Hello Professor 🙋
Exchanges are digital marketplaces where you have access to buy and trade crypto assets. It is impossible to buy crypto from your bank. But when you want to buy some cryptocurremcy like Bitcoin, Ethereum, or another cryptocurrency, you will need to have an account on an Exchange platform either Decentralized or Centralized platform to exchange your cryptocurrency or fiat currency for digital assets. Below are what you need to know about Exchanges.
This is an Exchange platforms that ease/speed up converting, buying and selling of cryptocurrencies with another cryptocurrency. An also act as a middleman between the buyer and seller and makes money through transaction fees and commissions.
SourceFor example a 100 STEEM can be exchange for USDT/BTV of the same equivalent value. This process can be applied another token based on is offers by the exchange.
A wallet and exchange are use to trade cryptocurrencies but they are not the thing. They quit useful when trading crypto it doesn't matter if you are buying and selling any coin but they make different impact in the ecosystem. Below are the things we need to know concerning them.
Cryptocurrencies are generated by "Mining" the tokens and solving complex puzzle but as for investors, they buy and sell the tokens they use.
An Exchange is the platform to carryout such transactions and also you can store your coins there too. While a wallet is platform where your tokens and assets security but can't use it for trading. But popular Exchanges have their own wallets.
The wallet is well deecentralization more than centralized exchange and also it is well secured. Both in Wallet and Exchange, a user have control of their assets. In some wallets, only cryptocurrency are supported such as metamask and so on. But in some wallets, like Trustwallet, support both cryptocurrency and fiat currency but in exchange platform it supports both fiat and cryptocurrency.
SourceBefore I state the advantages and disadvantages DEX and CEX I would love to throw more light on what DEX and CEX is.
This is a platform that make use of P2P system, that allows it's users to make transactions without the involvement of a the partyor a middleman. Mostly users prefer to use Dex because of the little ißues that are associated with centralized exchange. And also Dex does not facilitate the buy and sell of crypto assets or token.
Top Ten Dex Platforms
- UniSwap
- Tokenlon
- Ox Protocol
- Venues
- Sushiswap
- Coipound
- Burger Swap
- Curve Finance
- Inch Exchange
- Pancake Swap
- Reducing Hacking Risk: The essence of users not transferring to a third party has made the users and organizers to be safe from hackers and fraudster
- Avoiding Market Manipulation: Dex has prevented it's users from wash trading and fake trading due to their system of P2P trading of cryptocurrency
- Anonymity: In Dex users don't need to undergo the Know your Customer (KYC) procedure and this makes users on Dex anonymous
- Complexity: If users missplaces their key or passwords to their wallets, their assets are lost and cannot be recovered. So users on Dex are to keep their key or password safe to avoid loss of assets. Users are to have basic knowledge on how the platform works but it is not so in Cex due to it gives their users convenient and user friendly process
- Scarcity of Fiat Payment:Dex are strictly for cryptocurrencies not for exchange of Fiat currency. This makes Dex convenient for users that do not have cryptocurrencies
- Liquidity Problems:The transactions of most crypto assets are facilitated by Cex. This implies that they are responsible for the majority of Trading Volume. Dex most times lack liquidity due to the lack of trading volume, making it hard for buyers and sellers to make use of Dex when trading are low.
This an exchange platform that are controlled and operated by a group of people or companies and it also act as an intermediary between buyers and sellers. More or less 0% of all cryptocurrencies are transacted through Centralized Exchange such as Coinbase, Karen and so on.
Top Ten CEX Platforms
- Bianance
- Huobi
- Coinbase
- Kraken
- Bithumb
- BitFinex
- Bitstamp
- KuCoin
- FTX
- BotFlyer
- It is User Friendly: Cex gives tutorial for beginners in a friendly way on how to trade and invest their crypto assets. On like crypto wallets or P2P trading can be complicated sometimes. Cex users have access to their accounts and check their balance and through their applications and website they can be able to make transactions.
- Reliable and Security: When it comes to security and reliability, Cex puts in more efforts to make sure that transactions and trading are wel secured and reliable. By offering a centralized platform, transactions are offered on a high comfort.
- Hacking Risk: Cex are managed by companies which are accountable for Holdings of their users. Popular and large Cex normally holds Bitcoin of dollars making it a targets for hackers to prey on.
- Transaction Fees: When it comes to transcations, Cex charges higher unlike the P2P transactions for their services rendered. It can also be high especially trading in large amounts.
Yes I have made use of an Exchange tool before which is bianance. My experience on bianance was okay although I have some dislikes about it. The best thing I love about Binance is the simple procedure to set up and complete it's requirements. Unlike other Exchanges it is hard for scammers to found on Binance. They provided every necessary information I needed and their services are professional. I also live their P2P trading it is well secured and is quite hard to be scammed. One thing I don't like about Binance, whenever I place a sell order, it delays sometimes when volume is high but apart from this the Binance platform is okay.
An Exchange platform is more like an online market where crypto assets can be bought, sold and can be exchange for cash or for other crypto assets. It has two types of platform which is centralized and decentralized exchange. The centralized exchange is more flexible while Decentralized Exchanges are more secure. To have an experience on an Exchange platform is quite fun and profitable mostly when you make use of the P2P system. It is reliable and fast.
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