đź’ˇ TL, DR:
- Crypto swapping refers to the act of exchanging one cryptocurrency for another currency.
- Crypto swapping and trading is not the same.
- Three major reasons to swap crypto include cheaper costs, portfolio diversification, and sustainable investment.
In recent years, crypto swapping has been a popular approach for crypto traders who want to diversify their portfolios and increase their profit. In this article, let’s discuss it in detail to see if it is the proper way for your investment.
What is crypto swapping?
An overview of cryptocurrency swapping
Before diving deep into the topic, we need to know what crypto swapping is. As its name suggests, crypto swapping is the procedure of exchanging crypto assets from one token to another equivalently valued token.
There are two types of crypto swapping: crypto-to-crypto trade exchange and project-to-project migration. What is the difference between them?
First, crypto-to-crypto trade refers to the act of exchanging from one cryptocurrency to another currency without converting to fiat currency. This is one of the most common trading acts within the crypto market.
The second type of crypto swap is blockchain project-to-project migration. Specifically, this act is common among blockchain developers who convert from one network to another network after collecting investors’ funds. Why should they do that? The answer is: to utilize the beneficial features of the new token.
Crypto swapping vs. trading: What is the difference?
A common misconception in the cryptoverse is that crypto swapping and trading are the same. In fact, they are different by nature.
In terms of mechanisms, they are similar. You can find out more about this similarity in the next section.
However, in terms of outcome, trading and swapping are different.
If someone wants to swap crypto, it means that they will exchange their token for another cryptocurrenc. You don’t need much trading knowledge to make a swap.
Meanwhile, crypto trading means that you are buying and selling crypto. It is the same as if you trade a fiat currency – you buy on the low and sell for higher prices to make a profit. You’ll need knowledge and experience in trading to yield big profits in this case.
How does crypto swapping work?
In this section, we will discuss the crypto-to-crypto swap between users, not the swap for developers, since that is the story of advanced mathematical formulas and programming languages. It is irrelevant to us typical traders anyway!
Now, let’s get in-depth into the process of swapping crypto:
- Traders access the crypto swap sites
- Select the option “Token swap”
- Enter the amount you want to exchange based on your desired token
- Wait for the platforms to find the matching deal and help you connect to swap the crypto
- The deal is successful – you get the token you want!
As you can see, there is no step like converting your crypto to “fiat” currency value and conducting a trading transaction. What you need is to enter the amount you want to swap and wait for the match. That being said, you only need to pay transaction fees once!
When should you swap crypto from one to another?
After learning about crypto swap’s mechanism, it is time to dive deeper into when you should swap crypto.
Cut down transaction fees
The most common reason to swap crypto – similar to when you swap from one investment project to another beneficial deal – is to switch to an asset that charges less on the transaction fee.
In other words, if you find another token with equal value but lower transaction fees, you should switch to it. Why keep a deal that costs a lot when there is a better one, right?
Trade to a stablecoin
What is stablecoin, anyway? Theoretically, stablecoins are cryptocurrencies whose values clinch to fiat currency like the US dollar. For example, USDT, which is equivalent in value to the US dollar, is a stablecoin.
Many crypto traders want to switch to a stablecoin to escape the cryptocurrency market’s volatility.
Diversify your crypto portfolio
Last but not least, many people want to swap crypto simply because they want to expand their portfolio. There is no specific reason; they want to do it to feel safer in their investment!
We can understand their belief: the crypto market is quite unpredictable, so they don’t want to “put all eggs in one basket.” The more tokens they invest in, the higher their chances of making profits.
FAQs
How much time does it take to swap crypto?
It is difficult to confirm the exact time it takes to swap crypto since it depends on each app. However, as we can see on application reviews for most apps like Kasta, the transaction lasts a few seconds!
How much does it cost to swap crypto?
Similar to the previous question, it depends on the app you are using to swap crypto. Some platforms help you convert crypto with a 1-dollar fee, but some do it for cents. You can check our “Top token swap sites with lowest fees” to know the top cheapest sites for this service.
Which platform should I use for swapping crypto?
Based on our experience, the top 10 platforms to use when swapping crypto are:
- Kraken
- Coinbase
- Gemini
- Bisq
- KuCoin
- BitYard
- Pionex
- Binance
- Uphold
- Coinmama
Our detailed review of each site is out. You should check it at this Top crypto swap sites .
Final thoughts
That is everything you should know about crypto swapping. In short, it is an effective way to top up your investment, cut down the fees, and optimize your profit. However, it won’t be easy if you want to trade a less-popular coin.
