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Exchanges Cex Vs Dex

Created By : Admin

               EXCHANGES: CEX AND DEX  

               

                 What is a cryptocurrency exchange?

Digital currency exchanges or cryptocurrency exchanges are platforms that allow for the trading of digital currencies or tokens. Many exchanges allow for the conversion of traditional currency into cryptocurrency but the main function of these exchanges is to trade digital assets within a Buy and Sell system similar to a stock exchange. These exchanges usually require some form of identity verification to verify the user’s age and nationality due to the anonymous nature of digital trading. There is however an exception to that rule which comes in the form of decentralized exchanges aka DEX, which provides users a more accessible system to trade currency. It is now getting increasingly common to see exchanges adopt their own native cryptocurrencies to facilitate trading on their platform and incentivize it. 

 

               

              What is a Centralized Exchange CEX?

A centralized exchange is an exchange controlled by a central authority. Centralized exchanges are the most traditional way to trade currency and are similar in style to traditional online brokerages like Robinhood or Questrade. They play the role of middlemen between traders and usually offer an easier way for traders to liquidate or diversify their funds. There are many good reasons to use central exchanges. They are usually easier for beginners to use and have a lot of helpful tools for advanced users as well, however, the fact that they are controlled by a central authority is not always ideal. Many exchanges have been hacked and users have lost billions of dollars due to security breaches. Central exchanges can also manipulate the system at any time to their advantage and some have been accused of engaging in these practices through the means of spreading false information or faking their real-time trading data.          

                  

               List of Popular Centralized Exchanges (CEX)

                                               Binance

                                                Kucoin

                                              Coinbase

                                                 Okex

                                               Bitfinex

                                   

 

             What is a Decentralized Exchange (DEX)?

A decentralized exchange has no central figure of authority in control. It removes the middle man from the equation and relies on a peer 2 peer model for trading within its system. Decentralized exchanges provide users with more freedom and anonymity because there is no rigid verification system that discriminates against you based on your location or age.  They are also known to be more secure than centralized exchanges due to the fact your private keys, login information, and funds are not stored anywhere. One of the best things about Decentralized exchanges is that they cannot be manipulated or shut down by any governments or trading authorities. Although there are a lot of good things about decentralized exchanges there are also some shortcomings. For example, all liability falls on the user so it is not ideal for beginners, and liquidating your funds can prove more difficult than on a central exchange. Ex: (Uniswap, SushiSwap)

 

 

            List of Popular Decentralized Exchanges (DEX)

                                                  Uniswap

                                                SushiSwap

                                              PancakeSwap

                                            1Inch Exchange

                                                  Venus