What is the difference between a crypto exchange and an instant crypto exchange?

Many of those who want to get into trading virtual currencies often get stuck on the first step: finding the right place to trade. Why is it so difficult to choose? The answer is pretty simple – there are just too many exchanges, currently there are over 300 crypto exchanges in existence. Each one has its features, rules, its own set of listed tokens and cryptocurrencies, its own liquidity pool and requirements for trading. As a novice trader, you might find it hard to make a choice. This article is going to explain the main distinctive features of various exchanges and answer the question where is it more convenient to trade.

instant cryptocurrency exchange

What is a cryptocurrency exchange and how does a cryptocurrency exchange work

A crypto exchange is a platform where people can trade crypto assets for one another. Since cryptocurrency went mainstream, the rules for exchange services became more demanding, and now it’s not uncommon for a crypto exchange to ask for a set of documents to confirm your identity.

This policy has the name of the KYC/AML procedure, which means “know-your-customer” and “anti-money laundering”. Many big exchanges do it because they are operated by legal entities and they don’t want any problems with the law. If an exchange has a centralized operator, responsible for its functionality, development, security and liquidity, and runs on centralized software, that means it’s a centralized exchange. Majority of big cryptocurrency exchanges – Binance, Kraken, Poloniex and more are centralized and require creating an account will all the information on the client before you start trading. The funds, in this case, are stored in an exchange hot wallet as well.

Large centralized exchanges usually have good liquidity and many supported trading pairs. All trading pairs get added manually by the owners if the project can confirm that their project has some potential, or there’s an already existing demand for an asset. Some exchanges ask to pay a listing fee, so not every crypto project has an ability to be added by the large exchange platforms.

Cryptocurrency exchanges can be differentiated by:

  • registration procedure
  • security
  • the number of currencies listed
  • daily users
  • trading fees

How does an instant cryptocurrency exchange work

An instant crypto exchange is a swap service that acts as a middleman. When you use a non-custodial exchange with an intent to convert cryptocurrencies, you do not need to store the funds on the exchange itself or create the account. You simply check the exchange rate, and, if you find it suitable, you set the amount you want to exchange and complete the operation. When you swap your crypto, you take one coin from the liquidity pool of the exchange and replace it with another coin. It's the problem of the exchange itself to maintain the liquidity pool for all cryptocurrencies all the time. Instant exchanges have a lot of advantages, compared to the traditional ones. They are fast, you don't have to wait for your order to be filled, and also you don't have to keep your funds on the exchange. Instant exchanges are a good option if you want to simply get rid of one cryptocurrency and get another one.

As an alternative, you can use an exchange aggregator, such as Swapzone. It has all liquidity from other instant exchanges combined in one place and allows to compare rates and fees of different exchanges. This exchange service gives you an edge in cryptocurrency trading because you can choose the best rate and make the most profitable deals. The most convenient thing is that you get the information and offers almost instantly. No matter what you change, you always get around 4-5 offers, so you can choose what you like.

A custodial cryptocurrency exchange vs an instant crypto exchange

So, what is the best crypto exchange and where should you exchange crypto? We can't recommend you anything, because it's entirely up to you. Some people want to actively trade, place orders, make money on the market’s ups and downs. Some people want just to hold their portfolio, rebalancing it on very rare occasions from time to time. Both of these types of people need different exchanges. The best cryptocurrency exchange is the one that seems convenient for you. Swapzone tries to make the conversion process simple for everyone, has a lot of connected partners, and doesn’t require registration. Also, it always provides you with the best offers from many aggregated exchanges, and it does it almost instantly. As soon as you type the request, you get the information about available amounts of crypto for exchange operations as well as the exchange rates. The choice of tools is entirely up to you.