Steemit Crypto Academy Contest | S1W2 – Reviewing centralized exchanges by @unyimeetuk

The initial aim of Nakomoto Satoshi was that cryptocurrency should be used without any third party. Gradually, the acceptance of this innovative means of payment by many people resulted in lot of lost assets due to fact it was completely decentralized of which many people can’t protect them.

In order to reduce lots of assert and increase swapping of cryptocurrency with fiat, centralized exchange was introduced by developers.

In this exchange, it users permits the control of third party which will automatically monitor every transaction carried out by them unlike on decentralized exchange.

Definition of Cryptocurrency exchanges

In a simple word, an exchange is an online platform where cryptocurrencies can easily carry out a trading operation of buying and selling of their coins.

Basically, two major things are done on exchanges is swapping of coins and converting to fait cash.

Due to wide acceptance of cryptocurrencies, exchanges have expand their service to staking and shopping etc using their medium.

The three types of exchanges are;

• Centralized exchanges
• Decentralized exchanges
• Hybrid exchanges

Hybrid exchanges is not yet accepted by many people that’s why centralized and decentralized currently dominates.

The ultimate difference between the two types of exchanges is that there’s a third party control on centralized exchange while such does not exist in decentralized exchanges but rather decisions of every users is taken into consideration through voting.

Discuss briefly centralized exchange and it benefits to crypto users

Using the simplest definition, a centralized exchange which is denoted as (Cex) is a just like a bank but unlike banks that focus on fiat currencies, centralized exchange focus on cryptocurrencies.

Fiat currency user leave their money to the control of registered and trustworthy banks, buy shares and convert their fiat currency to another after a verification of their identity. This service is rendered by centralized exchange. Verified user can save their crypto coins, change/convert it to another cryptocurrency and earn from prolong saving known as staking.

Centralized exchange gained ground during COVID-19 as a result of lock down thus boost the convenience of day traders because of fast service compared to decentralized exchange.

Benefits of centralized exchanges to crypto users

• Reliability: CEX have a strong security that monitor every transaction through the used of a dual factor authentication otherwise (2FA).

• Conveniences: A CEX user can easily view their fund balance, convert it to another currency (both fiat and cryptocurrency) within few minutes without any complexity.

• High liquidity: Majority of crypto currency users use centralized exchange. This boost it liquidity pool because of high trading volume. This helps traders to transact (buy and sell) without delay.

• Possibility of recovery: This helps traders that can’t secure their passwords. The use of verification rules makes account recovery easy.

• Saving: Campared with Bank, this makes centralized exchange a must use. User can deposit any amount of fait currency in it, convert to crypto currencies and withdraw it any time.

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

• Security: The risk of loosing asset to hackers becomes higher everyday. As such, an exchange security should be intact. If my personal observations proves that the exchanges is secured enough, I choose it.

• Relationship with fiat currency: While some exchanges support Payoneer/PayPal, direct deposits to banks for buying and selling, others solely rely use cryptocurrencies alone. I consider the method too.

• Number of coins: Many exchanges support limited number of coins compared to coins listed on coinmarketcap. Today, Binance support many coins than many exchanges.

• Interface: There are certain things that can be done on a particular exchange but not public in others. I choose exchange base on the feature that it haves simple usage.

• Transaction fee structure: Fee rate for every transactions are not the same on every exchange. The cheapest is my choice.

Review your favorite centralized exchange and explain its unique features.

My favorite centralized exchange is Binance exchange. Binance have the largest numbers of active users and trading volume everyday.

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HISTORY

Binance CEX was founded by Changpeng Zhao (nickname is CZ) and Yi He (a lady). It headquarter is located at Cayman island. It have the largest amount of users an offers service to globally but only restrict USA citizens since due charges filed against them since 2019.

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BNB is the native coin of Binance CEX and it current price is on downtrend as of today.

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Since the launching of Binance CEX, it have been sanctioned by Thailand, USA, British, China and Japan authorities.
Binance offers rewards for staking. One can choose any trade among the three that are available.

Features

Binance CEX is home for transacting more than 100 different cryptocurrencies including airdrop updates, NFT and quick search box

Unexperienced users can switch to lite version and back to standard (pro) with just a click.

Some CEX charge about 0.30% but Binance charge lesser. Users can also gain profits for every referral.

Secured P2P service can be seen on Binance. No iota of scamming and a direct withdrawal option to my fiat bank

Binance security can not be underrated. Even authentic users have to be careful before having access to their funds

Banning of cryptocurrency transactions in my country (Nigeria) would have been a set back to users but Binance quickly stepped in by partnering with Flutterwave to support easy deposit

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And many others.

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

iPhone user notice high consumption of data even in lite version. I consider my data whenever I’m using Binance. I’m currently planing to get an Android phone so that I will conveniently use every features but if there’s a change, I’ll be very glad.

Minimum transactions amount is bad. Some location are $20 while others are $10. As far as the amount is up to a dollar value (e.g USDT), a user should be able to deposit it.

There is no portfolio progress. Giving a user review will encourage one to know their level of exposure on the exchange and cryptocurrency.
Verification is very annoying and discouraging. I know that it because of past hacking experience but if Zhao work on it, I’ll be very happy.

what shortcoming 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 key?

Some of the shortcomings of centralized exchanges are;
It counters anonymity and decentralization of operation as all the operation are monitored

Centralized exchange is a big fish for hackers because of the amount of coins that they safeguard.

Most feedback are not satisfactory. This annoys everyone anytime it’s encountered.

Verification protocol is an headache on most CEX.
Although they are we don’t have access to our private key, user funds can be protect through the enhancements of their security against hackers.

Conclusion

Centralized, decentralized and hybrid exchanges have their unique features. Anonymous people prefer decentralized exchanges but on averages, many people people prefer centralized exchanges because it support day trading.

Every day, different centralized exchanges comes into existence but Coinbase exchange is the first while Binance exchange dominates with the highest number of users.

I humbly invite @sachin08 @abdu.navi03 @benson6 @malikusman1 @edy.lobo @phlexygee @yonaikerurso @ramzanbaow and @baycan @ahsansharif to participate.
I’ll love to read and engage in through comments.