Good day prof. @imagen, it is a privilege to learn from you, and below is my home work post for task 7: Dex, cex, popular exchanges and trading cryptos.

Homework

(1) 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 any exchange before? Tell us about your experience.

Explain in your own words what an exchange is.

In my own understanding, I will say that Exchanges are well arranged marketplace where currencies ( both fiat and crypto) are traded.
Exchanges provide traders with the podium to buy or sell assets such as crypto and fiat currencies.
In exchanges, buyers finds specifically the currency they want to buy from a seller at a specific price based on demand and supply which are the main forces that control the market.

Exchanges can be divided cartegorically according to the type of trade executed, or what is being traded e.g cryptocurrency exchange, foreign exchange (forex), stock exchange, etc.

In cryptocurrency trading, traders are availed the opportunity to trade one cryptocurrency in exchange for another, buy or sell coins for fiat currency.
Digital asset exchanges can either be centralized or decentralized.

Centralised Exchanges (CEX)

As the name implies, there is a centralised authority (third party between the buyer and the seller) that controls the in and out of the exchange platform.
They help hold users' fund in one place. i.e users trust them with their money.
Some centralized exchanges include:

• Binance: binance has made its way to the top, ranking as the best crypto exchange with a daily trading volume of $82,760,703,550 at the time of writing this post.
• Huobi global: huobi have a trading volume of
  $113,483,434 at the time of writing this post.
• Coinbase: coinbase is the second rated platform having a trading volume of $2,256.30 in the past 24 hours.

Some other exchanges include:

• Kraken
• Gemini
• Paxful
• Bitfinex
• GDAX
• Poloniex

Decentralized exchanges (DEX)

Decentralized exchanges are cryptocurrency exchanges that are void of third party or a central control.
DEX rely on smart contracts which are self executing programs, and these smart contract enhances trading on DEX.

DEX, just like blockchains makes use of trust- less protocol, i.e traders don't have to trust the network niether their potential client on the dex platform. The smart contract through which trades are executed in DEX is known as peer-to-peer (p2p) trading. this feature helps reduce cost in DEX unlike CEX. This innovation that reduces cost is made possible through the automated market makers (AMM).

In DEX, KYC verification is not required. So, you may not need to have an account because transactions are executed directly from wallet through the smart contract medium.

Some decentralised exchanges include;
Bancor protocol, EtherDelta, WaveDex, Justswap, uniswap, pancakeswap, curve finance, Compound, etc.

Difference between Wallets and Exchanges

Cryptocurrency wallet is a software that avails users the opportunity to communicate with a blockchain. Users communicates with the blockchain by buying, selling, or even HODLing cryptocurrencies.

Classifications of wallet.

• Software
• Hardware

Paper ware

Depending on interface wallet can be either hot or cold.

Users prefer software wallets over every other wallets because of the ease in accessing it via the web using computers or mobile devices.
Some examples of software wallets are metamask, trust wallet, exodus wallet, electrum wallet, coinbase wallet, atomic wallet, trezor wallet, Luno, xapo wallet, etc

The latest cryptocurrency wallet is chivo, which is El Salvador's latest bitcoin app.

Hardware wallets are offline wallets used in safe keeping of crypto assets. They are the safest form of wallets because it is not prone to hacking.

Classification of wallets depending on interface

• Hot wallets: any wallet that has an internet access is a hot wallet. It is easily accessible by users at any point in time provided the user is connected to the internet.

• Cold wallets: these are offline wallets, having no connection with the internet. Cold wallets don't give room for cyber attack because private and public keys are kept offline. This is an ideal wallet for long time investment and HODLing.

Important features of Crypto wallets.

• Addesses: these are alphanumeric identifiers generated based on the public and private keys.
  Addresses are definite locations on the blockchain where crypto assets are sent into or sent out from.

• Public and private keys: 'keys' as the name implies, gives you access to your crypto assets.
  You can access your funds anytime, even if you loose your device ( computer or mobile phone) provided you have your keys.
  Private keys are seen as prooves of ownership of public keys. Private keys are used to perform transactions with cryptocurrencies owned by users.

Public keys on the other hand is likened to the contemporary bank account number. It is a section of arithmetic code assigned to a decentralized blockchain and it is used in signing into the wallet.

Differences between wallets and exchanges

Wallets	Exchanges
1. Not ideal for holding user's assets	acts as custodial for user's funds.
2. It can take the form of software, hardware or paper ware	only takes the form of a blockchain or software
3. Public and private keys are generated by the network	users chooses passwords themselves
4. Wallets, especially hardware wallets are ideal for HODLing crypto assets	Best for trading e.g futures, peer-to-peer, spot and margin trading.
5. Not decentralized	exchanges are both centralized and decentralized.

Outline the advantages and disadvantages of DEX and CEX.

Advantages of CEX

• Customer protection
• Ease on deposit using debit or credit card.
• It is highly liquid and at that it is more popular as compared to DEX.
• Best for trading
• Easy to buy and sell cryptocurrencies, convert from one crypto asset to another, as well as convert to fiat currencies.
• High level of liquidity gives traders alternatives and options on their trades.
• Central authorities keep crypto assets safe.
• Transparency and accountability: they release information about themselves, their physical offices, etc.

Disadvantages of CEX

• Troubles of regulatory compliance: user may end up loosing assets or even the wallet if he fails to comply to the regulatory requirements.
• Prone to cyber attack: for the fact that the network is centralized, down time may occur leaving traders in disarray.
  Hodling great amount of crypto asset attracts hackers to the acvount.
• Problem of sacrificing ownership of their assets: some users won't find it cool to trust huge amount of money into the hands of someone he don't know.

Advantages of DEX

• Gives the trader autonomy over his keys while trading
• Less cost due to smart contract functionality.
• It is less susceptible to hackers.
• No KYC verification so there is no trouble experienced.
• They offer novel and experimental financial services using various features such as liquidity pool, order books and aggregation tools.
• No single individual governs the network
• Trades are performed on user's wallet via smart contracts.

Disadvantages of DEX

• Lack of fiat withdrawal and deposit: you can only trade cryptocurrencies on DEX
• Hassles of liquidity: less liquidity on DEX give little or no room for traders to make skme trades.
• ** Absence of keys recovery option:** it is impossible to recover your assets once you loose your keys , unlike in CEX that have password recovery option.

Have you used an exchange before? Tell us about your experience.

I've been in the crypto space for like three years making use of wallets and exchanges like luno, trust wallet, tron link pro, meta mask, clover wallet binance and the rest.
For me i prefer binance to all other wallets because of its high level of security.
Apart from STEEM,SBD and TRON i have other currencies in my crypto wallets such as : Cadano, hive, wink, btt etc
Binance direct fiat deposit was top notch until the ban on cryptocurrencies in nigeria, and for better workability, binance brought peer-to-peer trading into play in order to help customers acquire assets and also trade despite the ban.

The pictures below shows some of my trades on binance.

Some of my successfully placed orders:

Conclusion

Global market liquidity is provided by cryptocurrency exchanges.
CEX are the ideal exchange so far, although DEX is posing a challenge to CEX.

Wallets, especially offline wallets are best for HODLing crypto assets.

I've been learning about wallets and exchanges the hard way, although i improve everyday, i anticipate the day of my perfection on the crypto space. I appreciate you @imagen for this great lecture.

Special thanks to the honourable professors;

@imagen
@sapwood
@reminiscence01
I appreciate my readers for their time. Hope it was worth your time.

Best regards; @ezege11