Questions
1-) Choose any of the following exchanges and develop a basic guide on how to use it, indicating whether it is decentralised or centralised.
Huobi
KuCoin
Waves Dex
2-) Can cryptocurrencies and exchanges be regulated? How do regulations affect the crypto world? Name some countries with regulations.
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.
Introduction
Hi guys,
It is a pleasure once again to continue the introductory course in the steemit crypto academy. On this faithful day, I will be attempting task number 5. This task 5 lecture was delivered by professor @imagen. This blog contains my assignment task. Have fun as you read through my post.
It is a pleasure once again to continue the introductory course in the steemit crypto academy. On this faithful day, I will be attempting task number 5. This task 5 lecture was delivered by professor @imagen. This blog contains my assignment task. Have fun as you read through my post.
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.
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?
In my own view, I see an exchange as place that both buyers and sellers meet to exchange their crypto currency either for other crypto or for fiat money. This implies that for you to be able to trade your crypto asset, you need an exchange to do so. Aside trading your asset in the exchange platform, you can perform other activities on the exchange platform using your crypto asset and this activity may include staking of your asset to earn more reward.
Exchange is the gateway that connects both the buyers and the sellers of crypto asset. This means that without an exchange in the picture, it will be difficult or impossible for holders of crypto coins to sell it. More also just like a wallet, the exchange can be use store your asset for easy access to trade. This means you don't need to transfer your asset to your exchange anytime you want to perform any trade. All you need is just go there and do the needful.
We may be wondering why is this exchange built? It is important to mention here that just like our usual banks, the exchange is design to make profits as well. When ever a transaction is carried out on the platform, some percentage of charges goes to the exchange. So as I earlier said the exchange also offer services like staking which is a process where the platform holds your coin for some period of time and then at the end you make a little or much profit based on the price of the coin at that moment.
Differences between a Wallet and an Exchange
Here in this section I will be listing the differences between a wallet and an exchange. But first and foremost let's look at what a wallet is all about. A wallet is a place where you store your crypto and then you have complete access to the coin in question because you are the only person who have the private key to the coins. Unlike exchange where you don't have complete control of the asset once you decide to store your asset there. So let's look at the table below for more of this differences between an exchange and a wallet.
| S/No. | Wallet | Exchange |
|---|---|---|
| 01. | Since wallets uses private keys, it is always very difficult to hack | Due to the presence of password used by different users hackers can easily guess and then hack into our accounts |
| 02. | Wallets are always decentralized in nature die to the use of private key | There are exchanges that are either centralized or decentralized |
| 03. | Wallets do not have a market and hence no any form of trade is allowed | Due to the presence of market, every form of trading activities is allowed in this very place |
| 04. | Wallets do not restrict it users on the amount or limit of transactions | Exchange has a certain limit to their trade hence there is a little destruction here |
| 05. | Wallets are associate with private key | Exchanges use password for those that are centralized whereas the decentralized uses private key |
Advantages and disadvantages of DEX and CEX
Before I proceed in giving us the clear advantages and disadvantages between DEX and CEX, lets first and foremost know the difference between them.
The acronym DEX stands for decentralized exchange. This type of any exchange is a type in which the users involve have absolute control over their asset. This is so because this type of an exchange uses private key. And as we know private key can not easily be access by anyone and hence I can conclusive say that this exchange is more secure than the other. The only problem is once your private key is missing your asset has gone as well as there is no way to recover it.
The acronym CEX stands for centralized exchange. This type of exchange is a type in which the user involve do not have complete control over his asset because the exchange has a saying concern the asset in their position as well. This type of exchange is not too secured when compared to DEX. This is because this type uses password and can easily be hacked by hackers. One advantage here is that once I misplaced my password here I can easily get it back using the forgotten password option. Now let's consider their merits and demerits differently in the table below.
Advantages and Disadvantages of DEX
Below are the advantages and the disadvantages of a decentralized exchange DEX.
| Advantages | Disadvantages |
|---|---|
| Since it uses private key security is one of the most important advantage | Lost of key implies lost of asset as there is no room for recovery |
| Users here have absolute control over their asset since it is decentralized | This type of exchange does not contain much feature as the CEX |
| This type of exchange is not interested in your personal information such as KYC | Here in this exchange, the volume of trade is not much as compared to CEX |
Advantages and Disadvantages of CEX
Below are the advantages and the disadvantages of a centralized exchange CEX.
| Advantages | Disadvantages |
|---|---|
| Since we make use of password here, there is always an option for recovery password | It is easier for hackers to have access to this type of exchange since they can easily guess someone's password |
| This type of exchange has a large volume of asset for it's trade | This type of exchange needs you to put in your personal information, so they are interested in KYC |
| Functionalities in these type of exchange are numerous | The exchange has more control over your asset |
Have you used an Exchange before? Tell us about your experience
I want to believe that all crypto users have used exchange in one way or the other be it a CEX or a DEX. It will almost be impossible for holders and traders of crypto currency to say they have not use an exchange before. So as a crypto currency enthusiast, I have used an exchange before. Now below I will give us brief summary of my experience while using this exchange.
I was opportune to use a CEX called Binance. Now before I started using Binance as an exchange, I was able to go through some tutorial made by some learned expertise in the crypto currency business. I was able to learn how to trade using the P2P format. Now the things I normally put into consideration before selling my coins is that I look at the reputation of the buyer and any one with reputation less than 89% I do not trade with that person. More also I take into consideration the time the buyer has set to make his or her prepayment and I go for those with maximum of 15 minutes because I don't want to be delayed while trading. So when I have checked all these then I can confidently place my order.
I have also had an issue once as I placed an order which the buyer marked as payed and he didn't make the payment. The platform in her wisdom provided a place where I was able to file an appeal and sent the screenshot of my transactions and the chat between myself and the buyer and immediately the platform steeped in and within 20 minutes the entire issue was resolved. I have also performed some other activities on the platform such as staking where I was able to lock my coins for a period of time and at the end I made a little more gain.
Conclusion
This is indeed a very interesting and educative lecture delivered by our noble professor in the person of @imagen. I have learnt a lot about CEX and DEX via my little research on carrying out this task. More also I have been able to know the differences between an exchange and a wallet as I have explain above. I look forward to performing more of this task soon.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Hi @simonnwigwe, Thank you for taking interest in the 5th Task of the Beginners Fixed Class. Your grades are as follows:
My Review and Suggestions:
You have completed the task.
You didn't bold the questions you choose.
You can add some supporting screenshots to make your explanation about your experience with exchange better.
Give more effort to each task you make. The information you provide has often been created by other people, try to explore new information.
Thank you!
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit