Steemit Crypto Academy Season 4 Beginners' course - Task 7: Dex, Cex, Popular Exchanges and Trading Cryptos
Hello Steemians,
It’s another exciting week and I’m here with solutions on the questions asked in the Beginner course Task 7.
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.
As the name suggests, An exchange is a digital platform that provides the stage for exchanges,it could be an exchange of a crypto asset for money/fiat, exchanging money for a crypto asset and an exchange of a crypto asset of another or.eg exchanging SBD for Steem. It can also be an exchange of services.Basically they’re digital platform for procreating market prices for assets based on their appreciation (demand and supply ), an asset with a higher market value will have a higher market price and the vice versa.
The parties involved in a trade retain their asset in a wallet of the exchange so they use the asset in their wallet for trades.
There are Basically two types of exchanges which are:
Centralized Exchange: Centralized as the name suggests, control and other activities are centered to one particular person or administration, users do not have full power over their accounts but rather a particular body controls/monitor their accounts and transactions and also claims charges for transactions.
Examples
- Poloniex
- Bittrex
- Binance
- Coinbase
Decentralized Exchanges: Decentralized Exchange is just the same as Decentralization where power/ control is not centered to a particular body but power is distributed to every user , Users are able to make autonomous decisions on transactions and other activities without third party involvement.
Examples
- Uniswap
- Just Swap
- Air Swap
- WavesDex
An Exchange is platform for exchanges, it could be exchange of crypto for fiat or crypto for another crypto. simply put an exchange is a medium for buying and selling Of digital assets.
A wallet is where users retain their assets which they use for trades in the future. In this case the wallet play the role of banks , when a user creates a wallet he’s given keys that gives him access to the wallet, without the keys the user can’t access the wallet.
| Wallet | Exchange |
|---|---|
| Retaining /storage of assets | exchange/trading of assets |
| Full control of private key | limited access to private key |
| Deals with only crypto assets | Deals with both crypto and fiat |
| It can be online and offline | Online only |
Decentralized Exchange are not supervised by a central administration therefore no requirements to join or access Decentralized Exchanges.
User make autonomous decisions in their transactions without third party therefore it incurs less charges.
Decentralized Exchange are transparent in a way that transactions are stored across multiple servers and not into one single / central server therefore any unusual activity will be noticed.
Decentralized Exchanges are very Secure because transactions are distributed across various nodes which make it impossible to be hacked and also all activities are monitored.
Due to anonymity of Decentralized Exchange criminals can use that as an opportunity for money for money laundering and other criminal activities.
Decentralized Exchange are user unfriendly, users find Decentralized Exchange problematic and therefore feel uncomfortable with Decentralized Exchanges.
transactions on Decentralized are irreversible so when a wrong transaction is made the user runs a lost.
In Centralized Exchange transactions are initiated and executed quickly , transactions conducted at high speed unlike decentralized.
In Centralized Exchange when someone has a problem pertaining a transaction the Central body can provide assistance so as to smoothen the transaction.
Centralized Exchange are user friendly so user can operate centralized Exchanges without any nuisance.
In Centralized Exchange, all transactions made incur charges on all transactions which goes to the central Body.
In Centralized Exchange Users do not have full control of their keys so at any point in a time a user can lose all his assets .
Since all the transactions and other information are stored on a single node , Centralized Exchange are more vulnerable to be compromised hackers will aim at the Central server and can access all they need.
I have and I have been using an exchange which is the Binance exchange, initially I didn’t have a Binance account so I used to transfer my assets from steemit to his Binance address so he makes trades for me till he help me create an Account for myself.
Whenever I want to trade Steem (when the price of Steem is high) I have to transfer it to Binance below is how I sell my Steem asset.
- first I sign into my binace account.and click on deposit.
- I then Search for Steem since it’s the asset I want to deposit and tap on it.
- I then Copy the STEEM deposit address and and open my wallet and paste it as the recipient name in the text box marked red .
- I then copy the STEEM memo address and paste it as the memo and click next. The Steem will then be transferred to my Binance account which I can trade with P2P at anytime .
An exchange provides a platform for exchanges, be it exchange of crypto assets or liquidity . Exchange can be Centralized Or Decentralized depending on the users preferences , he/she can choose a centralized Exchange or a Decentralized Exchange.
Thanks to @imagen for this enlightenment and I hope I’ve covered all questions asked and I’ll be looking forward for my work to be reviewed.