Dex, Cex, Popular Exchanges and Trading Cryptos - Steemit Crypto Academy Season 4 - Homework Post for Task 7

Hello fellow steemians once again,

I hope everyone is having a great day and good morning to prof. @imagen . I feel great and appreciable after learning the lecture notes provided for this task, it gave a new insight which i will now be more than glad to share light on.

Source

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.

What is an Exchange?

An exchange is when two people or two parties have something the other either wants or need then there can be an exchange between the two parties. But in cryptocurrencies terms we can say an exchange is more like a system which make it possible for cryptocurrencies to be sold and purchased and can also be used to convert one cryptocurrency to the another for example converting bitcoin to ethereum or ethereum to doge coin and many more. There are two main types of exchanges which are the Decentralized Exchange(DEX) and the Centralized Exchange(CEX).

Decentralized exchange(DEX) basically as the name suggests is most definitely decentralized and mainly exist to enable users purchase and sell crypto assets amongst one another without the need for an intermediary or a third party. Some of the popular decentralized exchanges are, uniswap, pancake swap, 1inch exchange, sushi swap, dYdX and many others

Centralized exchange(CEX) which is also the exact opposite of the DEX this one also as the name suggests is a centralized system which enables the purchasing and selling of crypto assets with the presence of a trusted intermediary to protect the funds as the transaction is in progress. some of the popular platforms for centralized exchanges are, coin base, kraken, Gemini, poliniex, binance and many more.

What is a Wallet?

Wallet as we all know literally is where we keep our money an important identification cards. But in this case we are talking about wallet in crypto terms, so just like a normal wallet, crypto wallet stores and keeps private keys safe and accessible. Most importantly, It allows for the sending, receiving and spending of crypto assets. In recent times, most crypto exchanges like coin base have also behave like wallets in storing crypto assets for some time.

Differences between an Exchange and a Wallet

After my insight on both what an exchange and a wallet is, one might think the two are mostly similar but there are some differences between them some of which i will state in the table below.

Wallet	Exchange
With a wallet, assets are only meant to be stored	In an exchange, crypto assets are to be sold, bought, and converted.
With a wallet, full access to the private key is being granted.	In an exchange, full access to private key is not being granted.
With wallet, users are responsible for the security of their assets.	In an exchange, the platform is mostly responsible for the security of users assets.
With wallet, keys can be kept offline to prevent attacks	In an exchange, there's a chance of an attack than a wallet.

Advantages of Dex

1. Decentralized exchange counters the most important issue that is the risk of an attack.
2. Decentralized exchange also prevent market manipulation with peer to peer exchange.
3. Decentralized exchange also provides anonymity to its users.
4. In decentralized exchange, all token can be traded.

Disdvantages of Dex

1. One main demerit of DEX is it's complexity to use, that is the need to remember keys to crypto asset wallets.
2. Another demerit for DEX is the lack of fiat payments. The lack of fiat payment make it inconvenient for users who do not own crypto assets.
3. In Dex another demerit is the lack of recovery for lost keys and passwords which then leads ultimately to the lost of assets.
4. The scalability issues in Dex due to the increase in number of users is also another key and disturbing problem.

Advantages of Cex

1. In a centralized exchanges there is a consistent liquidity in the system.
2. Centralized exchange makes the it easier to make complex trades and has faster transaction rate compared to the Decentralized exchange.
3. Mostly importantly centralized exchange is user friendly as it provides assistance for new users to better understand how to make trade and explore the platform.
4. Centralized exchange also accounts for the majority volume of trades unlike the decentralized exchange.

Disdvantages of Cex

1. The most pressing disadvantage of centralized exchange system is the risk of hacking. The Centralized Exchange runs a high risk of being hacked as most of its tools are online.
2. Another disadvantages of centralized exchange is the risk of manipulating prices.
3. Another key disadvantage of centralized exchange is the lack of enhanced security. As users entrust they privates keys in the system and the system runs a risk of being hacked, it therefore jeopardises the safety of users assets.

Have you used an Exchange before? tell us about your experience.

YES. i have used and still using an exchange to be specific Binance exchange.

My experience with binance has been quite intriguing and smooth going. Binance has a user friendly interface platform and many other tools to help users explore other options on the platform.

Another experience of mine is it's ease to use. A new user will be able to navigate the plafltform and explore new things as the platform provides tutorial videos to assist in almost every key part of the platforn especially on how to buy and sell crypto assets either by limit order or market price order and also how to trade through peer-to-peer safely. All am simply trying to say is that Binance platform is much easier to use than other platforms in my experience.

Source
Most importantly on binance to be able to have proper access to tradings and other investments the user's accounts ought to be verified. Below is mine.

Source

Lastly, there are features or tools on the platform that helps users make more profits on their investments. There's a feature named Earn in the wallet portion of the binance platform and this feature or tool helps user be able to stake assets in order to make various profits. And another tool named Pool which also mines certain crypto assets for users and many others.

Source

Note all images used in this post are either screenshots from my phone of were created by myself.

In conclusion i just want to thank prof @imagen once again for the opportunity to learn more and more and i hope to use this insight hopefully to do impactful things.
Thank you.