Steemit Crypto Academy Season 4 Beginners' course - Task 7: Dex, Cex, Popular Exchanges and Trading Cryptos; Home work task for @imagen
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.
Exchange as a word is seen as a market place where commodities and other financial related instruments are bought or sold.
Exchange main aim is to make sure that buying and selling between buyers and sellers is been done fairly.
Now what's exchange in the Crypto world?
In the world of cryptocurrency, exchange is considered a business deal that permits customers to buy or sell cryptocurrencies or digital currencies for other digital assets or fiat money.
Using the above definition, we can simply put exchange to be a professional relationship between a buyer and seller for the sole purpose of fair goods and service exchange.
Moving to the Crypto world, exchange requires the use of a wallet. (Centralized exchange CEX or decentralized exchange DEX) wallet.
Centralized exchange is that which is controlled by a central unit whereas decentralized exchange doesn't have a particular control unit.
Below is a list of CEX and DEX wallet that can be used for exchange.
- Roqqu
- Huobi
- Coinbase
- KuCoin
- Waves Dex
- Binance Exchange
- Kraken
- Uniswap
I'll outline the difference in a tabular form.
| criteria | wallet | Exchange |
|---|---|---|
| definition | wallet is considered an application that allows users to store their cryptocurrency. | An exchange is seen as a service that permits one to buy or sell currencies. Be it crypto, digital or covert fiat. |
| Security | The security of a wallet is more defined. In contrast, crypto wallets have high security level. | Security in an exchange is not as strong as that of a wallet, reason been that most exchanges are centralized and that makes trust is a shaky feature. |
| Decentralization/ centralization | Majority of wallets are decentralized. Meaning that there's no central body that coordinates its affair. | Most of the available exchange forum are centralized which is to say that it's activities are controlled by a central body. |
| Control and authority | In a wallet, total control is held by the owner because it's decentralized in nature. | An exchange is mostly controlled by the central body thereby depriving the owner the privilege of control and authority. |
| Presence | A wallet can be offline or online in nature. | Exchanges holds only the online feature. |
A Decentralized exchange and centralized exchange are the two major exchanges we have.
When we talk about centralized exchange, it's that exchange that's controlled by a central body and the opposite of it is considered a decentralized exchange.
Below is an outlined advantage and disadvantage of a centralized exchange and a decentralized exchange
Advantages of a CEX
The trading volume of a centralized Exchange is way more higher when compared to a decentralized exchange.
Another commendable feature of a CEX is speed.
Trading in CEX is faster than DEX.Liquidity is another amazing feature of this exchange.
The CEX allows users to convert any crypto currency to cash whenever they wish to.When we talk about fame, CEX has an edge over DEX. Maybe because of it's flexibility.
Disadvantages of CEX
Centralized exchanges can easily be hacked due to poor security.
Majority of users don't trust the CEX because their privacy is controlled by a central body.
The volume and price in a CEX can be manipulated by users to their advantage.
Since a CEX is controlled by a single unit, a breakdown of one part of the system will affect the full system.
Advantages of a DEX
Security in DEX is stronger than that of a CEX because only a user have access to his details.
Anonymity is another factor that makes DEX a spectacular exchange.
A DEX doesn't request for a user's personal information.A DEX gives users full custody of their fund (sovereignty). In contrast, there's no restrictions on how to use your fund using a DEX.
Data and transactions performed in DEX is secure because it's saved in different nodes unlike the CEX that stores information in one node.
Disadvantages of DEX
Speed is a very big challenge when using DEX.
Transactions in DEX is relatively slow.Liquidity in a DEX system heavily depends on the number of active users in the platform.
Conversion of cryptocurrencies to other currencies is hard when using DEX.Another disadvantage is focused on anonymity.
Since it doesn't require Personal details of users, fake account can be created and owned by fraudsters.It's takes much pain, time and money to cancel an already placed transaction.
Sincerely speaking, am a newbie in the Crypto world.
But due to my resilience and probing, I've learned how to use Roqqu.
What's Roqqu
Roqqu is centralized Wallet that enables users to trade cryptocurrencies to other currencies.
My Experience
I've always wanted to own cryptocurrencies, but never had an experience on how to do it.
So one day, I met a friend who always talks about wallet and asked him to direct me on how to use a wallet.
He gave me an insight about it. And now I can buy and sell coin using a Roqqu.
Procedures on how to perform transaction using Roqqu
Step I : download Roqqu from playstore or apple store and sign up.
Step 2 : Deposit money or move your steem from steemit wallet to Roqqu and sell it.
This is a Roqqu home page. It has different feature like deposit, buy/sell, airtime etc.
Now let me explain how to buy a cryptocurrency using Roqqu.
Step 3: click on buy/sell.
Step 4: click on instant buy.
Step 5: choose the digital currency you wish to buy.
Let's us BTC as an example.
Step 6 : input the price you wish to buy and click on proceed.
After that, you'll have to put you password to confirm the transaction.
How to sell cryptocurrencies using Roqqu
Step 1 : click on buy/sell.
Step 2: Click on instant sell.
Step 3 : choose the cryptocurrency you wish to sell.
Let's use XRP as an example.
Step 4 : input the amount you wish to sell.
Click on proceed, put your password to confirm the transaction.
The world of cryptocurrency is a very unique one that uses unique terms.
CEX and DEX are both exchange platform with different build ups.
Well, I must honestly thank professor @imagen for a nice lecture.
The lecture was a very strong backbone for me in the course of doing this assignment.
Note: All unsourced images are screenshots from my Roqqu.