[DEX, CEX, POPULAR EXCHANGES, AND TRADING CRYPTOS] - Steemit Crypto Academy S5 - Homework Post for Task 7

iddy (60)Beginner[1,2,3,4,6,9,10]in SteemitCryptoAcademy • 3 years ago

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Hello everyone, you are warmly welcomed to my blog, I am here to perform Beginners' course - Task 7

Question

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.

Exchange

Cryptocurrency exchanges (Digital Currency Exchange - DCE), are digital fora that enable their users to trade digital assets i.e cryptocurrency, either for non-crypto currencies or for different cryptocurrencies. In other words, crypto currency exchanges are online trade cottages where market prices are produced that reflect the value of cryptocurrencies based on their ration(supply) and demand.

The presence of these exchange fora has enabled in last years the mass use of cryptocurrencies, being feasible to trade without main complications, non- crypto currencies for cryptocurrencies or the reverse, from anywhere in the globe, and with fairly low prices, and accordingly, more desirable than other conventional methods.

Today, some trades offer among their services, the depository of crypto currencies as if they were wallets; the investment of de facto currencies with credit cards, debit cards, bank transfers or de facto(virtual) fora such as PayPal or Neteller; the (P2P), i.e., between the same users of the forum, and several ways to yield dividend beyond the speculative market.

Types of Exchanges

As blockchain technology evolves and the adoption of cryptocurrencies around the globe comes to be extra extensive, exchanges have been developing in the same way, nonetheless, they can be categorized into two major types: Centralised and Decentralised

Centralised Exchanges:

Centralised exchanges (CCE - Centralized Cryptocurrency Exchange) are virtual trade fora that operates like conventional exchanges.

A centralised exchange is acquired by the corporation that regulates it and maintains full custody over all transactions that take place on the forum. Users do not have permit to the private keys in their account, which implies that users put all their faith in the hands of the exchange operators as transactions can only be made via the mean gave and authorized by a central authority.

Many of the greatly well-known centralised exchanges are:

• Binance
• Poloniex
• Bittrex
• Bitfinex
• Coinbase
• Kraken

Decentralized exchanges:

Source

Decentralized Exchanges(DEX)
On the contrary, are not operated by a centralized authority, nor are they under the supervision of a whale.

A decentralised exchange does not possess the funds, location, or keys of its users, and only performs as a routing and fitting layer for transactions that are registered on its fora.

Among the vastly outstanding decentralised exchanges are:

• WavesDex
• Bancor Protocol
• Kyber Network
• EtherDelta
• AirSwap
• Uniswap
• Justswap

Differences between a Wallet and an Exchange

Wallets

We refer to a wallet as a software that enables us to save our crypto currencies. Consequently, this is software, hardware, or paperware. We can only perform a transaction with the use of private keys in our wallets. The wallet can be divided into three crypto sectors, enabling users to communicate with a blockchain network.

Software Wallet
Hardware Wallet
Paper ware Wallet

There are 2 additional wallets founded on the interface. These are,

Cold Wallet
Hot Wallet

The most effortlessly available wallet is the software wallet. Users choose the wallet because it can be accessed using a computer and a mobile phone.

Ex:-

Trezor wallet
Xapo wallet
Luno wallet
Trust wallet
Hardware Wallet:

The offline wallet utilized to protect crypto assets is named a hardware wallet. Hardware wallet is the comfortable means to have access to wallets and no one is enabled to penetrate.

Hot Wallet:

A wallet that that is operated with the use of internet is named a hot wallet. It is handily available to users when they are connected to the Internet.

Cold Wallets:

These are offline wallets that have zero to do with the internet. Cold wallets do not permit cyber-attacks. This is achieved because private and public keys are saved offline. This is a tremendous wallet for long-term enterprises.

Admission to Crypto currencies is through private and public keys. These municipal keys are fraction of the digital code selected to a decentralized blockchain and substantiate to be similar with private keys. Every transaction made is documented in the blockchain. The private keys received are to be stored in a protected place. Because if the keys are accessible by others, our crypto currencies can be stolen, hence we end up losing every token our wallets. These keys also give access to or maintain access to the wallet. This is the reason these keys are so crucial.

