In the world of crypto, it is crucial to understand the difference between Centralized Crypto Exchanges (CEXs) and Decentralized Crypto Exchanges (DEXs).
Each cryptocurrency exchange platform has unique characteristics that draw in various people. As mentioned earlier, let’s check the differences between the exchanges.
More than 300 million people are using cryptocurrencies. It is expected to reach 1 billion in 2023. However, a few people need to be made aware of the fundamentals.
Are you one among them? Or are you planning to start a new crypto business? Then read below and get an in-depth knowledge of crypto exchange platforms.
Jumping Into The World Of Crypto Exchanges
A cryptocurrency exchange can be categorized as either centralized or decentralized, depending on how it functions. So, it is time to examine the highlights of each class.
Crazy Centralized Exchanges!
A centralized crypto exchange (CEX) is an exchange platform governed by a central authority. People use these marketplaces to buy and sell their cryptos.
An account on the platform, a wallet, and some funds are the three main requirements for trading.
Also, users will be given a private key for protection and transaction purposes. In terms of CEX, a private key backup will be with authority.
Highlights Of CEX!
- These are marketplaces where cryptocurrency buyers and sellers carry out deals with the help of a middleman. Since there is the involvement of third parties, users should be cautious about the transaction and other details.
- Before using a centralized exchange, users must first create an account using personally identifiable information, such as names, email addresses, etc.
- Centralized exchanges are frequently governed and must abide by the laws of the nations in which they conduct business.
- Also, centralized exchanges are not limited to any specific blockchain. They can facilitate the exchange of any blockchain’s cryptocurrency assets.
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Developed Decentralized Exchanges!
A decentralized crypto exchange (DEX) is an exchange platform that is not governed by any central authority. People use these marketplaces to trade cryptos. Also, in the case of DEX, a private key is controlled only by the user.
Highlights Of DEX!
- These are marketplaces where cryptocurrency buyers and sellers deal directly without a mediator. The trader can keep the funds and assets in his wallet, and only he can access them.
- Users on decentralized exchanges can trade without completing any kind of KYC. Anyone with a crypto wallet can trade on these marketplaces without any restrictions.
- Since DEX are decentralized, it is challenging to govern. Therefore, there are no conditions for them to adhere to rules in case of operations.
- The majority of decentralized exchanges are designed to run on a specific blockchain. Interestingly, they are now beginning to accommodate many blockchains due to recent improvements.
Final Feather
It is always vital to know the basics before getting into something. There is no exception in terms of exchange platforms. So, I hope this blog helps you understand the fundamentals better.
Do you need any assistance developing a crypto exchange platform? Connect with Blockchain Firm, the leading cryptocurrency exchange development company, and get innovative ideas and affordable services.
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