profits. However, it is important to note that copy-trading is not a foolproof way to make money, and having strong risk management abilities is crucial.
Sometimes, it's fun to invest a small amount of money in copy-trading or automated trading bots, and I believe it's something that people in the cryptocurrency community are inclined to try. Currently, I'm also impressed by Bitget's rapid growth in derivatives trading volume, placing it among the top five in a short period. I believe there is great potential, so I have invested some of my assets in Bitget's platform token, BGB, to earn additional rewards through staking on the platform.
Recommended Taiwan exchanges: TWD deposit channels
🔗The most cost-effective way to deposit funds in Taiwan currently is by registering with a local exchange, linking it to a bank account for TWD transfers, and then converting the TWD to USDT using the TWD/USDT trading pair on the exchange. Due to liquidity concerns, users typically transfer the USDT to large foreign exchanges for trading purposes. They do not engage in cryptocurrency trading on the local exchange.
Currently, there are several local exchanges in Taiwan such as MAX, ACE, BitoPoint, and Rybit that are being used and considered user-friendly. It is recommended for beginners to register on these platforms simultaneously so that they can compare the exchange rates offered when purchasing USDT. They can then choose the exchange that offers the best rate at the time of their purchase.( !! Please note that there may be transfer fees when sending USDT to foreign exchanges, and the discounts offered by each exchange may vary.)
- MAX
User Experience : There's not much else to say. Registering is a must for depositing Taiwanese dollars, and I mostly use MAX exchange for deposits. The experience has shown that MAX tends to have a slightly faster transfer speed when it comes to transferring funds.
Conclusion
🔗The emphasis on user experience while discussing various exchanges is because, despite how impressive or secure the exchanges may be, it is important to acknowledge that cryptocurrencies are primarily built on decentralized principles. Centralization poses risks, so storing assets on exchanges carries inherent risks. Currently, the safest method is to store one's assets in a cold wallet.
Feel free to click on the cold wallet link to make a purchase if you're interested.
!!It is essential to purchase a cold wallet through the official website and have it delivered directly from the official source. There are cybersecurity risks associated with purchasing from third-party platforms.
By clicking on the following link, both of us will receive an equivalent of $10 worth of BTC upon purchase. Receive BTC👆
Personally, I believe purchasing the LEDGER NANO S PLUS, the basic version, is enough. It includes all the necessary features, except for Bluetooth functionality.
However, in practice, it is not always possible to achieve perfection, and there is always a trade-off between convenience and security. Additionally, it is now common for investors to hold platform tokens (e.g., BNB, BGB, BIT) as they are integral to the survival of the platforms themselves. These platform tokens are typically stored on various platforms since they are intertwined with the platforms' activities. Keeping them on an exchange allows for participation in platform events and potential earnings. However, if an exchange goes bankrupt, even if the tokens are withdrawn, they may not be of much use. Moreover, individual retail investors may not be able to afford transfer fees for every transaction and instead tend to transfer to cold wallets once they have accumulated a certain amount. Hence, the choice of exchange becomes crucial.
Diversifying assets across several exchanges that you consider to be promising and transferring long-term holdings to a cold wallet is currently the most reliable approach in my opinion. If there comes a day when all exchanges indeed collapse, then I would have to accept that reality as well.😎
The previous generation relied on real estate, and it seems that this generation will have to rely on cryptocurrencies. I wish everyone success in achieving financial freedom at an early stage.
Alvin
Software engineer, interested in financial knowledge, health concepts, psychology, independent travel, and system design.
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