Steemit Crypto Academy Season 4 Beginners' course - Homework Post for Task 7 : [Dex, Cex, Popular Exchanges and Trading Crypto] | by @chairulrizalx
(3). Explain in your own words what an Exchange is. Differences between a Wallet and an Exchange. Mention the advantages and disadvantages of DEX and CEX. Have you used an Exchange before? tell us about your experience.
Hello Everyone
Season 4 of Steemit Crypto Academy has arrived at week 4, and on this occasion, I will complete an assignment for Season 4 Beginners Level Introductory Course at the Crypto Academy. In this post, I will complete Task 7 which is discussed Dex, Cex, Popular Exchanges and Trading Cryptocurrency - Steemit Crypto Academy Season 4 Beginners' course - Task 7: Dex, Cex, Popular Exchanges and Trading Cryptos mentored by Professor @imagen.
1). Explain in your own words what an Exchange is.
Market is a place that brings together sellers and buyers. Marketing occurs when people decide to satisfy needs through exchanges made by sellers and buyers. In cryptocurrencies, an exchange is a platform that brings together buyers and sellers of cryptocurrencies or other digital assets to conduct transactions between the two parties where the exchange acts as an intermediary between the two.
2). Differences between a Wallet and an Exchange
Wallet
Digital wallets are required by individuals to store cryptocurrency or digital assets that they acquire for personal storage in the form of software, mobile applications, and extensions on web browsers. The wallet has a private key that must be stored and guarded carefully to avoid theft or other digital crimes, the private key given when creating a cryptocurrency wallet serves as a key that we can access to enter the wallet. Generally, wallets do not provide facilities for buying and selling cryptocurrencies or digital assets, wallets only act as a place to store digital assets.
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Exchange
Exchanges are only used by traders or investors to buy and sell cryptocurrencies and digital assets, the exchange platform is just a place for trading or staking cryptocurrencies. Exchange does not provide individual privacy such as a private key on the Wallet, the exchange only provides a temporary wallet for us to store digital assets to make it easier for users to trade on the exchange platform. Each Exchange can usually be accessed through a website or mobile app because it serves as a place to buy and sell cryptocurrencies and digital assets.
3). Advantages and Disadvantages of DEX and CEX
Centralized Exchange (CEX)
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Advantages of Centralized exchange (CEX):
- Have higher trading volume compared to Decentralized Exchange.
- Have high liquidity.
- More popular than Dex.
- Become a trading place for Fiat currencies and cryptocurrencies.
- Has high functionality.
Disadvantages of Centralized exchange (CEX):
- Has vulnerable security compared to Decentralized Exchange.
- Under the regulation of certain authorities such as the Government.
- Can be stopped not under the regulations of the relevant authorities.
- Centrally managed.
- Fee for each withdrawal of funds to fiat currency.
- Possible scam from third parties.
Decentralized Exchange (DEX)
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Advantages of Decentralized Exchange (DEX)
- High security of blockchain network.
- Transparent.
- Cannot be closed by any authorities including the government.
- Not tied to a central organization company.
- No fraud from any third party.
Disadvantages of Decentralized Exchange (DEX)
- Lower trading volume compared to centralized Exchanges.
- Unpopular with the general public.
- Has low liquidity.
- Only offer cryptocurrency coins and tokens.
- The functionality of DEX is still limited.
4). Have you used an Exchange before? tell us about your experience.
I was familiar with the cryptocurrency exchange market in 2018, I used a centralized exchange platform from Indonesia, namely Indodax.
Conclusion
Exchange platforms and wallets in the cryptocurrency world have different functions and use in their application, both of which are required by individuals working in cryptocurrencies and other digital assets, wallet provides features not provided by Exchange and vice versa.
Centralized exchange is a type of digital exchange that is popular among traders and investors who have been in the world of cryptocurrencies and digital stocks for a long time. Decentralized Exchange (DEX) is a decentralized cryptocurrency and digital asset exchange platform.
After doing these 7 tasks I have knowledge about Wallet and Exchanges, advantages and disadvantages of centralized exchanges, also I finally found out that there are also decentralized based cryptocurrency exchange platforms.