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

Hello Steemians, I'm glad to be part of this week's steemit engagement challenge contest in crypto academy. Its my first engagement challenge on the topic Reviewing Centralized Exchanges. Join me as I take you on the journey of my review on centralized exchanges and my favourite one too.

---

---

Exchanges in terms of crypto space simply refers to an online market place or platform where exchange of cryptocurrencies and fiat currencies are done, in terms of buying and selling. There basically two types of exchanges in crypto space which is; Decentralized exchanges and Centralized exchanges. For the course of this post my focus will be on reviewing Centralized exchanges today. These exchanges are utilized by crypto traders in trading their crypto assets and also for the safe storage of assets, in other words these exchange platform can also serve as wallets.

---

---

Centralized exchanges and their Benefits.

---

CENTRALIZED EXCHANGES

Source

Centralized exchange are those exchanges or markets are platforms provided by a company or a firm to crypto traders to trade their assets online or virtually with ease. This exchange are owned and controlled by a sole entity, who has a single central authority over the platform to oversee the affairs of the platform as a middlemen or third-party interference and hence the name Centralized exchanges. With centralized exchange traders can buy, sell, swap, send stake crypto assets at any time of the day with no limitations of public holidays as its observed with other financial institutions. This platform form also provides a well secured wallet for its users to store their assets safely.

The middleman or third-party associated with centralized exchanges are known to control and authorise every transaction on the platform. Before any transaction is successful on this exchange a central authority follows it's process to ensure the security of the transaction. They serve as an intermediary between two users, say a buyer and a seller, if a transaction is not approved by the central authority on the platform, that transaction will not be successful. Although, Centralized exchange gives its users control over their assets, every transaction is fully controlled by a single authority as they also have access to the private keys of ever user.

The full access of a user's private key is given to a centralized exchange, and of a truth has its pro and cons. The pros of this is that, in a case of mistake transaction the central authority can be able to trace where the problem came from and help retrieve a users asset, also if any malicious or fraudulent act is suspected, the central authority takes it upon itself to protect your assets and keep it safe from fraudsters. Also in cases of forgotten password, the middleman on the platform can help the user recover its password since they have full control and access on every users private key.

One major con of centralized exchange is that hackers can easily attack the platform if the security level is not high, and this brings about users not having complete trust on the platform as once a hacker gain access to the platform money and asset theft occurs, which will lead to loss to the trader. Not withstanding there are still some reputable benefits of centralized exchange, below are some of it.

•Variety of Trading Pairs: Centralized exchanges provides users with different varieties of trading pairs, to aid the easy exchange of one cryptocurrency to another and also the exchange of cryptocurrency to fiat currencies. Crypto traders can easily buy or sell fiat currencies with a cryptocurrency, this is done with the use of wallet address provided by the platform and also the traders local bank details are required too.

• Good security for users: Centralized exchanges tries their best to provide a high level of security for it's user's asset. On most centralized platforms before any transaction is made, a trader is expected to login with its details and a series of confirmation are made by middleman before excuting any transaction to ensure the security of a traders asset.

•Relatively User-friendly nature: Centralized platforms are very user friendly, it provides guides for beginners on how to carryout various transactions safely on the platform. I found this feature very helpful when I first used a centralized exchange.

•Provides high Liquidity: centralized exchanges are known to provide high amount if liquidity for it's users. The provision of many cryptocurrencies on the exchange brings about a higher trading volume and hence high trades can generate enough liquidities when many orders are placed by other investors to facilitate easy exchange of the cryptocurrencies between traders on the platform. High liquidity level in a platform helps traders and investors trade easily without delay.

•Provides suitable market orders with choice prices.
A variety of market orders are provided on centralized exchange, to suit every trader trading choice and strategy with the best prices. Traders are able to set limits and stop-loss orders for there own good. Centralized exchanges provides trade orders like market, limit, OCO orders etc.

•Password recovery: Centralized exchanges also serve as a password recovery tool to helps users recover their account in case of forgotten login detail or wrong passwords. If for any reason a user forgets its login details they can easily recover it back with the help of the platform, as centralized exchanges have access to eyery users private key, although the user have to go through some reprocess of answering some questions. This can't be seen in a decentralized exchange.

---

---

Criteras to look out for when choosing an exchange to trade crypto assest.

---

As a crypto trader there are vital aspects you check out before choosing an exchange platform for trading your crypto assest, as a person I have a few and I'll be outlisting them below here;

1. Security
The security status of a centralized exchange is one aspect i look out for before using it, as no exchange is 100% secure or free from malicious acts by hackers. I ensue I make research on their security level in previous time, and how the platform reacts to if any malicious attack occurs. One's asset are valuable and ought to be safeguarded by an exchange.

2. Trade volume and volatility capacity
A centralized exchange with a high trading volume will have a low volatility rate and hence there can be a manipulation of the market on the exchange, that is why one should consider the volatility of an exchange before choosing one. A centralized exchange with higher trade volume and faster transaction process, is less likely to experience makert fluctuations.

3. Liquidity availability
A good centralized exchange of choice has to have enough and different cryptocurrencies or fiat at all times for trading. Where liquidity is high a high trade volume is expected on the exchange, hence the more active trading of assets on a centralized exchange increases the liquidity of asset exchanges on the platform.

---

---

Review your favorite centralized exchange and explain its unique features.

Source

My favourite centralized exchange is Binance exchange platform. This is the second centralized exchange platform I'm using and I have no regrets about it for the past one year now. They are well secured, reliable, flexible and well organized with great KYC services. From Coinmarketcap records, Binance is currently the most used and largest centralized exchange across the world with millions of traders that trades daily at all time, ranking #1 with a high exchange score of 9.9, this shows the reputation level of Binance in crypto space and how efficient and reliabile they are.

