INTRODUCTION
Hello my wonderful Steemians, today I welcome you to my homework post that was given by professor @imagen, on the topic DEX,CEX, Popular Exchange and Trading Crypto. Let's get started...
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 an Exchange before? tell us about your experience.
Explain in your own words what an Exchange is.
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The world exchange to and individual who has no background knowledge of cryptocurrency will regards exchange as a marketplace where goods, services and other financial assets are traded. But as and individual who has understanding on cryptocurrency like I and you who are Steemians can see exchange as a Platforms that facilitate the trading of different cryptocurrencies for other currencies, such as fiat currencies and digital assets. In a nutshell, Exchange is simply a digital marketplace where traders and investors can easily buy and sell cryptocurrencies using various altcoins or fiat currencies. This means that exchange stand as an intermediate between sellers and buyers of the assets that is traded.
Exchange works by matching buyers with sellers. Traders can decide to buy and sell cryptocurrencies buy entering market order or limit order. When a trader choose a market order, the trader is telling the exchange to trade the assets a the current market price in the market. But when the trader choose the limit order, it means the trader is telling the exchange to trade the assets for a price that is either below or above the current market price based on whether the trader is buying or selling his assets. With a little of this explanation I believe that we have understand what an exchange is all about.
Differences between a Wallet and an Exchange.
The difference between a wallet and an exchange can be seen in a tubular form for a better understanding a s given below.
| Wallet | Exchange |
|---|---|
| A wallet allows us to store our assets more securely without using it to trade | An exchange allow us to buy and sell assets for other assets like fiat or digital currencies |
| Wallet is a software program that allow us to store our assets. | Exchange is basically a website or application that allow us to convert our fiat currency like NGN, USD and more for digital assets. |
| Wallet come with a private keys that allow us to sign in and authorize transactions. | Exchange only come with password that is choose by the users. |
| Wallet doesn't charged transactions fees or commission | Exchange come with address and it also charge transactions fees. |
Mention the advantages and disadvantages of DEX and CEX.
Advantages of DEX
Privacy
DEX do no require users to verified (KYC) know your customer, before they can gain full access to their account offering privacy and anonymity to users. With this users funds and personal data are safe.
Mitigating hacking risk
In DEX users do not need the service of a third party before their funds/asset ls can be transfer. With this users are confident of whatever their do I because there is no risk of whether the third party or the users account will be hacked.
Stopping market manipulation
Since DEX has to do with peer to peer trading of assets it stop market manipulation, by stopping users from any form of fake trading and stealing.
Less transactions fees
The transaction fees that is involves in DEX is at minimum level.
User control
DEX allow users to have comolete control of their data, by removing their personal information from hackers.
Disadvantages of DEX
Issue of liquidity
CEX facilitates most of the transaction which is believe to be in charge of trading volume. Because of this DEX is faced with the issue of liquidity,that scare traders away.
Password are too complicated
Due to the password and keys that is involved in DEX users always find it difficult to access their account, like for instance once a user lost his/her key their is no way such user can have access to his/her wallet.
Lack of fiat payments
DEX don't support fiat payments for digital currencies which make DEX to be less relevant to users that want to buy digital assets.
Advantages of CEX
User-friendly
CEX is very easy to use both beginners and old time trader can access their investments so easily. Since the DEX come with a lot of features user can access their account, check their balance and make several transactions on the go.
Reliable
CEX give user more security and reliability when it comes to trading and transactions which also come with a high levels of satisfaction.
Fiat payments is included
CEX allow users to trade their digital assets for another assets and also for fiat currencies. Users can buy and sell or even swap one crypto for another on a go.
Disadvantages of CEX
High transaction fees
CEX usually charge high fees when transaction is carry out which sometimes lead to user losing their investment most especially when their trading on a very large amount of assets.
Security
Since CEX is operated by third party users information can easily be compromised.
Manipulation
CEX can easily manipulate figures and also their carry out inside trade,with fake volume and fake price for their own benefits
Have you used an Exchange before? tell us about your experience.
Yes I have used Centralized Exchange and I am still using it. My experience with centralized exchange is that their over more reliability and features. Like experience I got when I was using Roqqu and Luno before I started using Binance exchange is that. In Roqqu wallet I can easily deposit fiat and buy any cryptocurrency of my choice and also sell and withdraw directly to my bank account. There are a lot of features in a centralized exchange like swapping of cryptocurrency, price volume, Airtime recharge, DSTV subscription and many more.
Centralized exchange usually offer referral bonus when a user refer another user their earn so percentage when the user who was referred perform transactions. The ugly experienced that I once encounter with centralized exchange was the day I deposited some USDT and k didn't received it hopping to receive it when I contacted the customer service but till today I haven't received my USDT. But although I still love Centralized Exchange as it facilitates fiat payments. Also in Binance exchange I have experienced a lot of good things when it come to trading. In Binance I trade via peer to peer (P2P) trading and is very fast and conveniences.
Thank you.....
Best Regards;
Cc:-
@imagen
Awesome
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