Crypto Academy Season 4 Beginners' course - Homework Post for Task 7: Dex, Cex, Popular Exchanges and Trading Cryptos || by professor @imagen
Hello everyone, I would like to give thanks to professor @imagen for giving us this great lecture and I will like to give thanks and praises to the almighty God for adding me another day and I am here today to complete my task on exchange.
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.
Explain in your own words what an Exchange
Exchange is a digital currency that allows users to trade assets like cryptocurrency or digital cryptocurrency or in crypto Exchange is the act of buying and selling cryptocurrency in the online example of cryptocurrency is Bitcoin etc
Exchange in crypto is mostly done inside your wallet example of exchange inside your wallet in crypto is a binance wallet this is where we mostly do our exchange our cryptocurrency and inside our wallet,
you can do all kinds of exchanges which is buy and sell cryptocurrency.
Exchange is the act of giving something out and you receive something in return example is when you sell your cryptocurrency to a buyer and he or she pays you your money that in exchange.
TYPES OF EXCHANGE
There are two types of exchange which are decentralized exchange and centralized exchange
Decentralized Exchange: In a decentralized exchange, there is no authority in charge of the account, the exchange is own and controlled by the users, it’s the user who has fully controlled the account.
in exchange, the buying And selling there is no authority having his hands inside on it or telling the user what to do. For the decentralized exchange and it’s the users who have full control of their account
In a decentralized exchange if you are going to make a transaction the mode of payment is less us compared to a centralized exchange
An example of a decentralized exchange is wavesDex
- Ether
- Delta
Centralized Exchange A centralized exchange is own and control by the authority and is the authority that gives the users the orders for what they should do and the users don't have fully controlled of their account
In a centralized exchange when the user wants to make a transaction there is a third party who look assist the users to complete the transactions and there is a higher fee to pay at the end of the transaction
An example of centralized is
- Binance
- Poloniex
Differences between a Wallet and an Exchange.
WALLET
A wallet is a device where everyone is being given the chance to store their private and public key for their cryptocurrency transactions and in the wallet, every user is being given two keys which is the public key and the private which is what you are supposed to keep it safe to keep your fund at a safer place and if you mistakenly lost your keys you can’t get your fund, so in the wallet is always important to store your keys inside a place so that whenever you lost your keys you can get it there so that you will get closer to your keys example of wallet is binance wallet and Paxful wallet.
EXCHANGE
Exchange is an online market where users buy and sell cryptocurrency and exchange in crypto can be done in all parts of the world provided you have an account you can trade, buy and sell without having problems with anyone example of a cryptocurrency that we exchange online are Bitcoin, etc
ADVANTAGE AND DISADVANTAGE OF DECENTRALIZED EXCHANGE (DEX)
ADVANTAGE OF DEX
In a decentralized exchange whenever you make a transaction your fees are always less as compared to a centralized exchange example if you want to transfer your Trons into your binance wallet your mode of payment is free.
In a decentralized exchange, someone cannot hack your accounts on less you hand your keys to them, that is the only way they can get access to your fund.
In a decentralized exchange, there is no third party and there is the privacy it’s only the user who can have access to his funds without anyone getting closer to it and he or she has the right to sell or buy from whomever he chooses to trade with, without anyone knowing.
DISADVANTAGE OF DEX
Decentralized exchange is usually difficult to work because it involves high skilled personal that one can work with it, in other to make a transaction.
It is very easy sometimes to get a stolen because in a decentralized exchange if you are going to buy or sell your cryptocurrency the one you are going to trade with you might not know he or she, so you might get rob in the process of buying or selling your cryptocurrency.
In a decentralized system if you mistakenly lost your key, which is the public or the private key you can’t key access to your funds, and getting your keys back would be difficult on less you create an account a new account to start at fresh again.
Advantages and Disadvantages of CentralizedExchange (CEX)
ADVANTAGE OF CEX
In a centralized exchange in case, you're lost your keys, and you went and see the authority they will assist you to get your keys back and so that you can get your funds back without having problems.
In a centralized exchange if you going to make a transaction and you get lost in the process there is a third party who will assist you to know your transaction is successful.
In a centralized exchange, if you are going to make a trade like selling and buying, you will do everything physically and it is always safer than a decentralized exchange, so it will being difficult to get attract when buy or sell cryptocurrency and it will go successful without having problems.
DISADVANTAGE OF CEX
- In a centralized exchange if you are going to make a transaction there is a third party who will assist you to make your transaction after that the fee payment is high.
In a centralized exchange, there is no privacy before if you are going to make a transaction there is a third party, who will choose how he or she wants the transaction should go and you can’t do anything about it so there is no freedom in there,
In a centralized exchange, it wastes time as compared to the decentralized exchange because in other to complete a transaction you have to follow a channel before you can complete it, and sometimes maybe a bad network, and when there is a bad network you can make a transaction.
Have you used an Exchange before? tell us about your experience.
YES I have never known what exchange till I join the steemit platform where I got to know exchange in crypto is an online market that we used to buy and sell cryptocurrency.
I have also learned that to exchange in binance, blockchain and paxful and in binance, if you going to do an exchange, for instance, if you are having SB inside your steem wallet you, first of all, have to go to the market to exchange your SB into steem and if they gave you the steem, you transfer into your binance wallet and you covered you steem into Bitcoin or Ethereum
After you are done covering it you they send it to your p2p ( peer to peer) after that you can do your exchange that is how it's done in your binance, you can do your exchange inside your binance wallet.
CONCLUSION
Exchange is the act of selling or buying cryptocurrency online and in exchange, you can get to sell or buy without having problems with anyone.
I will like to thank professor@imagen for going through my work and giving us this wonderful to learn more about exchange and how it's done.
Thanks !!!