The most significant difference between a crypto wallet and an exchange

(1) When we use a crypto wallet we have entire custody over our private key. And we have the only standardized key to access cryptocurrencies. So having entire control makes storage generally safer.
(2)These three major components of selling, buying, and trading are not seen in a wallet but are seen in the exchange. Exchanges can also catch sight of our private key when we grant our approval.
It is not safe. It enables individual to get your key and transfer all your crypto currencies.
(3)Crypto wallet is used for long-term depository, an elevated level of safety, and comfort of use. Exchange is adequately than a wallet to conserve assets from hackers.
(4)Encryption is the particular "location" address of the blockchain that remits or receives currency. These addresses comprise of alphanumeric identities produced founded on private and public keys.
(5) The wallet is easy to use if used the exchange service often. Yet the safety is endangered because the key is preserved during the exchange.
(6) Wallet Exchange does not store user' assets. The cryptocurrency of the stored user acts as the fund trustee. It can be software, hardware, or paperware and comprises of public and private keys produced in the pattern of software or blockchain.

Mention the advantages and disadvantages of DEX and CEX.

Source

CEX

CEX is a centralized exchange. In CEX, there is a middle man between the buyers and the sellers in regulating the access and withdrawal of the exchange forum.

The centralized exchanges are:

Binance
Coinbase
Kraken
GDAX

Advantages	Disadvantages
The main man is liable for governing the user's keys, giving customer safety and keeping crypto currency secure.	Disappointment to fulfill the regulatory prerequisites may conclude in forfeiting of assets or wallet to the user.
Rates are inferred by the supply and demand of the market and are exchanged at fair prices.	In the exchange forum, some of the users of the forum miss a lot of currencies by trusting the middle man they do not recognize.
Exchange forum is the nicest way to market and possess the facility to deposit utilizing debit or credit cards. It is more outstanding as compared to DEX	As the network comes to be extra centralized, markets become extra restless and susceptible to cyber-attacks. Therefore traders operate at lost.
Merchants have choices for trading in international crypto currencies as liquidity is elevated.
Cryptocurrency can be bought and sold at ease and can be exchanged from one crypto to another crypto.

DEX

DEX is a decentralized exchange Forum. DEX is a crypto currency exchange Forum. This is a trade that depends on a reasonable agreement. This is recognized as p2p trading. Contrary to CEX, DEX reduces expenses. A Bank account is not needed for immediate transactions from the wallet.

DEX exchanges include:

Uniswap
Wavedex
Justswap
Etherdelta

Advantages	Disadvantages
According to the nature of decentralized, hacking of the network is very costly and the risk of hackers is very slim as users' money are not stored.	Dissimilar to CEX, there is no comeback choice for private and public keys, so when a user lose his keys or passwords, he miss his assets permanently, irretrievably.
DEX system is entirely decentralized and cannot be regulated by a single individual or a mediator.	For the sake of low liquidity of DEX system, DEX's trading quantity is lower than that of the CEX.
Marketing is performed literally from the user's wallet at low expense due to the reasonable contract functionality.	cryptocurrencies are the only currency that can be traded in DEX as fiat currencyy deposits and withdrawals are not accessible.
Marketing has a self-regulation that enables merchants to manage or protect their keys.

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

Screenshot from binance App

There are several exchange fora as cryptocurrency is nowadays the priority of several people around the globe. though my experience with the crypto currency exchange forum is little, I have learned from my own knowledge. I have utilized Exchange forum before and the Exchange forum I am using is Binance. While experimenting on my own, I had casualties at first. Binance is an incredibly nice exchange forum and is among the top 10 in the globe. I have downloaded the binance app and established my account, therefore, I now exchange steem, and Tron (TRX) currencies. The profession here is giving a rapidly service. It's simple to work with and has outstanding security for users. So in my mastery and knowledge, Binance is an exchange forum that gives a relatively nice service for cryptocurrency.

CONCLUSION

During the course of this homework, I have learned that Cryptocurrency exchanges (Digital Currency Exchange - DCE), are digital fora that enable their users to trade digital assets i.e cryptocurrency, either for non-crypto currencies or for different cryptocurrencies. I have also learned types of exchange which are centralized e.g