Steemit Crypto Academy Season 5 Beginners' course - Task 7: Dex, Cex, Popular Exchanges and Trading Cryptos | for professor @imagen | by @dhanux94

in hive-108451 •  3 years ago 

Hi Steemians,,,

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I'm dhanux94. I would like to thank professor @imagen for providing the details. Your lecture was very important to me for this homework. I learned a lot about the DEX, CEX, Popular exchanges and trading cryptos.

I will answer the first of three questions your mentioned.

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Question


01.) 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.

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Answer


I. Explain in your own words what an exchange is?

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Exchange is a well-organized, currencies trading, marketplace where we can buy digital money by paying the so-called fiat currency. The exchange provides a platform for traders to buy or sell assets such as crypto and fiat currency. Demand and supply, which are the main forces controlling the market, help buyers and sellers to obtain a fixed price in the event of an exchange.

Exchange can also be categorized. The type of trade that takes place depends on the financial instruments being traded. Can be traded using the exchange as a source. The exchange has the ability to make any trade, including spot trading, futures trading and marginal trading. We can sell our assets directly to someone else and make money through p2p trading. But many traders use brokers to make currency transactions and do not exchange directly. There are over 400 methods of exchange worldwide. But they classify the exchange as centralized and decentralized.

Exchange Types
• Centralized Exchangr (CEX)
• Decentralize Exchange (DEX)

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II. Differences between a wallet and an exchange?
What is wallet?

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We call a wallet the software that allows us to save our crypto currencies. In short, this is software, hardware, or paper ware. We can only transact with the private keys in our wallet. We can divide the wallet into three crypto categories, allowing users to interact with a blockchain network.

[ ] Software Wallet
[ ] Hardware Wallet
[ ] Paper ware Wallet

There are 2 more wallets based on the interface. That is,
[ ] Cold Wallet
[ ] Hot Wallet

The most easily accessible wallet is the software wallet. Users prefer the wallet because it can be accessed using a computer and a mobile phone.

Ex:-
•• Trezor wallet
•• Xapo wallet
•• Luno wallet
•• Trust wallet

© The offline wallet used to secure crypto assets is called a hardware wallet. It is the safest way to access wallets and no one is allowed to enter.

© Any wallet that has internet access is what we call a hot wallet. It is easily accessible to users when they are connected to the Internet.

© Cold wallets are offline wallets that have nothing to do with the internet. These cold wallets do not allow cyber attacks. This is because private and public keys are kept offline. This is a great wallet for long term investments.

Access to Crypto Money is by private and public keys. These public keys are part of the digital code assigned to a decentralized blockchain and prove to be compatible with private keys. Every transaction we make is recorded in the blockchain. The private keys we receive should be stored in a safe place. Because if it is stolen our crypto money can be stolen. These keys also provide access to or retain access to the wallet. This is why these keys are so important.

The most important differences between a crypto wallet and an exchange

  1. When we use a crypto wallet we have full control over our private key. And we have the only systematic key to access cryptocurrencies. So having full control makes storage naturally safer.

  2. These three main elements of selling, buying and trading are not found in a wallet but are found in an exchange. Exchanges can also see our private key when we give our permission.
    It is not safe. It allows someone to get your key and transfer all your crypto coins to him.

  3. Crypto wallet is used for the purpose of long term storage, high level of security and ease of use. Exchange is better than wallet to protect assets from hackers.

  4. Encryption is the specific "location" address of the blockchain that sends or receives money. These addresses consist of alphanumeric identities generated based on private and public keys.

  5. The wallet is easy to use if you use the exchange service frequently. But the security is compromised because the key is stored during the exchange.

  6. Wallet Exchange does not store user funds. The cryptocurrency of the store users acts as the fund trustee. It can be software, hardware or paper ware and consists of public and private keys generated in the form of software or blockchain.

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III. Mention the advantages and disadvantages of DEX and CEX?

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Centralized Exchange (CEX)

CEX is a centralized exchange. There is a third party between the buyer and the seller in controlling the entry and exit of the exchange platform.

These centralized exchanges include:
~• Binance
~• Coinbase
~• Kraken
~• GDAX

AdvantagesDisadvantages
The central authority is responsible for managing the user's keys, providing consumer protection and keeping crypto currency secure.Failure to meet the regulatory requirements may result in loss of assets or wallet to the user.
Prices are determined by the supply and demand of the market and are exchanged at reasonable prices.In the exchange platform, some users have to lose a lot of money in their assets by trusting someone they do not know.
This is the best way to trade and have the facility to deposit using debit or credit cards. It is more popular compared to DEX.As the network becomes more centralized, markets become more restless and vulnerable to cyber-attacks. So traders get lost.
Traders have options for trading in global crypto currencies as liquidity is high.
Cryptocurrency is easy to buy and sell and can be converted from one asset to another.
Identifying the perpetrators of fraudulent activities and those who create fake accounts can prevent such acts from occurring. Gives the user their identity and accurate information.
You can also easily deposit fiat money with a debit and credit card.

Decentralize Exchange (DEX)

DEX is a decentralized exchange system. This is a crypto currency exchange. This is a trade that relies on a smart contract. This is known as p2p trading. Unlike CEX here, it reduces costs. A tank account is not required for direct transactions from the wallet.

These decentralized exchanges include:
~• Uniswap
~• Wavedex
~• Justswap
~• Etherdelta

AdvantagesDisadvantages
Due to the decentralized nature, hacking of the system is very expensive and the risk of hackers is low as users' funds are not stored.Unlike CEX, there is no recovery option for private and public keys, so when you lose your keys or passwords, you lose your assets forever, irretrievably.
The network is completely decentralized and cannot be controlled by a single person.Due to its low liquidity, DEX's trading volume is lower than that of the CEX.
Trading is done directly from the user's wallet at low cost due to the smart contract functionality.Only cryptocurrencies can be traded on DEX as fiat cash deposits and withdrawals are not available.
Trading has a self-regulation that allows traders to manage or keep their keys.
Provides new and experimental financial services. To do this, they use various elements such as liquidity pool, order books and collection tools.

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IV. Have you used any exchange before? Tell us about your experience.

There are many exchange platforms as cryptocurrency is currently the focus of many people around the world. Although my experience with the crypto currency exchange platform was not smooth, I learned from my own experience. I have used Exchange and my favorite Exchange is Binance. While studying and studying on my own, I even had losses at first. Binance is a very good exchange and is among the top 10 in the world. I have downloaded the binance app and created my account there and have now converted to steem, SBD, Tron (TRX) ​​currency. The specialty here is providing a fast service. It's easy to work with and has special security for users. So in my experience and knowledge Binance is an exchange that provides a very good service for cryptocurrency.

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Thanks to @imagen for this great lecture and I learned so much new.

Thank you so much for reading my post😊

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