Lesson 1
4 min

The difference between a cryptocurrency broker and an exchange

Although the terms “broker” and “exchange” are sometimes used interchangeably, there are many differences between them, including how they operate and the advantages and disadvantages to the trader.

  • A cryptocurrency broker is a firm or an individual that acts as an intermediary between the users and the cryptocurrency markets.

  • Cryptocurrency brokers set their own prices and fees.

  • A cryptocurrency exchange provides an online platform for buyers and sellers who trade cryptocurrencies with each other based on current market prices.

  • Sound knowledge of trading processes and cautious handling of cryptocurrencies are essential when trading on an exchange.

For beginners and experts alike, cryptocurrency trading can be a complicated practice. Everyone seems to have different opinions on how to trade and it can be confusing to find the “right” way to trade crypto in all the online chatter.

In its most basic sense, cryptocurrency trading means that investors speculate on the price movement of cryptocurrencies. If you want to start cryptocurrency trading, you have several options, two of the most common ones being using a cryptocurrency broker or a cryptocurrency exchange. But what is the difference between the two? And what are the advantages and disadvantages to you as a trader?

What is a cryptocurrency broker?

A crypto broker is a firm or an individual person who acts as a financial intermediary for persons who want to exchange their fiat money for cryptocurrencies. A cryptocurrency broker, like Bitpanda, provides online financial services for users who want to buy or sell cryptocurrencies (and other assets). For providing this service, a broker charges users premiums for using the platform. 

Advantages and disadvantages of crypto brokers

Buying and selling cryptocurrencies on a broker holds a number of advantages for users. 

Suitable for beginners

Cryptocurrency brokers offer the most suitable environment for users just getting started with cryptocurrency markets and beginners who are looking to buy Bitcoin, Litecoin, Ethereum or other cryptocurrencies. Exchanging fiat currencies for cryptocurrencies and vice versa all take place between the buyer/seller and the broker platform. Brokers like Bitpanda are easy to use and navigate, taking the confusion out of the buying and selling process. 

More affordable

Crypto brokers usually allow users to buy and sell cryptocurrencies at prices set by the broker. A cryptocurrency broker is also suitable if you want to buy a small number of cryptocurrencies, making it the more affordable option.

A vast range of services

In the scope of facilitating trades, cryptocurrency brokers may also provide the service of holding cryptocurrencies for their customers. Bitpanda, for instance, supports users who prefer not to hold their cryptocurrencies using a third-party wallet. 

What to keep in mind

When choosing a crypto broker, you should verify their credentials and make sure they are competent and secure. Your broker should have state-of-the-art security systems in place and operate in compliance with national current regulatory measures for financial services providers. You should also make sure you can access your crypto broker platform 24/7 via desktop and mobile apps.

Differences between cryptocurrency broker and exchange 

What is a cryptocurrency exchange?

Unlike a crypto broker, a cryptocurrency exchange allows users to trade cryptocurrencies directly with other buyers and sellers. Exchanges allow traders to sell and buy amongst each other based on current market prices. The exchange provides the platform for this direct trading.

Advantages and disadvantages of crypto exchanges

Crypto exchanges are advanced tools used mostly by experienced crypto traders or those who have done their research and understand the fundamentals of crypto trading. It cannot be stressed often enough that reading up on crypto trading and learning how to trade in theory is essential before you begin trading in practice. Inexperienced traders tend to incur losses because they do not understand how a crypto exchange works. Once you have the trading basics down, you can start researching the exchange that is right for you.

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Choosing a crypto exchange

When choosing a crypto exchange, it’s a good idea to first start with the most practical aspects. Does the exchange operate in your location? Does it serve your local fiat market? And, does it accept your preferred payment method?

Consider the user interface and the usability of the exchange. Trading on exchanges happens all day, every day, and if you don’t want to miss out, you should ensure that you always have access to your exchange. Look for an exchange that offers an interface that is fully responsive and automatically scales to any device. 

In order to work towards maximising trading success, savvy traders utilise API trading technology and trading bots that facilitate automated trading. Look for an exchange that offers API integration for users to connect their trading bots.

Regulation and compliance

Regardless if you’re trading via a crypto broker or an exchange, make sure that you are protecting yourself against scams and money laundering, both of which are frequent occurrences in the cryptosphere. Bear in mind that crypto brokers and exchanges that ensure high transparency and compliance also typically provide users with reliable access,  using state-of-the-art safety measures. At the end of the day, you want to be certain that all your assets are safe before, during and after trading, whether you choose a crypto broker or exchange.  


This article does not constitute investment advice, nor is it an offer or invitation to purchase any crypto assets.

This article is for general purposes of information only and no representation or warranty, either expressed or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of this article or opinions contained herein. 

Some statements contained in this article may be of future expectations that are based on our current views and assumptions and involve uncertainties that could cause actual results, performance or events which differ from those statements. 

None of the Bitpanda GmbH nor any of its affiliates, advisors or representatives shall have any liability whatsoever arising in connection with this article. 

Please note that an investment in crypto assets carries risks in addition to the opportunities described above.