Crypto Academy Season 3 Beginners' course - Task 5: Dex, Cex, Popular Exchanges and Trading Cryptos by @doctor23

What is an Exchange

In normal words, an exchange is a process of giving a thing and recieving another. In the cryptocurrency world, a digital currency exchange is platform that allows and provide a platform for its users or customers to trade cryptocurrencies or other conventional currencies such as the fiat. This exchange is like a market place where you can change your currencies for others. They often use the bid price minus the ask price as their commission for the services they offer. These exchanges accepts wire transfer and other credit payments. Some of these exchanges run anonymous transactions. The exchanges sends cryptocurrencies to the users personal wallet. The main history behind digital currency is that, it was actually brought to live when the first cryptocurrency was created in 2008. this was mainly due to the introduction of other cryptocurrencies.
Examples include:

• Bitfinex
• Bitstamp
• Binance
• Huobi
• Coinbase
• Upbit
• Kraken

Two types of exchanges exist;
1)Decentralized Exchange (DEX):
This is actually a decentralized exchange. It uses the distributed ledger technology. Trading here is carried out without a third party.the seller and buyer connects with each other and interact.
2)Centralized Exchange (CEX):
The Centralized Exchange actually acts a third party to all its transactions. They establish high levels of security, with unlimited withdrawal when compared with the centralized exchange.

Difference between a wallet and an Exchange

• With a wallet, you can store your cryptocurrencies because that is what it is programmed for. In an exchange, you can convert cryptocurrencies to fiat currency.
• The exchange allows buying and selling of cryptocurrencies while a wallet does not.
• The wallet allows the secure and storage of crypto at any time.
• The wallet provides long term storage since that is what it is made of. But an exchange provides a short term.

Advantages of DEX

• In the Decentralized Exchange, it maintains confidentiality. Meaning the users do not pass verification. This always reduces the risk of third parties.
• Decentralised Exchanges are immune to regulations. This is mainly due to the distributed ledger technology.
• the interface here is user friendly.
• since the platform does not have access to the user fund, it cannot store data or funds of its users.

Disadvantages of DEX

• Margin trading does not exist in the decentralised system.
• It does not allows the exchange of fiat currencies.
• Contracts on the Decentralised exchange are traded based on smart contracts, as a good number runs on smart contracts.

Advantages of CEX

• The Centralised exchange offers unlimited withdrawals.
• it has a high trading volume when compared with the decentralised exchange.
• they can actually be run on mobile applications.
• they have high levels of security
• The Decentralised Exchange posses a good number of payment methods.

Disadvantages of CEX

One of the major drawback of the Centralised Exchange is that it has relative high fees.

• they actually have no advance order type.
• They often have a limited number of currencies they support.

My Experience with the Binance Exchange

In my two years of trading I have actually been trading currencies for about a year and a half using the JustForex Broker, until the beginning of this year which I learnt about cryptocurrency trading. Since then i engaged with the Binance Exchange, though it turns to be a centralized Exchange but I still like it and prefer it over decentralized exchanges. What I am looking further to use is the Poliniex Exchange, since it has been connected to the Steemit Blockchain already.

CC: @imagen