Token swapping can be a great way to trade and earn crypto, but there are some key things you need to consider before getting started.
The crypto industry is constantly evolving and relies on innovation when it comes to storing, purchasing, and selling digital assets. In the past, exchanging one crypto asset for another wasn’t as straightforward as it is today and you had to endure long waiting times and high fees. To bypass these issues, ‘token swapping’ was formed: the process of instantly exchanging one cryptocurrency for another without having to first complete a crypto-to-fiat exchange.
Whether you’re new to crypto swapping or a seasoned pro, read on to discover our five top tips for coin swapping to help you get the most out of your trades and also keep your assets safe from scams.
Tip one: before swapping crypto, create a strategy
There are two main strategies that crypto investors use to build their assets: Margin swapping, and swapping then holdinghodling (yes, hodling)!
Margin swapping. Market volatility is a key player in margin swaps. Investors utilize value differences to make revenue from multiple, strategic swaps.
Swapping then holdinghodling. This strategy involves identifying lesser-known coins at low prices. You start by finding a token minted by a promising project. As the project becomes more popular, its token will also rise in value which earns you a profit once swapped and sold.
Most serious traders use a combination of both strategies to spread the risk and maximize their potential for profit, so spend time figuring out a strategy that works for you based on the funds you have to invest and how much time you have to dedicate to trading each day.
Tip two: choose an appropriate wallet
A crypto wallet functions largely the same as a physical wallet; instead of physical cash, it holds proof of your digital assets. Crypto wallets can be built on anything from a program to a website, and many crypto exchanges offer wallets as part of their service.
Users also have the option to choose a custodial or non-custodial wallet. At bitoftrade, we use Metamask, which is a non-custodial wallet.
A custodial wallet is centralized, with one company holding your public key, private key, and funds. As a user, you can control your cryptos through their wallet interface.
Non-custodial wallets are managed by you, and you only. There are positives to both wallet types, although non-custodial wallets give you more control over your finances. For example, Metamask includes a key vault, secure login, token wallet, and token exchange.
You can connect all your Metmask wallets to bitoftrade. This way, you can benefit from all our features while you remain in full control of your funds.
Tip three: pay close attention to exchange fees
Always pay close attention to the fees you’ll pay before you start swapping tokens to make sure you aren’t hit with high exchange costs and you’re getting some of the most competitive rates available.
Unlike other swapping platforms, we promote a transparent fees approach. Our customers know what fees to expect before every single swap. We believe in 100% transparency on fees and our users receive a summary of the fees to pay before they execute each transaction. Our platform fees vary between our trading features and are up to 0.2% per transaction and 0% for withdrawals. Remember that there may be gas fees to pay for transactions and withdrawals as well as our exchange fees.
Tip four: be aware of liquidity and slippage
Liquidity (the ease with which cryptocurrencies can be swapped to other cryptocurrencies) and slippage (the difference between the expected price of an order and the price when the order actually executes) can add extra hidden costs to your executed transactions. So it’s important to be aware of both and understand how they can affect your trades.
So how can liquidity and slippage impact my swaps? Some platforms place restrictions on slippage which prevents the execution of transactions if the slippage exceeds the platform’s threshold. Similarly, changing your transaction type could attract higher rates from tokens with limited liquidity. Make sure you’re aware of both of these important factors when you’re swapping crypto.
Tip five: be wary of scams
Cryptocurrency is very valuable, so it’s not surprising that scammers have turned their attention to it big time. Crypto crime has hit a record high, with one report finding that scammers took $14 billion worth of crypto in 2021 alone.
So how can I avoid the worrying influx of crypto scams?
Research the project thoroughly. A legitimate project will have a social media presence and development team information. An anonymous team isn’t always an indicator of a scam, but the vast majority of scammers do utilize anonymity. If the team is transparent, check their background and skill set. You should also check that the information is detailed and seems legitimate, for example, does the project and ecosystem have a real-world use?
Verify using trusted sources. To search for a token using a trusted source, use sites such as CoinMarketCap and CoinGecko. These handy crypto tracking websites let you search for a token and navigate to trading pairs. Click on your pair of choice and it’ll take you to a verified exchange page which will help you avoid fake tokens.
Analyze the contract address and the token. Etherscan can be used to check the vital analytics of swap pairs on the Ethereum blockchain which can help reassure you that the transaction has gone through. When you’re trading a new token, make sure to check out the total liquidity, transactions (24h), and volume (24h), as well as when the last transaction was and when the liquidity was added. If any of these factors are surprisingly low, this could be a sign of a scam.
Invest and exchange tokens with confidence using bitoftrade
bitoftrade offers its users advanced trading tools that not only allow you to trade anonymously but also directly from your Metamask wallet. We offer a great variety of common exchange features while still being a decentralized platform. This way you stay in full control of your funds and remain anonymous while you trade. Even better, our platform requires no registration or KYC to get started!
We also provide some of the most competitive exchange rates on the market. You can swap, trade on leverage, and limit trade on our easy-to-use platform. It’s quick, easy, and anonymous. All you have to do is connect your Metamask wallet and you’re ready to go.
Check out our crypto swap trading feature and start today!