What are the different types of crypto trading platforms?
When entering the world of crypto trading there are basically two different types of trading platforms available to investors: brokers and exchanges. Both platforms offer you access to the crypto market but differ in their offering, service and structure. Brokers, including neobrokers, allow you to buy and sell cryptocurrencies at fixed prices and are ideal for beginners. Exchanges (crypto exchanges), on the other hand, offer more flexible trading opportunities and are aimed more at experienced traders who want to benefit from direct market prices.
What is a crypto broker or neobroker?
Crypto brokers generally offer a selected range of cryptocurrencies and digital assets. This is often based on the popularity and market capitalisation of the assets to provide users with a solid basis for investment. Neobrokers are a modern form of broker that often offer lower fees and an app-based, intuitive user experience, making them particularly attractive to beginners.
Brokers enable the purchase and sale of cryptocurrencies at fixed prices and often charge a fee or premium. Brokers are particularly attractive to beginners as they offer simple, user-friendly platforms, often complemented by market analysis and educational resources. In addition to trading in fiat money (e.g. euros, dollars), many brokers also enable exchanges between different cryptocurrencies.
What is a crypto exchange?
In contrast to brokers, crypto exchanges are trading platforms where buyers and sellers of cryptocurrencies can trade directly with each other. These exchanges set market prices based on supply and demand, allowing users to trade at these fluctuating prices.Â
Crypto exchanges often offer a wide range of cryptocurrencies, allowing users to be more flexible in their trading strategies. Exchanges can represent a higher barrier to entry for trading beginners due to the more complex user interfaces and trading mechanisms.
Trading platforms for cryptocurrencies: differences between crypto brokers and exchangesÂ
Crypto brokers vs. crypto exchanges – whatâs best for your trading strategy? Selecting a suitable trading platform can have a significant long-term impact on your trading experience. Our analysis will help you compare the advantages and disadvantages of both options, helping you decide on the crypto trading platform that best suits your personal trading goals and preferences.Â
Security
The security of your assets is the top priority in crypto trading. Both brokers and exchanges use various security measures to protect your cryptocurrencies. The security functions of trading platforms for cryptocurrencies can include, among other things:
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Two-factor authentication (2FA): Additional security layer through SMS or authentication apps
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Cold storage: Offline storage to help protect against hacks
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Encryption: Protection of your data and transactions
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Security audits: Regular external assessments
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Insurance cover: Protection against security incidents
Brokers usually take a managed approach to security, similar to banking practices. They offer features such as regular security audits, security certificates and the option to transfer cryptocurrencies to external wallets. These measures ensure high protection, but are determined mainly by the provider. With exchanges, on the other hand, the responsibility often lies more with the user. These platforms offer more control over individual security settings, which increases complexity.Â
Before using them, you should carefully compare the security features of various cryptocurrency trading platforms in order to protect your crypto assets in the best possible way.
Diversity of assets
Depending on the crypto trading platform, you can have access to different cryptocurrencies and markets, which allows you to build a diversified portfolio and react flexibly to market movements.
Crypto brokers usually offer a curated selection of coins and tokens, often based on their popularity and market capitalisation. This manageable selection can help beginners focus on the most important assets and simultaneously offer the opportunity to use fiat currencies such as the Euro. Exchanges, on the other hand, generally offer access to a wider range of cryptocurrencies, including smaller, more speculative coins and tokens. This greater choice allows experienced traders , in particular, to create specialised portfolios and benefit from a variety of trading options and complex strategies to react more quickly to market changes.
Your decision between a broker or neobroker with a comparatively limited selection of assets and an exchange with a broader range of assets depends heavily on your individual trading objectives, your level of knowledge and your risk appetite. For this reason, it makes sense to choose a provider that meets your needs in order to successfully implement your trading strategy.
Mobile trading
Due to its high volatility, or the possibility of rate fluctuations, the crypto market is very fast-moving andthe ability to trade anywhere and at any time is not just a convenience, but an absolute necessity for the modern trader. Consequently, many providers therefore also allow cryptocurrencies to be bought and sold via an app, on a smartphone, or tablet.
Broker apps are usually characterised by simple user interfaces and offer quick access to functions such as market analyses, real-time rates and portfolio management. In addition, many apps integrate educational resources and news feeds. Exchanges also offer mobile apps with more advanced features such as charting tools, different order types and access to more complex trading options such as margin trading or futures markets. These are ideal for experienced traders who want to react flexibly to market changes.
