Steemit Crypto Academy Season 4 Beginners' course - Homework Post for Task 7 : [Dex, Cex, Popular Exchanges and Trading Crypto] | by @chairulrizalx

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(3). 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.

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Hello Everyone

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Season 4 of Steemit Crypto Academy has arrived at week 4, and on this occasion, I will complete an assignment for Season 4 Beginners Level Introductory Course at the Crypto Academy. In this post, I will complete Task 7 which is discussed Dex, Cex, Popular Exchanges and Trading Cryptocurrency - Steemit Crypto Academy Season 4 Beginners' course - Task 7: Dex, Cex, Popular Exchanges and Trading Cryptos mentored by Professor @imagen.

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1). Explain in your own words what an Exchange is.

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Market is a place that brings together sellers and buyers. Marketing occurs when people decide to satisfy needs through exchanges made by sellers and buyers. In cryptocurrencies, an exchange is a platform that brings together buyers and sellers of cryptocurrencies or other digital assets to conduct transactions between the two parties where the exchange acts as an intermediary between the two.

^source To carry out trading activities on the exchange, we need to enter funds in the account that we have on the exchange platform. After the buyer enters the nominal funds using fiat currency (USD, EUR, etc.), then the buyer can carry out the "buy" process on the exchange, this way later we can buy Bitcoin or other digital assets at a price that we have chosen according to our wishes.
^source The exchange platform is only an intermediary and it cannot determine the price of cryptocurrencies or other digital assets. The law of supply and demand is what will determine the selling and buying prices of these cryptocurrencies. Each exchange platform differs from one another such as price, the digital assets traded, and other technical differences that give buyers the choice they are looking for.

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2). Differences between a Wallet and an Exchange

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^source Exchange platforms and wallets in the cryptocurrency world have different functions and use in their application, both of which are required by individuals working in cryptocurrencies and other digital assets. Following are the differences between Exchange and Wallet:

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Wallet

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Digital wallets are required by individuals to store cryptocurrency or digital assets that they acquire for personal storage in the form of software, mobile applications, and extensions on web browsers. The wallet has a private key that must be stored and guarded carefully to avoid theft or other digital crimes, the private key given when creating a cryptocurrency wallet serves as a key that we can access to enter the wallet. Generally, wallets do not provide facilities for buying and selling cryptocurrencies or digital assets, wallets only act as a place to store digital assets.

^source In addition, Having a wallet is useful for helping us to manage private ownership of cryptocurrencies and also interact with Decentralized finance networks, decentralized applications (DApps), and other blockchain technologies.

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Exchange

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Exchanges are only used by traders or investors to buy and sell cryptocurrencies and digital assets, the exchange platform is just a place for trading or staking cryptocurrencies. Exchange does not provide individual privacy such as a private key on the Wallet, the exchange only provides a temporary wallet for us to store digital assets to make it easier for users to trade on the exchange platform. Each Exchange can usually be accessed through a website or mobile app because it serves as a place to buy and sell cryptocurrencies and digital assets.

^source Exchange and Wallet have different functions and uses, Wallet provides features not provided by Exchange and vice versa. Both are needed as tools and access to connect with the cryptocurrency market and blockchain network.

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3). Advantages and Disadvantages of DEX and CEX

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Centralized Exchange (CEX)

^source Centralized exchange is a type of digital exchange that is popular among traders and investors who have been in the world of cryptocurrencies and digital stocks for a long time. A centralized exchange is a platform for buying and selling cryptocurrencies and digital assets set up by a central organizational company to provide a meeting place for traders, investors, and owners of digital coins or crypto tokens who wish to sell or buy them.
Centralized Exchanges are: Poloniex, Indodax, Binance, Bitfinex, Bittrex.

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Advantages of Centralized exchange (CEX):

• Have higher trading volume compared to Decentralized Exchange.
• Have high liquidity.
• More popular than Dex.
• Become a trading place for Fiat currencies and cryptocurrencies.
• Has high functionality.

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Disadvantages of Centralized exchange (CEX):

• Has vulnerable security compared to Decentralized Exchange.
• Under the regulation of certain authorities such as the Government.
• Can be stopped not under the regulations of the relevant authorities.
• Centrally managed.
• Fee for each withdrawal of funds to fiat currency.
• Possible scam from third parties.

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Decentralized Exchange (DEX)

^source Decentralized Exchange (DEX) is a decentralized cryptocurrency and digital asset exchange platform. DEX in its implementation a cryptocurrency market that does not rely on third-party services to hold each customer's funds. Trading in this system will be formed directly between users automatically with a Peer-to-Peer (P2P) network system.
^source DEX uses Blockchain technology which is very secure compared to centralized exchanges, most crypto asset enthusiasts believe that the decentralized exchange market can increase significantly in the future because it is not tied to any particular authority, the security system of blockchain technology, and also transparency.

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Advantages of Decentralized Exchange (DEX)

• High security of blockchain network.
• Transparent.
• Cannot be closed by any authorities including the government.
• Not tied to a central organization company.
• No fraud from any third party.

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Disadvantages of Decentralized Exchange (DEX)

• Lower trading volume compared to centralized Exchanges.
• Unpopular with the general public.
• Has low liquidity.
• Only offer cryptocurrency coins and tokens.
• The functionality of DEX is still limited.

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

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I was familiar with the cryptocurrency exchange market in 2018, I used a centralized exchange platform from Indonesia, namely Indodax.

I use the platform to buy crypto currency coins which are used for trading and small investments, because I still don't know about decentralized exchanges I only use CEX to transact cryptocurrencies and digital assets.

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^{transactions that I do on the Indodax centralized exchange platform.} Apart from using the Indodax cryptocurrency exchange platform, I also use Binance to exchange Steem coins that are converted to fiat currency. In my opinion, both platforms are easy to use and also have high liquidity because they use a centralized system.
^{My Binance Exchange account. Transactions I made on the Binance exchange platform.}

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Conclusion

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Exchange platforms and wallets in the cryptocurrency world have different functions and use in their application, both of which are required by individuals working in cryptocurrencies and other digital assets, wallet provides features not provided by Exchange and vice versa.

Centralized exchange is a type of digital exchange that is popular among traders and investors who have been in the world of cryptocurrencies and digital stocks for a long time. Decentralized Exchange (DEX) is a decentralized cryptocurrency and digital asset exchange platform.

After doing these 7 tasks I have knowledge about Wallet and Exchanges, advantages and disadvantages of centralized exchanges, also I finally found out that there are also decentralized based cryptocurrency exchange platforms.

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Thank You

cc Professor : @imagen @dilchamo @nane15

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