What is Crypto Exchange?
The cryptocurrency exchange is a platform that creates a correlation between buyers & sellers for trading digital currencies such as BitCoin. This exchange provides security to buyers of cryptocurrencies. And in return collects taxes or fees from them. Almost all cryptocurrency exchanges make money this way.
Along with the growing business of cryptocurrency trading, crypto exchanges are also making a lot of money. There are many crypto exchanges are available in the market today. Each exchange has different terms and conditions of operation. And accordingly, their fees may vary.
Types of Cryptocurrency Exchanges
There are two different types of crypto exchanges. One of which is called Centralized and the other is called Decentralized. These two are explained in detail below.
Centralized Cryptocurrency Exchange
This is a cryptocurrency exchange that works between the buyer and the seller. It acts as the third person between the buyer and the seller. Both parties have to work under the exchange. It secures your cryptocurrency transactions. There are several centralized cryptocurrency exchanges are available in the market but some of the popular exchanges are as follows:
Examples of Centralized Cryptocurrency Exchanges
Advantages of Centralized Exchanges
There are several advantages of decentralized exchanges are available. But in this article, we are going to know about some major and important advantages. There are the top three main advantages of centralized exchanges are as follows.
These exchanges have proven to be reliable in terms of transactions and they are very strict in security which is very good for the buyers. That is why these exchanges are credible.
2. User Friendly
Another major benefit of these exchanges is that they provide Group, Two traders, with a better way to trade. Another major benefit of these exchanges is that they provide Group, Two traders, with a better way to trade. There are many features like logging in to your account, checking your balance, etc. It is not difficult to understand and use all these features. That is why these exchanges create a friendly relationship between traders and themselves.
Disadvantages of Centralized Exchanges
Everything that comes into this world has its advantages as well as its disadvantages. If something is benefiting us, it does not necessarily harm us. Just as centralized exchanges bring us many benefits, there are also some disadvantages. You can read about all these disadvantages in detail below.
1. Risk Of Hackers Attack
As these exchanges are used by crypto traders. Every crypto trader has a cryptocurrency worth about something. In addition, millions of bitcoins are being exchanged here. That is why the risk of hackers is increasing here. Every trader is at risk of being hacked by a hacker into stealing their money. Because their accounts contain crypto coins of billions of worth. There are many examples of such hacking attacks before our eyes.
3. Fees on Every Transaction
If you make a transaction using Centralized Exchange, you are charged a fee. If you are sending your currency to someone, you will have to pay a fee. Which makes traders unhappy.
Decentralized Cryptocurrency Exchanges
By using this exchange, traders trade without any third-party intervention. Using this exchange keeps the identities of crypto traders private. But there are also some issues that make it difficult for traders to trade. This is why many traders prefer decentralized exchanges because of some of the problems in centralized exchanges. The most popular Decentralized cryptocurrency exchanges are as follows.
Types of Decentralized Cryptocurrency Exchanges
Advantages of Decentralized Cryptocurrency Exchanges
There are several advantages of decentralized advantages are available that are explained in detail below. Get ready to know about these advantages and start reading confidently.
1. Less Hacking Risks
Traders that will use these exchanges for trading, do not need a third party to trade. That’s why they are safe from hacking risks. This reduces the risk of the company being hacked and keeps the trader’s money safe.
2. User Anonymity
Trading through this exchange does not require a third party. That’s why the trader here often stays anonymous, which is good for him.
Disadvantages of Decentralized Cryptocurrency Exchanges
There are also some disadvantages to decentralized cryptocurrency exchanges. Which we are going to talk about in detail.
1. Complex Trading
Users using decentralized crypto exchanges need to remember their passwords, etc. Otherwise, they may lose all their money. If in any case, they forget their password, it becomes very difficult to recover and it can be said to be impossible.
2. Direct Payments / Fait Money
As per other issues, Decentralized crypto exchanges have another issue that is, the users cannot pay directly via fiat money. This requires you to have another cryptocurrency. In this case, consumers who do not have other cryptocurrencies have problems in trading. And they have to buy another currency to trade on this exchange.
The End Line
This article gives you a brief overview of cryptocurrency exchanges. At the same time, its types and the disadvantages and advantages of their types have been discussed in detail. I hope you have understood everything mentioned above.
You can also share this article with your friends so that they too can benefit from this information. So be sure to send this article to those friends who are more interested in cryptocurrency. God bless you guys.