There are several methods to buy and sell cryptocurrencies such as centralized exchanges, decentralized exchanges, Bitcoin ATMs and face-to-face cash. The most preferred of these is to trade on an exchange. There are two different Cryptocurrency Exchanges, Centralized and Decentralized.
The purpose of Centralized Exchanges is to provide users with secure cryptocurrency trading by providing infrastructure services. They provide these services in return for the fees they set. Decentralized Exchanges, on the other hand, allow investors to trade without burdening their exchange obligations.
The Centralized Exchange (CEX) is managed through a company. Submission of investor information is mandatory. User information is stored within the platform. Many issues such as listing, project, listing parameters, decisions to be taken about users are taken and implemented by the managers of the exchange. Binance, Kucoin, Huobi exchanges are the most well-known centralized exchanges. NitroEx Exchange is a centralized exchange with goals and managed by professionals.
The Decentralized Exchange (DEX) is not affiliated with any person or organization. It executes its transactions directly on the blockchain. Therefore, you usually do not need to share your personal information to trade on these exchanges. Your information is not stored in exchanges. Binance DEX, Idex, Etherdelta, Forkdelta and Uniswap are the most well-known decentralized exchanges.
Advantages of Centralized Exchanges
- There is a manager. In case you make a wrong transaction, you can contact the responsible persons in order to undo the wrong transaction.
- Many exchanges have customer services that you can reach 24/7.
- They have high transaction volume.
- They have high processing speed.
- It is easy to use. Ease of use is important for beginners.
- User funds are vulnerable to cyber attacks but are protected by cyber teams.
Advantages of Decentralized Exchanges
- Investors do not need a company to access their funds.
- Fund management belongs only to the investor himself.
- It is more secure against cyber attacks.
- The investor mass is usually professionals.
- Resistant to market manipulations.
- It has an anonymous structure.
- Commission fees are low.
- There is no liquidity problem.
- Listing is free, but it can harm projects.
- New projects often get their first listing here.
The Difference Between Centralized and Decentralized Exchanges
In centralized exchanges, investor funds are located in exchange accounts. In decentralized exchanges, the account belongs only to the investor.
In centralized exchanges, the investor has to present his identity information to trade. This is called Know Your Customer (KYC). Anonymous accounts can be used on decentralized exchanges. All you need to be able to trade is a cryptocurrency wallet.
While trading cryptocurrencies in centralized exchanges, the order given is processed on the board and the order is executed when a response is found. The exchange performs the execution on your behalf. In decentralized exchanges, transactions are carried out with on-chain smart contracts.
Centralized exchanges can evaluate investors’ funds in different areas. Although the number of exchanges that do this is small, they continue to exist. In decentralized exchanges, the investor manages his funds only himself.
Centralized exchanges are managed by for-profit companies or individuals. Decisions taken are not investor-oriented, but are taken for the goals of the company. This is not the case in decentralized exchanges. Decisions are taken as a result of the joint statement of the investors.
Decentralized exchanges do not store funds or investor personal data on their servers. It serves as a platform for trading purposes only. Orders are executed via smart contracts on the blockchain and the investor never has to entrust his own funds. You should be more careful when trading. It is not possible to undo the mistakes made.
In decentralized exchanges, it is easier to produce fake projects because there is not much auditing. The use of fake liquidity is quite common.
We see that decentralized exchanges are becoming widespread for many reasons such as investors who want to trade cryptocurrencies do not want to trust a third party, do not want to share their identity information, and want to make their transactions faster and safer. As a result of this development and change, it is a very clear fact that there are many innovations in the entire cryptocurrency industry. You should consider that decentralized exchanges have their shortcomings, contrary to the good opportunities. In order to improve yourself and trade professionally, you should get help from centralized exchanges. It will be healthier for your investments to choose decentralized exchanges after gaining experience.
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