Hello Steemit Crypto Academy Community!

As-Salaam-Alaikum professor @yousafharoonkhan. I have done my research on this week’s task. And here are my answers to the questions asked.

Centralized Exchange

Generally, a centralized exchange is a cryptocurrency market place where a mediator control how users buy and sell digital assets as well as the deposit and withdraw of funds. Coinbase, Bittrex, and Poloniex are centralized exchanges.

A centralized exchange regulates buy and sell orders using what is called an order book. They use their own software, servers and order book to match buyers with sellers and then process these orders for a commission called the transaction fee.

Benefits of Centralized Exchanges

1. It is easy to use
2. It provides high levels of liquidity for cryptocurrencies
3. It has good customer support team

Decentralized Exchanges

A decentralized exchange is a digital market place that has no mediator. Instead of using their own server, software, and order book to control how users buy and sell, a decentralized exchange uses smart contracts to process transactions.

PancakeSwap, SushiSwap, and UniSwap V2 are decentralized exchanges.

Benefits of Decentralized Exchanges

1. It has high level of security
2. Users always have access to their funds
3. No KYC needed and as such it does not require users to provide personal information

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Differences between Centralized and Decentralized Exchanges

There are several differences between centralized and decentralized exchanges, they include;

• Security: Decentralized exchanges do not store your funds for you so it is harder to lose your funds if a DEX is attacked. Centralized exchange have access to your funds and as a result you can lose your funds when hacked.

• Converting Fiat to Crypto: Centralized exchanges offer a medium where you can easily buy cryptocurrency with your fiat or cash at the bank. For instance, you can use your credit card to buy crypto on Binance. Decentralized exchanges cannot convert fiat to crypto.

• Customer Support: Decentralized exchanges usually do not have a customer support team but centralized exchanges have an active customer support team.

• Third-Party Involvement: The centralized exchange act as a middleman who regulates transactions. Thankfully, decentralized exchanges do not have any involvement from third-parties.

• Downtime: During maintenance centralized exchange often suffer downtime in which orders may not be processed or one can't make a withdrawal. This has happened severally on Binance. A decentralized exchange like Uniswap V2 hardly suffer downtime.

• KYC: Centralized exchanges like Binance require users to provide personal information like your date of birth, bank details and more. Decentralized exchanges do not require personal information.

• Nature of Transactions: Transactions made on centralized exchanges are traceable because users provide their personal informations to verify their accounts. Whereas, transactions made on decentralized exchanges are untraceable.

• Resistance to Censorship: It is difficult for government to regulate, ban, impose taxes, or track transactions on decentralized exchanges, but centralized exchanges make it easy for government to do this.

• Transaction Fee: Decentralized exchanges charge low transaction fees. However, centralized exchanges change higher transaction fees due to the cost of keeping your funds and monitoring transactions.

• Listing of New Digital Assets: It takes longer time to list new cryptocurrency on big centralized exchanges. On the contrary, it is easier to list new coins on decentralized exchanges.

Comparison Table

Exchanges	Centralized	Decentralized
Security	Low	High
Converting Fiat to Crypto	Easy	Difficult
Customer Support	Present	Not present
Third-party Involvement	Present	None
Downtime	Yes	No
KYC	Needed	Not required
Nature of Transaction	Traceable	Untraceable
Resistance to Censorship	Low	High
Transaction Fee	High	Low
Listing of New Digital Assets	Slow	Fast

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Two Best Centralized Exchanges of 2021

In my personal opinion, the two best centralized exchanges of 2021 are;

• Poloniex, and
• Binance

Why Poloniex is Best to Me

• Smoothe interface and design
• Good customer support team
• No KYC needed unless you're trading extremely high amount
• Low transaction fee of 0.125%
• Huge range of cryptocurrencies

Screenshot of My Last Trade on Poloniex

From the photo above you can see my last trade on Poloniex. I bought some STEEM at 0.73 USD. I already made some profits because STEEM has risen to 0.82 USD at the time of writing this post.

Why Binance is Best to Me

• Very active P2P trading
• You can transfer STEEM directly to your steemit account
• 2 factor verification to authenticate withdrawal
• Easy to use
• You can earn with DeFi Staking

Screenshot of My Last Trade on Binance

From the screenshot above you can see the that I bought some SXP yesterday at 2.8 USD. SXP is now 3.6 USD, already made some profits.

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How to Install Metamask on Firefox Browser

Below is a stey by step guide on how to install Metamask wallet on Firefox browser:

• Go to app.uniswap.org

• Tap the [Connect Wallet] button

• Click [Install Metamask] from the options provided

• Scroll down the page and press the [Download now] button

• Then click [Install Metamask for Firefox].

• Tap the [+ Add to Firefox] button.

• You will receive a pop-up notice to give Metamask some permissions. Simply click [Add]

• To use Metamask add-on while on incognito you need to give it permission by ticking the check box and clicking [Okay, Got It]

Congrats! You have successfully installed Metamask wallet on your Firefox browser. Now let's set up the Metamask wallet

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How to Set Up Your Metamask Wallet

• Tap the [Get Started] button, then click on the Metamask icon at the top left corner of Firefox browser

• Hit the [Create a Wallet] button

• To enable Metamask usage statistics, tap the [Agree] button. This will enable the developers to improve the functionality of the wallet

• Set up your password and confirm the password in the fields provide, then press the [Create] button

• Tap the highlighted area to reveal you pass phrase. Store properly then tap [Next]

• Input your pass phrase and click on the [Confirm] button

• Tada! You have successfully set up your Metamask Wallet. Now press the [All Done] button

Now let's talk about how to buy and sell coin on Uniswap.

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How to Use Uniswap Exchange

In this guide, we will focus on how to use Uniswap Exchange on a personal computer.

• Go to app.uniswap.org, connect your Metamask Wallet with UniSwap V2. Make sure to tick the account box and click [Next]

• Choose the coin you want to sell, then select the coin you want to buy. In this example, I chose STORJ

• If you do not have sufficient balance you will not be able to swap, as seen in the photo below:

Note: Ensure you have sufficient balance so that you can start swaping your coins.

Final Words

This article covers the definition, benefits, and differences between centralized and decentralized exchanges. I have also discussed my favorite centralized exchange, how to install Metamask wallet and how to use Uniswap exchange.

Notable mentions:
@yousafharoonkhan
@stream4u
@steemitblog

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Footnote:
^{All Screenshots were taken by me on Poloniex, Binance, Metamask and Uniswap}