Hello to everyone, it is another blissful week of the steemit crypto academy season 2. I have really learn a lot in this week’s lecture, particularly the lecture on Decentralized and Centralized Exchanges by our hardworking professor @yousafharoonkhan. For this interesting lecture, I am here to present my homework task.

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Question 1

What Is A Decentralized Exchange

Any peer-to-peer business could constitute a decentralized trade but with regards to decentralized exchange we are basically looking at a platform that enables the functioning of centralized exchanges. The main difference is their backend exists on a blockchain. No one takes care of your funds and you don’t even need to trust the exchange to an extent that you do with centralized offerings. With decentralized exchange (DEX) it mainly involves trading between two parties with no middleman during the trading process. This trading process involves a peer-to-peer which generally takes place on the blockchain network and is very secure. The terms and conditions associated to the trading are laid to the two parties involved.

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What Is A Centralized Exchange

Centralized Exchange (CEX) commonly improves trades between users by keeping an order record. This records are collection of buys and sells orders posted by individuals traders. Centralized exchange aggregates orders from their users and then use a particular app to match and carry out the corresponding buy and sell orders. In this exchange, traders buy and sell on the exchange with an involvement of a middleman in the trading.

Question 2

Differences Between Centralized And Decentralized Exchanges

Below are some differences that separates and make the two exchanges unique;

1. The charges involve in centralized exchange during transactions is high but in decentralized exchange there are fewer charges allocated to transactions.

2. With decentralized exchange there is no trading options of spots and margin but in centralized exchange there is trading spot and margin.

3. Again with decentralized exchange, it involves independence of transactions and in centralized exchange the transaction pass through orders as allowed by the exchange rules of operation.

4. A cryptocurrency wallet is needed in decentralized exchange to interact with the platform which makes it difficult to use while centralized exchange is easy to use due to no cryptocurrency wallet needed to interact with the platform.

5. Decentralized exchange makes buying and selling of crypto assets quickly with no delay while in centralized exchange buying and selling of crypto assets are sometimes hindered due to low balance.

6. In centralized exchange, an investor can trade with real money, credit cards and cryptocurrencie but in decentralized exchange an investor can only trade using cryptocurrencies.

7. With decentralized exchange there is no documents needed for verification before carrying out a transaction but in centralized exchange there is a special document needed for transaction to take place.

Question 3

Write About Any Two Best Centralized Exchanges Of 2021

There are two exchange platforms that I like using, although I haven’t started using the coinbase exchange but I have an account of it and will be using it very soon. Binance is another exchange platform that I use.

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Binance

Binance is the largest and the fastest growing exchange platform for cryptocurrencies. It was found in 2017 with the main goal of trading in altcoins. The Binance exchange has its own cryptocurrency called Binance COIN (BNB). There are several digital currencies and stable coins on the binance platform for trading. Binance is recommended for traders who want to invest in various cryptocurrencies. It is one of the leading exchange platforms in the world. One can only make deposit in U.S dollars through SWIFT. Users can also directly trade a number of cryptocurrencies using their credit or debit cards. It also has the lowest transaction fees for both the taker and the maker. Each of them taking 0.1%.

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My Verified Binance Account

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Coinbase

The coinbase exchange is a long existing centralized exchange for cryptocurrencies since 2012 and has remained reliable till date. Coinbase has a coinbase wallet which is custodial to crypto wallet and is built on decentralized and allow users to navigate between two systems and utilize the best one for any of the desired trade at any point in time. The fees allocated to the coinbase exchange platform is around 0.99 – 2.99 USD depending on the type of transaction. Coinbase has its license of operation in almost 40 U.S states and this adds in strengthening their reputation. Initially coinbase only allowed for Bitcoin trading but quickly began adding different cryptocurrencies that fit its decentralized principle. Its list of cryptocurrencies expanded to include Ethereum, Litecoin, Bitcoin Cash, XRP and many others with the promise of adding more as long as their requirements are met.

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My Verified Coinbase Account

Question 4

Metamask Installation

Metamask is a digital cryptocurrency wallet that is used to connect with the Ethereum blockchain. It allows its users to access their Ethereum wallet through a browser extension and can also be used to connect with decentralized apps. It allows its users to store account keys, broadcast transactions, send and receive Ethereum based currencies and securely interact to decentralized apps through a web browser.

Below are the steps involve in installing a metamask extension;

• Visit the homepage of uniswap using the link (https://app.uniswap.org/#/swap)

• Click on the connect wallet.

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• Pick install metamask.

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• Click on the download now.

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• Pick chrome for the metamask installment.

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• Click add metamask to chrome.

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• Click on add extension.

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• Click create wallet and agree on their terms and conditions.

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• Create a strong password for yourself.

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• Backup phrase will pop-up where you have 12 words on metamask and should be written down where only you can have access to it . I choose remind me later to write down my 12 words for security reasons, after writing down the 12 words and clicking on the confirm button they will give you a congratulation message

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• Now there is a start swapping button where you can click to start your swapping process.

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• After your swapping process you can review the swap interface by clicking on the review swap.

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Question 5

Using Uniswap For Swapping

Uniswap is a decentralized exchange created on top of the Ethereum blockchain. It can be used to swap tokens, basically Ethereum to any ERC20 tokens. Below are the steps involve in swapping using the uniswap exchange;

• Login to the uniswap site using the link (https://app.uniswap.org/#/swap).

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• Click on connect wallet.

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• Now it does not appear install metamask anymore because you have already done that, so you now click on metamask.

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• Your wallet will be connected successfully and your Ethereum balance will be indicated.

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• Now select the token you want to swap, I will be swapping AAVE.

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• Now indicate the amount of Ethereum you want to swap and click on the swap button, the amount of AAVE you will receive and the price will be shown.

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Conclusion

To conclude with, I will say that decentralized exchange is more advantageous than centralized exchange due to how they work and considering their differences as well. My desired exchange platforms are Binance and Coinbase and I will love to do more trades there as time goes on. Also we need wallet like metamask to connect us to the decentralized exchanges for easy and comfortable swapping.

Thanks to everyone who devoted his/her precious time to go through my post.

@yousafharoonkhan