Best Cryptocurrency Exchanges & Apps for October 2023

Let's first look at the security of your cryptocurrency investments.

Security

Security is a major issue for cryptocurrency investors because crypto assets don't have the same protections equities in a brokerage account or cash in a bank. If your crypto platform fails, you could lose the assets deposited there. It's important to use a reputable exchange or broker and to look at the crypto exchange's security features.

Watch out for these factors:

• Percentage of assets kept offline in "cold storage." Most of the top cryptocurrency exchanges keep the bulk of their digital assets in cold storage. This means they are stored offline, making them harder to hack or steal. In the earlier days of cryptocurrencies, there was a greater risk of exchanges being hacked, but these issues have largely been dealt with.
• Whether it has private insurance. Third party insurance could cover your funds in the event of platform failure or a security breach.
• Third party audits. Some crypto exchanges publish proof of reserves to demonstrate that they have enough funds to cover client deposits. Look for platforms that use reputable external auditors.
• Whether the platform has ever been hacked. If the exchange has been hacked, look at how it handled the issue and whether it made customers whole.

Bear in mind that you'll need to take steps to secure your account too -- even the best app for cryptocurrency won't be protected if you don't enable two-factor authentication and set up strong passwords.

You may also opt to keep your cryptocurrencies in a separate digital wallet of your own. You could even use a hardware wallet to create your own offline storage. This gives you more control over your crypto, but also pushes more responsibility onto you. For example, if you lose your security credentials, you could lose access to your crypto completely.

Now let's consider safety from an investment perspective.

Investment volatility

It's important to point out that cryptocurrencies -- even Bitcoin, the largest and most-established one -- are a young asset class and are rather volatile. This is especially true for the smaller cryptocurrencies in the market. So, you need to be ready to withstand major price swings over time.

Many experts recommend allocating no more than 5% of your portfolio to riskier assets like cryptocurrency, but it depends on your risk tolerance. If you want to build long term wealth, try to create a balanced portfolio that also includes other assets such as stocks, bonds, cash, real estate, and commodities like gold. And, just as with other investments, don't invest money you can't afford to lose.

Many cryptocurrency investors only want to buy Bitcoin and one or two other major currencies. However, if you plan to invest in some of the smaller coins, you'll need an exchange that has some variety.

When it comes to platform staking fees & interest, make sure you understand and are comfortable with how the interest is generated. The exchange may loan out your money, or it may pay you staking fees if you commit to leaving your coins alone for a set period.

Be aware that these interest-paying options can carry risks, and may put your assets at risk. The SEC argues that platforms involved in lending or staking crypto assets may be subject to the federal securities laws. As a result, several U.S. crypto platforms have already withdrawn these products.

If you're looking for the best cryptocurrency application, fees play an important role. Paying unnecessary fees is throwing money away, whether you're choosing a bank, a brokerage, or the best cryptocurrency exchange.

Here are some crypto platform & broker trading fees to watch out for:

• Trading fees. Fees vary depending on the exchange and type of trade. You can expect to pay between 0.1% and 0.5% per trade. Fees usually get lower if you trade high volumes or use the advanced platforms. Fee-free trading does exist, but in these cases you'll often pay a higher spread.
• Deposit fees. A lot of the best crypto trading apps let you transfer money from your bank account for free. But it is worth checking for crypto transaction fees, as some will charge 1.5% or more, especially if you use a debit card. If you want to pay by credit card, be aware that you're likely to get charged at least 3.5% and your bank may also treat it as a cash advance.
• Withdrawal fees. You can't currently withdraw your digital assets from many traditional brokerages that are trading cryptocurrencies. The exchanges usually charge a set fee depending on the currency you want to withdraw. You can check the exact fees on their websites.

Find out how much it costs to deposit, withdraw, and trade before you open an account. It's also worth checking the withdrawal and deposit options to make sure they work for you. For example, you may not be able to withdraw fiat money from some crypto exchanges. Equally, some crypto brokerages don't allow you to move your crypto off the platform.

Nobody wants to wade through pages of FAQ to get help because money hasn't arrived in their account. Be aware that only a couple of top cryptocurrency exchanges offer 24/7 telephone support. Others offer assistance via live chat or email.

Cryptocurrencies have become far more accessible for the average American after their recent rise in popularity. Some of the best crypto exchanges have made the process more user-friendly than ever, especially those with high-quality, intuitive, cryptocurrency trading apps.

So, whether you go with a crypto broker or a crypto exchange, make sure it has the functionality you need. For example, if you want to buy cryptocurrency on your mobile, look for the best cryptocurrency app.

• Ease of crypto app use. Cryptocurrency apps have developed rapidly as more people want to invest. However, at times that fast development has come at the cost of user-friendliness.
• Crypto knowledge. Cryptocurrencies are a relatively new kind of investment, so the more you can learn, the better. Some apps include cryptocurrency learning centers as well as information on specific coins.

There are two main types of crypto wallets:

• Cold wallet. This is usually a piece of hardware that is kept offline, making it extremely difficult to hack. Cold wallets cost between $50 and $150, and are often considered the safest way to store digital currencies.
• Hot wallet. Hot wallets are connected to the internet, so they are not as secure. However, like normal wallets, they are a convenient place to keep small amounts of crypto you might want to use.

The cryptocurrency you own is protected by public and private keys -- a bit like your PIN and bank account number. You use a wallet to store your encrypted keys and keep them safe.

In the early days, several cryptocurrency exchanges fell victim to hacks. And at that point, if your crypto was stolen, there was no way to get it back. So long-term crypto enthusiasts use exchanges only for trading, and store their coins in their own wallets.

These days, investors are more likely to use crypto wallets to protect themselves against platform failure. The collapse of FTX highlighted the lack of investor protection in crypto -- in many cases, crypto assets are not covered by SIPC insurance or FDIC insurance.

That said, several companies do insure the crypto assets they hold. The best app for cryptocurrency will also have excellent security and store your assets offline in cold storage.

Moreover, some platforms don't give you the option to move your digital currencies. For example, the crypto platforms offered by Fidelity or SoFi Active Investing are designed for investment purposes. So if you bought Bitcoin with them, you wouldn't be able to move it out of your account.

Think about what you plan to do with your cryptocurrencies before you buy them. If you are investing long term and want to buy and hold, you may be happy to entrust your crypto keys to the exchange or brokerage. But if you plan to trade regularly or want to spend your coins, a wallet may make sense. In which case, you'll need to look for the best app to buy crypto that will connect easily to your wallet.

Learn more: How to safely store cryptocurrency