With Binance in Uganda- What are Cryptocurrency Exchanges and how do they Work?

What are crypto exchanges?

Binance launched in Uganda early October 2018 with it's CFO Wei Zhou noting that the first fiat-to-crypto exchange in Uganda will help maintain sustainable economic stability in Africa. He also noted that the company plans to bring more innovations to the region. I therefore take this opportunity to explore what crypto exchages are and what they offer.

According to Wikipedia, A cryptocurrency exchange or a digital currency exchange (DCE) is a business that allows customers to trade cryptocurrencies or digital currencies for other assets, such as conventional fiat money or other digital currencies.

There are hundreds of crypto coins in the market. Not all coins give you the same benefits and thus the reason you need to exchange the coin you have with the coin you want.

Today, most companies/stores across the world have not started accepting cryptocurrencies as a form of payment and therefore with crypto exchanges, you can be able to convert your coins into fiat money and feast.

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How do they work?

Have you heard of the stock exchange? If yes, then this will be straight forward for you and if not, there is no need to worry because I am here to break it down for you.

Here is the breakdown for you: - On a stock exchange, traders buy and sell assets shares or derivatives in order to profit from their changing rates, however on a crypto exchange, traders use cryptocurrency pairs (BTC/USD or LTC/BTC to profit from the highly volatile currency rates.

It is also important to note that an exchange is not the same as a wallet, which is a place for storing cryptocurrency once you’ve bought it. However there are some platforms that provide both services.

What to note:

Before choosing an exchange, it is important to look at what it offers. There are three main cryptocurrency exchanges to be aware of:

Centralized Cryptocurrency Exchanges
These are similar to the traditional stock exchange. They operate as the middle-man between two parties. This means that one party is trusting another with handling their money. Notably, most centralized crypto exchanges have crypto/crypto pairings. But not all of them provide fiat/crypto pairings.
Some examples of CEXs include: - Coinbase, Bitterex, Binance

Decentralized Cryptocurrency Exchanges (“DEX”)

With the introduction of Blockchain DEXs, are created for the sole purpose of removing the middle man to any transaction. These enable peer-peer trade where buyers and sellers come together and engage in transactions directly.
These are more secure but currently less popular, issues with these include locking yourself out of your own earned money, low volumes and low liquidity. IDEX is an example

Hybrids

These are believed to be the real future of cryptocurrency trading experience as they combine the benefits from both CEXs and DEXs.

Now we know.
Thank you @tayangas