Steemit Crypto Academy Contest / S1W2 – Reviewing Centralized Exchanges by @kennydavebobo

Discuss briefly Centralized exchanges and its Benefits to crypto users.

What do you look out for when choosing an exchange to trade your crypto assest?

Review your favorite centralized exchange and explain its unique features

Is there anything about your favorite exchange you will like to be changed? Discuss.

What shortcomings do you see on centralized exchanges and how do you think user funds can be protected since we don’t have access to our wallet private keys?

INTRODUCTION: Good day beautiful people of this community, I bid us welcome to the second week of this contest. Last week, I started out with this contest but unfortunately along the way, my phone was stolen and I couldn't continue. This week once again as God has provided a way, I am out here to give us one of the best post as I am out here to be among the winner the weekly winner.

So, just grab a glass of water and sip through as you read.

Discuss briefly Centralized exchanges and its Benefits to crypto users.

What is a centralized exchange?

So, I am going to get started by defining what a cryptocurrency exchange is and just as we can see that the term is made of two words cryptocurrency and exchange, I will have to explain each word before I proceed for better understanding.

What is an exchange? An Exchange can simply be defined as a platform for trading (i.e., buying or selling) something for another thing.

What is cryptocurrency? Simply put, cryptocurrency is a digital currency which doesn't have a central bank. Digital in the sense means it exists electronically.

So what is a cryptocurrency exchange? With the understanding of those two words above, I can defined cryptocurrency exchange as a platform that provides or facilitates the trading of digital currency for other thing which might as well be another digital currency or even fiat money.

In another word, a cryptocurrency exchange act as an intermediary between a buyer and a seller.

Now, we should know that there are two types of cryptocurrency exchange which are,

• Centralized exchange which I am going to write on shortly.
• Decentralized exchange.

Centralized exchange (CEXs): A centralized exchange is an exchange platform owned and controlled by a company or private firm. It serves as an intermediary or middle man between a buyer and a seller and are the most common means that traders or investors used for their buying and selling of cryptocurrency.

When I first started out with cryptocurrency, what I understand about it is that, it is decentralized but afterward when I encountered the word centralized, I was confused just as many of us are too at first. But having read more about it and I found out some benefits and why it is important to have it in the cryptocurrencies ecosystem.

This leads me to the benefits of centralized exchange which are explained below.

Benefits of centralized exchange?

Below are some of the benefits of centralized exchanges and these are actually what gave it an edge over decentralized exchange though decentralized exchanges also has its own benefits.

• The first thing I see as a benefit in CEXs is how simple and friendly it is to use their platform, user can easily log in into their account, check their account balances, transact easily. This is the number one thing that got me attracted when I was starting out.

• Another thing is how reliable CEXs are as they offer enough layer of security when it comes to trading and transaction. I am sure this is one thing users look out for as they don't want to get scammed while getting started with not enough knowledge.

• Also, CEXs exhibit fast transaction, they allow the depositing and withdrawing of fiat currencies. This is also a plus as when is just starting, one might not have any cryptocurrency to start with and this is where fiat currencies comes in.

What do you look out for when choosing an exchange to trade your crypto assest?

Well there are different things to look out for when choosing an exchange and traders or investors need to take their time to make their research in order to not fall victim of bad things.

I am going to mention some things which I also looked out for back then though not long ago😁.

• Accessibility: I believe this should be the number one thing that every individual should look our for when choosing an exchange. We need to know that one's location can actually stops one from buying as well a selling cryptocurrencies on some exchanges which might be due to national regulations. China as a study case.

• Security: This is also one important features that should be lookout for. We need to know that there is no central institution backing up cryptocurrencies and so, one's cryptocurrencies are not protected the same way as our traditional investments and with this I believe we can see why it is important to look out for the exchange security feature.

• Liquidity: This is also important and one must look out for the exchange trade volume as this is what ensures that you can buy and sell your cryptocurrencies whenever you want. It ensures that you buy and sell at the best price.

• Coins offered: We need to also look out for the currency pair that is available on the exchange.