Source

Binance exchang is a one of the largest centralized exchange for cryptocurrency trading, created and developed by Changpeng Zhao and Yi He in the year 2017 and was initially based in China, although its headquarters is now moved out of China to Seychelles precisely Caymans Island, due to the increasing cryptocurrency regulations by China government. Binance exchange offers its users a large variety of cryptocurrencies for trading, globally about 365 crytocurrencies are traded but in USA they are limited to about 65 cryptocurrencies for trading, Binance also has a wide variety of crypto pairs for trading and of recent I foundout STEEM/USDT pair is now available on the platform, it was a great news for me.

Binance provides great and simple tools and features of its users. It supports trading patterns like Spot, Margin, Future and Perpetual trading with different order types like Market, Limit, Support and OCO orders. Binance is known for its high liquidity nature which makes it easier for traders and investors to easily exchange any crypto asset in the platform. Binance is also known for its large variety of trading tools such as real-time charting tool(with moving average and exponential moving average indicators) and great features that makes it easier for users to use, some of these features I'll be explaining later on.

Binance exchange also have a blockchain network of its own called Binance Chain and Binance Smart Chain, that works parapasuit with each other. The Binance blockchain is very efficient and scalable as transactions are successful in less than 2mins, with low transaction fees due to Hugh trading volumes. The native coin of Binance exchange is BNB (Binance Coin), it is available and traded on Binance exchange and other platforms, it is used for various utility purpose the and other projects in the crypto space. As at the time of writing this post BNB coin is valued at $388.6, below is a screenshot of fundamental analysis of BNB coin.

Source

---

Unique features of Binance exchange

Some unique features of my favourite exchange exchange, Binance are outlined below, bearing in mind these are mine opinions;

•Security feature
The security feature of Binance is one talked about by most crypto traders and I can attest to it too. The platform is well secured as it uses a 2FA security authentication protocol. Before any withdrawal or deposit transaction is carried out the platform verifies the authenticity by sending approval codes to emails and mobile numbers of the user. This feature gives me some level of assurance and the platform is always trying their best by improving on their security tactics daily to ensure the security of their clients assets.

•P2P (peer-to-peer) trading feature
This is one feature I love about binance exchange. The P2P (peer-to-peer) trading feature enables traders to buy or sell assets easily at the best prices(better than some financial institutions) as there is always availability of liquidity. This feature has been helpful to me and many crypto traders in my country Nigeria, since the restriction of cryptocurrencies trading in 2021.

Screenshot from Binance

• Customer service
They have a great, effective and reliable customer service. Binance customer service is always reliable, they attend to users complains quickly at any time of the day. Either by chats, emails, submitting a ticket or on the website.

• Affordable transaction fees and high liquidity.
Binance exchange transaction fees are relatively low and cheap than other leading centralized exchanges, due to high trading volume and availability of liquidity, trading transaction fee is low and also fast.

• Market Order types
Binance platform has great market order types for its users. This helps traders have a variety of choice to buy or sell assets in the market depending on their trading tragedy.They have Limit Order, with this I set my desired price for an asset I want to buy or sell, once the price is met my trade becomes successful automatically, this feature helps me do other things without worry. As a trader, I can also choose to market order and buy or sell an asset with the current price.

Screenshot from Binance

---

---

Things about your favorite exchange I would like to be changed

---

Yes, there are two things I would like Binance exchange to look into and make some changes.

1. The verification process after signing up on Binance exchange is very stressful and rigorous. It takes longer time before an account is verified, when I first registered on the platform my verification process was quite stressful and took about 3weeks before my verification was approved. And the type of identification needed is another aspect.

2. On Binance exchange the minimum trade amount is 10USDT and is a bit discouraging because not everytime one has such funds to trade. I will like Binance exchange to review the trading amount to enable traders with small funds trade too, have been in a tight corner once because of this issue and it was quite frustrating, i had to ask a friend send some funds for me to makeup the 10USDT. I will want Binance to be flexible with trading amount, it will be nice if one can trade with the least 0.5USDT.

---

---

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

---

There are some notable shortcomings of centralized exchange as no exchange is 100% complete. I'll be list shortcomings of centralized exchanges have noticed below;

•Centralized exchanges are highly susceptible to malicious attack and theft by hackers, once a hacker is able to penetrate into the platform assets of users worth billions can be stolen if the security of the exchange is not strong.

•Once there is a high volume of trade transaction, the transaction fee becomes high too. To me I don't see this as a good, rather when there's a high trade transaction on the platform the transaction fee should be reduced.

•Centralized exchanges are not completely transparent, must atimes they do not give users much information about a trade price.

•The fact that centralized exchanges operates on a central authority is a bit disturbing, because clients are dependent on a third-party influence who are under a governing body and if for any reason the government of a nation can decide to restrict the operations of the dentralized exchange, that decision can be devastating to the users, as the funds could be lost since they don't have full access to their assets.

---

For a user funds to be protected fully, I suggest a copy of the user's private key should be given them and before transaction is done, the user must be able to provide their private key also, this will also help in verifying a transaction. Once in a while user's also should try to move their funds to another wallets preferably where they can have full access to their assets.

---

---

CONCLUSION

Centralized exchanges are great trading platforms which makes crypto trading less stressful globally, especially in countries where cryptocurrcency trading are on ban. Binance is one of the top centralized exchanges which provides varieties of features zo make trading easy for crypto traders. Nevertheless, one has to be extremely careful when trading on a centralized exchange as there's no full guarantee to security.

I'll like to acknowledge the effort of steemit crypto academy for this contest. Thanks for reading through and I'll like to invite my dear friends @armstrongdiho, @beautiefair and @estyrobert to participate in this contest.