Cryptocurrency is going to revolutionize the world. The world is accepting the cryptocurrency as a payment gateway. In past, we need banks to make transactions and exchange of money. We are still using banks in most of the cases but the future will be totally different.
Companies are adopting the cryptocurrencies around the globe. New ICOs are making their way to the market. Above all, we need cryptocurrency exchanges to change the cryptocurrency into fiat and vice versa.
In this article, we are going to discuss what is the cryptocurrency exchange and what is the difference between centralized and decentralized exchange.

What is Cryptocurrency Exchange

Cryptocurrency exchange is online platforms where the crypto users can exchange Cryptocurrency for other assets, such as conventional fiat money and with another cryptocurrency.
The exchange charges a specific transaction fee for every transaction. We can divide exchange in different categories depending on different factors.
A fiat exchange allows the exchange of fiat currencies with the cryptocurrencies. On the other hands, in crypto-to-crypto exchanges, cryptocurrencies can be exchanged for each other. The generally traded crypto pair is Bitcoin vs. Ethereum.

Centralized Vs Decentralized Exchange

What Is Centralized Exchanges

Centralized exchanges are the cryptocurrency exchanges that are control by a central authority. These exchanges work as an intermediate between users and exchange. It allows trading BTC and other cryptocurrencies against fiat currency.

Properties Of Centralized Exchange :

1- Centralized exchange is controlled by a central authority, it is easy To use even for beginners.
2- Centralized exchange have Advance features available like ( Margin Trading & Stop loss)
3- There is no problem with liquidity due to a high volume.
4- In centralized exchanges, transaction speed is very fast. For example, Binance has 1.4 Million transactions/second.
Similarly, centralized exvhange also has some drawbacks. As it’s controlled by the central authority, the users have to pay a specific fee for trading and transactions.

Drawbacks Of Centralized Exchange:

1- Exchange acts as the central authority and the user needs to pay a specific fee.
2- The Centralized system is open to users. There is a chance of hacking attempt on exchange and users can lose their funds.
3- Bank accounts and KYC approval required for verification. You can’t start trading without KYC approval.

Let's talk about DecentralizedExchangee :

What Is Decentralized Exchange?

Decentralized exchange is an exchange which is not control by a central authority. The trade is occur between users with the help of peer to peer network.

For example, if user1 want to buy 5 Bitcoin and user2 want to sell 5 Bitcoin then both will trade among themselves. There will be no third man between these two users.
Etherdelta, IDEX , Switcheo & Nex are decentralized exchanges.

Properties Of Decentralized Exchange:

1- Decentralized exchange is not own by any central authority, that’s the reason there is a very low trading fee and in some cases, there is nearly no trading fee

2- There is no risk of being hacked. Decentralized exchange is control by the users. Users hold the private key

3- You can start trading on decentralize exchange without any KYC approval.

Drawbacks Of Decentralized Exchange:

1- The user have to manage the decentralized exchange. That’s why, it is difficult to use decentralize exchange for beginners.

2- It has a low volume of exchange. This cause liquidation problem until the adoption of these exchanges come.

3- If you want to start trading on decentralize exchange, you need to wait to match with specific trade value because of low volume.

Best Cryptocurrency Exchange Platforms

The are several digital currency exchange platforms available in the market but you need to choose the best cryptocurrency exchange.

Some popular cryptocurrency exchanges are:

https://www.coinbase.com/join/5a8ad7628563c704055592e0

https://www.binance.com/?ref=29231198

Your Turn

Let's continue the conversation in the comments.

Have you already know about cryptocurrency exchange?
Have you ever used cryptocurrency exchange before?
Which one is your favorite cryptocurrency exchange?
How can I improve my instructions to help you learn better?
Thanks for stopping by!