• Transaction fees: This is another feature to consider. I believe we all don't want the transaction fees to be more than whatever profit we are to make right?

• Educational tools: By this, I mean tools that can aid one in learning more about various digital assets, tokens, blockchain technology itself. This is an important aspect for beginners and they should as much a s possible to look out for it. This particular feature can be found on Coinbase and Binance.

Just as I have said earlier, there are still some other things to look out for and so, it is important to make adequate research before choosing an exchange

Review your favorite centralized exchange and explain its unique features

My favorite centralized exchange is Binance. I chose Binance because of so many reasons which I am going to be explaining throughout this section.

Binance by trading volume is the largest online cryptocurrency exchange. Don't forget when I was explaining things to look out for when choosing an exchange earlier, I mentioned liquidity, this makes transactions made on this platform very fast as compared to other CEXs out there.

Binance was founded in 2017 by CEO Changpeng Zhao and its headquarter is in Malta a country that allows the use of cryptocurrencies.

Binance offers a wide range of cryptocurrencies available in the market place as of the time of writing this post if not the widest. Both coins with large market capitalization and small market capitalization are offered on the platform.

Binance exchange is very user friendly as both newbie and advanced traders can navigate easily on the platform. The platform supports spot trading, margin trading, and futures trading.

Binance also lay strong emphasis on security as we can see in the implementation of Binance offering 2-FA and anti-Phishing measures on the platform.

The platform is readily available for everyone as it is available on Google Play, Apple Store. Desktops user can also access it as it is compatible with both, iOS and Windows.

Furthermore, The platform enables affiliate program where users earn commission having referred anew user and when the referred users trades on either of Binance 's spot or future markets.

Also, users can earn interest by saving cryptocurrencies and also earn rewards by staking cryptocurrencies. Another major feature is that customer support is available throughout the whole day.

Earlier on, I mentioned that the platform is user-friendly, well , this is as a result of the following trading platforms that are available on Binance.

1. BASIC: This is the simplest way to trade on the exchange.

2. Classic: This is a standard trading platform which facilitates a more traditional platform to trade on. It includes charts, stop loss order, marker order, limit order, etc.

3. Advanced: This is more like an advanced "Classic".

4. Margin: This allows users to trade with margins and this comes with enhanced earnings.

There is also OTC and P2P.

Some of its other key features include,

• It allows bank deposit for fiat currencies.

• The use of Credit and Debit card is allowed and accepted.

• Binance also integrates Peer to peer trading which gives it an edge over other CEXs.

• It accepts Third party payment via Simplex and Banxa.

So before I close this section, let me just quickly list the steps to create an account on Binance platform to get started.

• First, go to Binance

• Click on Register as shown below.

• You can sign in with email or phone or apple or google as can be seen in the image below.

Is there anything about your favorite exchange you will like to be changed? Discuss.

Yes, there is one thing I will like Binance to work on not changed. I would love it if they can make demo account available not only for Futures trading

What shortcomings do you see on centralized exchanges and how do you think user funds can be protected since we don’t have access to our wallet private keys?

What shortcomings do you see on centralized exchanges

Well, one thing we should know is that there is always a side effect which can be termed as shortcoming for almost everything if not all. I tagged it side effect as this are what happened inevitably.

Below are some of the shortcoming of centralized exchanges

• The number one I believe is that users don't have full control over their assets and whenever an exchange is compromised, one's coin can also be compromised.

• Centralized exchanges are under the controls of financial regulator.

• CEXs doesn't exhibit anonymity. This is one reason why some people doesn't use it.

How do you think user funds can be protected since we don’t have access to our wallet private keys

To my understanding, in the case of a centralized exchange, I believe the best we can do to protect our funds is to prevent.

What do I mean by preventing? Just as the question denotes, in a CEX, we don't have access the our private key and this mean we don't have control over the wallet in which our funds is saved in. So the best thing we can do is to look out for some things before choosing and using a centralized exchange.

We need to go through the About us section of the centralized exchange and see all what the exchange is all about, check people's reviews, its security method and many more.