Hello dear steemian professors and students of the Crypto Academy. I am pleased to present my homework post on task 5, lectured by Professor @imagen.

Dex, Cex, Popular Exchanges and Trading Cryptos by @rosita-nkefor

---

Question

3-) 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.

---

What is an Exchange?

An exchange, which is short for Digital Currency Exchange, is an online place where one can exchange cryptocurrencies for other cryptocurrencies, or for fiat money.

That is, you can buy or sell cryptocurrencies on such a place digitally. These exchanges make profit by charging, deposit fees, transaction fees and also withdrawal fees.

There are two main types of exchanges; the Decentralized Crypto Exchange (DEX) and the Centralized Crypto Exchange (CEX).

The CEX is a type of exchange which is governed by a central body. All information passes through the center before any transaction can be performed.

On the other hand, the DEX is an exchange type where all users have the power to do their transaction without waiting on a central body. It is more peer-to-peer with a decentralised backbone.

---

Differences between a wallet and an exchange

• A wallet is a place, usually an app, where one can store their cryptocurrencies and remove them at any time while an exchange is a digital place where one can buy and sell cryptocurrencies.
• You have full 100% control of your assets in a wallet but you do not have such total control on your currency in an exchange.
• You can only store or retrieve crypto with a wallet but an exchange allows you to also convert fiat money to crpto along with storing the cryptocurrency.
• With a wallet, you keep all your keys with an exchange, some keys and passwords are kept with the operating server.

---

Advantages and Disadvantages of CEX and DEX

1) DEX

• Trading is always possible as it can never shut down.
• Here, the data and funds of any trader is not stored anywhere making it secure.
• There is greater transparency due to its decentralized nature.
• There is no third party involved.
• Traders don't have to reveal their identities which will also include their personal information putting them at risk.

• Transactions are generally slower.
• You can easily trade based solely on smart contracts.
• You can only trade tokens i.e you cannot exchange fiat money for digital currency or vice versa.

2) CEX

• These exchanges have high liquidity, which allows them to easily pay.
• They have many trading options and so many cryptocurrencies.
• You can buy cryptocurrencies using fiat money and vice versa.
• They allow for fast transactions.

• You keep your coins and keys on the exchange which puts them in risk.
• There is a third party involved.
• Your data is being kept in the central server.
• If anything happens to the server, the exchange will be inaccessible i.e it can shut down.

---

Have you used an Exchange before? tell us about your experience.

I have never actually used an exchange before. The only exchange I've opened but never used is Poloniex as the link is in my steemit wallet. Poloniex is a centralised exchange and you can trade many digital currencies for either different ones or into real money. Also, from what I observed, it offers lending opportunities.

---

Thank you all for reading.

NB: All pictures are mine created using PixelLab.