The drawbacks of instant crypto exchanges

While it’s clear that there are a number of advantages to instant crypto exchanges, there are some drawbacks worth noting. While onboarding onto an instant exchange is a quick and simple process, it does require the knowledge and use of a wallet. For a novice cryptocurrency user, the learning curve and responsibility of safeguarding your own crypto assets can prove to be a barrier to entry. Users should do their research to understand exactly how wallets work, as lost funds are most often not recoverable.

The use of wallets is the one place where instant exchanges actually require more sophistication. Most of the time, a more sophisticated approach accompanies the traditional trading exchanges. As with wallets and self-safeguarding, however, greater sophistication can have a payoff. For custodial exchanges, the sophistication of interfaces seen above comes with more advanced trading options. These can be more sophisticated instruments, like derivatives, order placement — like stop-limit orders — leverage and margin.

Finally, trading fees should be considered. Instant crypto exchanges tend to charge between 0.25–0.50%, where many traditional exchanges typically charge closer to 0.05–0.50%. Depending on your price sensitivity and frequency of trading, a traditional exchange solution may make more sense.