If you’re interested in investing in new and exciting cryptocurrency projects, you will almost certainly need to rely on a process called “swapping.” This involves converting one coin or token for another in the same way you might convert your home country’s currency for that of another country’s before going on vacation.
Swapping is a hugely important part of the cryptocurrency world, especially when you consider that there are more than 18,000 different cryptocurrencies in existence today, and the majority of these cannot be purchased directly from an exchange. So, before you have to rely on swapping yourself, let’s find out exactly what it is and how it works.
The process of swapping in the cryptocurrency world is actually incredibly simple to understand. All it means is exchanging one cryptocurrency coin or token for another. There are a number of incredibly popular swapping services dedicated to this process, and they make it possible to obtain cryptocurrencies that aren’t available on other exchanges.
As we mentioned above, there are more than 18,000 different kinds of cryptocurrency in existence as of early 2022. New web3 projects are surfacing all the time, and each one comes with its own native cryptocurrency. The best way to support those projects, or to make use of the services they provide, is to buy a share of its currency.
The problem is that only a small percentage of those 18,000 cryptocurrencies are available to purchase directly through an exchange. The rest must be swapped for other, more popular coins and tokens that can be more easily purchased with conventional fiat currencies.
If you want to buy AAG tokens, for instance, you first need to purchase another cryptocurrency like Ethereum (ETH), then swap that for AAG using a service like Coinbase. Alternatively, you can use Gate.io or MexC. A similar process is required for the majority of cryptocurrencies in use — particularly those that are new to the market.
The best way to convert one cryptocurrency into another is to use a dedicated swapping service, such as:
These services, which are available as decentralized applications (DApps) that can be easily connected to your cryptocurrency wallet, let you swap digital currencies like Bitcoin, Ethereum, and Binance’s BNB coin into thousands of other cryptocurrency options.
The process is straightforward — just as straightforward as swapping one conventional currency for another, as we mentioned earlier. Firstly, you take a currency you already own, or one that’s more accessible to you, then use a service like those listed above to convert that currency into the one you want. The process is usually pretty quick, and although there are some fees involved, they are typically very inexpensive.
Swapping and trading in the cryptocurrency world are two very similar processes, but they have some key differences. The process you’ll need to use mostly depends on what your end goal is, or what kind of cryptocurrency you want to end up with in your wallet. Let’s look at both processes in detail to understand the differences:
Trading is the process of purchasing cryptocurrency with conventional fiat cash, or selling it for conventional fiat cash. Some exchanges also offer trading pairs that allow you to convert one cryptocurrency into another, much like you would when swapping. However, you cannot trade one cryptocurrency for another if it is not offered as a trading pair.
Swapping gives you much greater flexibility over what you do with your cryptocurrency tokens. You can trade almost any cryptocurrency for another cryptocurrency, regardless of whether it’s a trading pair or not, and because only one transaction is required, it is usually less expensive — assuming you already have some cryptocurrency to swap.
Cryptocurrency swapping has become so popular that even some centralized exchanges (CEX) now offer this functionality. But again, there are some key differences. While centralized exchanges can allow you to purchase cryptocurrencies with your debit card in some markets, and provide you with support, they offer fewer cryptocurrency options.
Decentralized exchanges (DEX), on the other hand, don’t have the same level of support, but they offer a significantly greater variety of cryptocurrencies to choose from. A large reason for this is because it is much more affordable for new cryptocurrency projects to be listed on a DEX than on a CEX, which is an incredibly time-consuming and costly process.
The first step in the process is to open up a cryptocurrency wallet, if you haven’t already done so. You can then purchase an easily accessible cryptocurrency like those mentioned above from a centralized exchange like Binance or Coinbase using your debit card (in some countries), and then transfer it to your cryptocurrency wallet.
Once the cryptocurrency is in your wallet, you can then connect your wallet to a trading exchange to convert the cryptocurrency you already own into something else.
PancakeSwap, Uniswap, and SushiSwap are three of the biggest, most popular decentralized trading exchanges. They perform mostly the same function — allowing you to convert cryptocurrencies — and both PancakeSwap and SushiSwap are actually forks of Uniswap. However, the underlying technology is a little different, so they’re used for different things.
Uniswap is one of the earliest decentralized exchanges, and its aim of giving users a way to swap cryptocurrencies has always been its primary focus. One of the key things to remember about Uniswap is that it is built on the Ethereum blockchain, so it revolves around the ETH token. If you want to use Uniswap, the first step to take is acquiring ETH.
PancakeSwap essentially does what Uniswap does, except it runs on the Binance Smart Chain, and therefore uses BNB instead of ETH initially. However, PancakeSwap isn’t just a trading exchange; it has also added games and an NFT marketplace over the years as it has risen to become one of the biggest decentralized exchanges in terms of trading volume.
SushiSwap is another Uniswap fork that, much like Uniswap, is built on the Ethereum blockchain. Because of this, Uniswap and SushiSwap are very close in terms of what they can and cannot do when it comes to swapping. However, SushiSwap differentiates itself in other areas, like heavily supporting new cryptocurrency projects.
There are a few things to consider before deciding which DEX is the best one for you. Firstly, is it easier for you to acquire ETH or BNB, depending on where you live and what services are available to you? The other thing to consider is what cryptocurrency you want to invest in. If it’s based on the Ethereum blockchain, you’ll need to use either Uniswap or SushiSwap, but if it’s only available on the Binance Smart Chain, you’ll need to use PancakeSwap.
Yes, there is a cost associated with moving cryptocurrencies in any way, and this is referred to as a “gas” fee. The fee depends on which exchange you use, which tokens you’re swapping, and the volume of the swap. But it is usually inexpensive.
Most cryptocurrencies cannot be acquired directly. In other words, you cannot purchase them from an exchange using conventional fiat cash. So, if you want to invest in certain cryptocurrency projects — particularly those that are new — you’ll first need to acquire a more accessible coin or token and then swap it for the cryptocurrency you really want.
PancakeSwap, Uniswap, and SushiSwap are the biggest and most popular swapping platforms in use today. They offer access to the widest range of cryptocurrency tokens.
This article is intended to provide generalized information designed to educate a broad segment of the public; it does not give personalized investment, legal, or other business and professional advice. Before taking any action, you should always consult with your own financial, legal, tax, investment, or other professional for advice on matters that affect you and/or your business.
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