Suppose you want to buy or sell a cryptocurrency. In that case, you do so through a broker’s platform, which will automatically find the counterparty available on the market for you to serve your order.
Crypto brokers are not only intermediaries between traders; they are also intermediaries between you and liquidity providers; this could be banks, for example, or investment funds that deal very large amounts in the financial markets. Thanks to liquidity providers who work with brokers, it is thus possible to see trades executed even if they represent large amounts and at the best rates.
For those who are new to this, there is a lot to learn, and it is not always easy. You have to discover how cryptocurrencies themselves work, understand the role of blockchain and understand the changes in this new economy in today’s world.
And if you want to buy cryptocurrency, you still have to take the time to understand how you can do it safely and at a good price. There are indeed many platforms that can be classified into two main categories: crypto brokers and crypto forex brokers.
Which option to choose to buy cryptocurrency? How to make this choice? What are the advantages and disadvantages of these two types of platforms?
Crypto Exchanges vs. Crypto Brokers
An exchanges or crypto Forex broker is an exchange that connects buyers and sellers of the cryptocurrency. Thus, it allows crypto-traders and investors to trade their crypto-assets directly with each other if they agree on the price. Trading activity strongly influences the price of cryptocurrencies and the liquidity available on the platform.
A crypto broker does not put buyers and sellers of cryptocurrency in direct contact. Instead, it acts as an intermediary between its clients and the cryptocurrency market to facilitate the purchase of tokens. It is the broker who determines the price of crypto-assets. When his traders want to buy or sell cryptocurrency through his platform, a crypto-broker will place orders with exchanges to obtain or sell the tokens. Some platforms offer both services.
How to choose between a crypto exchange and a crypto broker?
The answer to this question mainly depends on your knowledge of the cryptocurrency world, your trading experience and your goals.
Do you already have a wallet? Do you know cryptocurrencies? Are you looking for a way to buy cryptocurrency once to hold tokens in the medium / long term? Or do you want to implement an active trading strategy instead?
Using a crypto Forex broker, for example, is more suited to seasoned and institutional investors who are familiar with the world of crypto-trading. These traders are active and want to take advantage of a comprehensive and advanced platform. We think of modern and responsive trading APIs, trading bots or advanced trading charts and tools, for example.
A cryptocurrency broker is more suitable for novice traders or those who only want to make a single purchase of crypto. A broker will also offer a wide range of related services to facilitate transactions. For example, it will be possible to obtain a wallet to keep your tokens. You can also use many fiat currencies to buy your cryptocurrencies and many deposit methods (sometimes free).
Choosing the right platform to buy cryptocurrency is not always easy. There are many things to consider before making your choice.
Among the most important is your knowledge of cryptocurrencies, your trading experience, your strategy, your goals, the amount of your investment or even the fiat currency and the deposit method you want to use.
There are also some factors to consider when you compare the platforms between them: trading fees, related features, available trading pairs, as well as security.
In general, a broker will be easier to use than an exchange and will often offer turnkey services for novice crypto traders.