Hello dear friend, today I will be attempting the homework task by professor @yousafharoonkhan

CENTRALIZED EXCHANGE

Centralized Exchange is an exchange platform that is established on strict rules and regulations of which any trader who intend to trade (i.e. either selling or buying an asset) on the platform must abide by the principles. Thus, the traders are not given the freedom to run their businesses according to their own principles as they don't have a say on how the transactions should go other than to carefully obey laid down principles of the exchange platform.

This platform plays a major role as the middleman for every transantions that happens on it, in the sense that both the sellers and the buyers are constrained by the policy of the platform such as selling and buying of asset limits, allocating some assets to be traded with some other specificied ones, buying and selling fees, etc. So, no transaction can be successful unless it has fully met the requirements for the exchange established by the platform.

DECENTRALIZED EXCHANGE

This is an exchange platform for trading assets of which the buyers and sellers are given freedom to carry out their transactions the way that suits their interests. Thus, this is an exchange platform of which the traders can run their individual businesses according to their own will and principles.

There is no middle man on this type of platform as it does not restrict transactions to some policies unlike in the case of Centralized Exchange.

SIGNIFICANT DIFFERENCES BETWEEN CENTRALIZED AND DECENTRALIZED EXCHANGES

Haven understood the what the two exchange platforms entails, it is necessary to look into their differences which is essential for all traders to know before venturing into trading using any of the platforms.

Some of these major differences includes:

THE VERIFICATION PROCESS:

The centralized exchange platform uses the "Know Your Customer or Client" (KYC) mode of verification which entails that the traders must provide some personal documents such as ID, National Passport, etc in order to complete the verification process. While such more of verification is not practiced on the decentralized exchange.

TRADING FEES:

Just as stated earlier, in centralized exchange, fees are asigned to every transactions on the platform of which must be paid by both the seller and buyer in order for the transaction to be successfull. Whereas, such fee does not exist on decentralized exchange since it is free.

THE CAPITAL'S SECURITY:

The security of assets is fully ensured on the decentralized exchange as it uses blockchain on many servers which enable each trader to encrypt their assets of which can not be stolen by hackers, and this makes the traders confident of their capitals. Whereas, such is the case in centralized exchange as it uses only server its transactions.

VOLUME OF CRYPTOCURRENCY:

The volume of cryptocurrency on centralized platforms has really been on an increase over the few years as many traders tends to be more interested in the platform despite the insecurity of capital and transaction fees. Nevertheless, this has greatly contributed to the growth of the platform because growth is directly proportional to volume of coins available.

While, the reverse is the case in decentralized exchange as the volume of cryptocurrency on this platform is far lesser.

LIQUIDITY:

Because of the availability of many coins on centralized exchange of which have great tendency to be available for trade just within a short time, millions of traders tends to flood the platform which has over time contributed greatly to its high volume of trade. While this is low in the case of decentralized exchange although its liquidity and volume is gradually increasing.

ACCESSIBILITY AND FEATURES:

The usability of decentralized exchange is quite difficult, unlike in the case of centralized exchange that is easily accessible for traders as many exchange features are provided on the platform which also support both long-term and short-term trades.

TWO BEST CENTRALIZED EXCHANGES OF 2021

1. BINANCE

This is presently the best centralized exchange in the world because both its liquidity, volume of trade and cryptocurrency has been on a high increase over the past few years of its establishment. I would really prefer Binance because of its easy accessibility, availability of numerous important coins in the words and exchange platforms such as the Binance P2P, Spot, Covert of coins, reliable wallet, withdrawal in many currencies which includes Naira, etc which are just so easy to carry out. Although it requires KYC verification, it is still the best of all.

2. COINBASE

This is a centralized exchange founded in 2012 which has really gained ground in the United States. I rate it as the second because of its solid variety of altcoin choices, simple user interface, high liquidity, easy exchange features, reliable wallets for investors and traders to store their investments, etc. Traders are also paid commissions if they refer other investors to the platform and monitor the growth rate of coins and exchanges.

HOW TO USE METAMASK

Metamask is an ethereum wallet which enable transactions with exchanges, DApps, coin swaping and also storing of ETH or any ERC-20 token in its wallet, etc. It is a secured and reliable exchange platform. It is therefore essential to know its use.

Install Metamask from the official website or play store.

Open the app, click on "Create Wallet" and set password.

Click on the seed button to reveal your secret codes. Ensure to keep them safe.

Input the seed words according to their numbers allocated to each one, accept Metamask policy and then click the confirmation button.

Then you can proceed to trade at your choice.

HOW TO USE UNISWAP EXCHANGE

Many coins on Metamask can be exchanged for another coin based on their worth.

The following are steps to swap your coin:

Click on the swap button at the top side on the app

Select a coin of your choise like Ethereum to swap with another like YFI

Select the number of Ethereum you want to swap.

Click on the swap button to complete the transaction.