I apologize to prof @dilchamo for what happened and promise to be of good behavior.
Tasks Question
(1) Explain in your own words what an exchange is. Differences between a wallet and an exchange. Mention the advantages and disadvantages of DEX and CEX. Have you used any exchange before? Tell us about your experience.
Explain in your own words what an exchange is.
To my own understanding, in cryptocurrency, exchange has to do with when individual want to trade his or her crypto asset by this the individual may decide to exchange crypto to fiat currency or fiat currency to crypto.
Source
Here the trader is able to buy and also sell the asset he has and the one he or she is interested in. And here it is the demand and supply force that control the market. Trader also through exchange makes profit depending on how the market is .
We have 2 types of exchange which are the centralized exchange and the decentralized exchange and the both play important role in exchange
Centralized Exchanges (CEX)
As the name implies, there is a centralised authority that controls the in and out of the exchange platform and they are the once that manages and control the users fund
Some centralized exchanges include:Binance, Huobi global Poloniex etcDecentralized exchanges (DEX)
Decentralized exchanges are cryptocurrency exchanges that it is the user that manages and is control of his asset, no central body needed
Decentralized exchange rely on smart contracts because it helps in enhancing trading here, there is also a P2p system here where trade are use to be executed.
Some decentralised exchanges include;
Justswap, uniswap, pancakeswap,etc.
Difference between Wallets and Exchanges
| Wallets | Exchanges |
|---|---|
| 1.wallets only receive and store assets | exchange helps in converting crypto asset into other digital asset |
| 2. Trading of assets is not supported here | trading of assets is supported |
| 3. Here the Public and private keys are been generated by the network | Here, it is the users chooses passwords the want by themselves |
| 4. Wallets, is been used in holding crypto assets | it is used best for trading e.g peer-to-peer, spot trading |
| 5.it is not decentralized which means there is a central body involved | exchanges are both centralized and decentralized which means that some part of it there is a central body involve and in another there is no central body needed. |
##Outline the advantages and disadvantages of DEX and CEX.
Advantages of CEX
This type of exchange is best used for traders to trade
It makes it easy for traders to buy and sell their assets
Here traders can covert assets to fiat currency
Since there is third party involvement there is someone to alway attend to the trader if the find difficulty
Here individuals can easily recover their private key if misplaced.
Disadvantages of CEX
The security network here is not strong which makes it prone to attack
Low trust level due to the low security network
charges here are always high
If the user does not obey they rules attached he or she will lose the wallet
users doesn't have full control of assets.
Advantages of DEX
Individual are always charge low here
Here, due to the fact that there is high security individual will not be scare of their funds safety.
It is the individual that manages and control the account
No Central body knows about the transaction done here.
The Security network is strong here which mean individual funds are safe.
Disadvantages of DEX
Here if the individual lose the private key the funds are also gone.
The knowledge of blockchain is mostly in used which not everyone has it.
unlike centralized exchange no one to call for help if difficulty is faced.
Have you used an exchange before? Tell us about your experience.
Yes, I have made use of Olamax Exchange
Source
It is an exchange site which was the first I know of and it has really been of great help here individual can buy and sell asset, individual can also exchange asset for recharge card or data
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They also have a customer care in which an individual that has issues can call to get information or solve the problem he or she has.
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Since using it the have really been of great help to me in exchanging my digital asset to fiat currency.
Conclusion
Having completely answer this question, I have really come to the understanding of what exchange and wallet is and am really happy to know about that and also practice and write about olamax which I normally use in exchanging my steem to fiat.
Please @dilchamo kindly reconsider and grade me
Cc : prof @dilchamo
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