Steemit Crypto Academy Contest / S1W2 – Reviewing Centralized Exchanges by @preye2

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Greetings Everyone,

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Designed on Canva

I must commend the Steemit team for bringing up this challenge, as it will promote more interaction and learning in the Steemit platform.

For this week, I will be discussing and reviewing the Centralized exchange, and what you need to know about it. Before I continue, I would like to first tell us what exchanges really are in respect to crypto.

Exchanges In Terms of Cryptocurrency

When we talk about exchanges in respect to cryptocurrencies, it refers to digital platforms that enhance and supports the trading/exchange of different cryptocurrency pairs with crypto assets or FIAT money💰.
The blockchain ecosystem would not be complete without the existence of Exchanges, as it is used to easily buy or sell the digital assets of blockchain industries.

Exchanges get rewarded with the transaction fees and commissions of the traded assets. An exchange can either be Centralized or Decentralized, and they both have their advantages and disadvantages. Let me talk briefly on the Centralized exchange.

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Centralized Exchanges And Its Benefits To Crypto Users

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Centralized Exchanges as we know refers to those digital crypto trading platforms, which are owned and controlled by an organized group of body, usually a big company.

In this type of exchange, a huge percentage of power is being federated, as transactions will first pass through a governing body before being executed. The governing body actually controls the private keys of it's users, and they allow the users to access their various accounts via a strong password.

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Some popular Centralized Exchanges includes:

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• KuCoin
• Coinbase
• Binance
• Kraken
• Poloniex
• Bitstamp
• bitFlyer. etc....

Many users prefer the Centralized Exchanges because it provides some amazing benefits when compared to decentralized exchanges. Below are some of the benefits of using a Centralized Exchange.

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Some Benefits of Using Centralized Exchanges

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• High Transaction Speed: Despite the fact that the transactions must first pass through a Centralized body, it has been observed that the transactions are processed within few seconds, provided they are no manipulations.

• High Liquidity: Centralized Exchanges are usually controlled by big market makers, and they tend to provide high liquidity to the platform. A huge percentage of traders uses the centralized exchange, and as more people trade their assets, the platform become more liquid.

• Secured Transaction: Transactions on centralized exchanges are processed by the governing bodies, which means they would make sure the transaction is carried out successfully.

What To Look Out For When Choosing An Exchange For Your Crypto Trading

For me to comfortably trade in an exchange, I must first observe whether the exchange has either of the following:

• Low Transaction Fee: Every exchange has a certain fee percentage, which it charges for every transaction. Nevertheless, some exchanges charge higher than others. We all seek to make Profits, so I would prefer to trade on an exchange with lower transaction fees.

• High Security: I wouldn't want to trade my asset on an exchange that is not secured, because I would be risking my entire asset to theft or possibly hacks. Many good exchanges (especially centralized) have their unique ways of securing users assets. Most exchanges uses Two Factor Authentication, and they usually send OTP codes for every transaction carried out.
  Security remains one of the most important and necessary aspect to watch out for, and I won't Ignore it.

• High Liquidity: For a quick and successful trading to occur, they must be some trading volume in the exchange. If buyers and sellers do not constantly come together to trade their assets, then the exchange would barely work. I have traded in some exchanges which took me about 3 days for the transaction to be successfully completed.
  So high Liquidity and volumes are very important for every exchange.

• Supports the Use of FIAT payment: Some exchanges supports the use of FIAT payment for digital coins, while others uses only digital coins for their trading. I prefer an exchange that equally supports Fiat payment, because even if I don't have digital coin I can easily use FIAT payment.

Review of My Favourite Centralized Exchange And It's Unique Features

My Favourite Centralized Exchange would be KuCoin.

Source

KuCoin was established and launched in May of 2017, as the founders aimed at creating an easy-to-use exchange that allows the trading and storing of crypto coins. KuCoin is currently based in Seychelles, and is managed by Johnny Lyu. The exchange is the 5th most largest crypto exchange according to market cap.

The KYC verification process of KuCoin is very easy and secure, as it improves the relationship between the users and the company. Alot of traders come into the platform everyday, as it has more than 10 million users across over 200 countries.

I really love this exchange because it allows traders and investors to easily monetize their accounts via bank cards and PayPal payment. The exchange equally has high liquidity and trading volume, with over 500 tradable tokens.

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Some Unique Features of the KuCoin Exchange

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The KuCoin Exchange has some amazing features, which we rarely see on other exchanges, some of these includes:

• Free $500 worth of USDT for new users: This exchange supports it's new users, who are willing to make a deposit/transfer of atleast 50 USDT to their wallets after sign ups.

• The Use of Trading Bots: The KuCoin exchange has a trading machine that helps traders to automatically make trades in both regular and future market.

• Users who have verified their emails can easily start making their trade, even without a proper KYC procedure.

• Use of an extra Security Password: The KuCoin exchange improved it's security by providing different sets of password for trading and logins. So the password used for login, can't be used for trading.

What I would like to change about KuCoin Exchange

The KuCoin exchange is widely used by many, as it ranks at #52 on Coinmarketcap. Nevertheless, they are still somethings which I would love to change if I am opportuned to do so.

Screenshot from Coinmarketcap

• If I get the opportunity to change anything about KuCoin, I would first work on the poor customer service. You would agree with me that this exchange is one of the biggest in the crypto space, but it's still unfortunate that KuCoin has alot of bad reviews about it's customer service.
  In most cases, the customer support services of KuCoin would not reply or attend to complaints of the customers, and I think if this issue is sorted out alot of users would be satisfied.

• Another big challenge/setback which I would love to change if given the opportunity is to license KuCoin in the U.S. So many U.S citizens would love to exchange/trade their assets on the KuCoin platform, but unfortunately it is limited to U.S citzens, which I think is really bad for business.

Shortcomings of The Centralized Exchange and How Our Funds Can Be Protected Without Our Private Keys

Some of the Shortcomings of the Centralized Exchange includes:

• They are Hackers Target: Centralized exchanges are basically crypto companies that has billions of assets in it. So many online thiefs/hacker would see these crypto exchange as their targets. And in some cases, hackers successfully break into the exchange's wallet, which is very bad for the entire users.

• There's no 100% guarantee that a centralized exchange will exist forever. Yes, I know of a centralized exchange(HitBTC with over 40,000 BTC worth of trading volume) that disappeared overnight with users funds. Whenever the users tried to make withdrawals, they always get a message stating that "the withdrawals have been disabled temporarily."

• In most cases, they tends to be market manipulations in centralized exchanges, as the big market makers performs manipulating trades, with the aim of getting the fake volumes and liquidity.

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How Can Our Funds Be Protected Without Our Private Keys

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For the fact that our Private keys are not entrusted to us, we are not fully in control of our money💰. But what scares me the most is that these centralized exchanges are not 100% guaranteed of existing forever, which means we can wake up one morning and discover that all our assets are gone.

Because the system is centralized, we can't necessary get access to our private keys. Nevertheless, I think our funds can still be protected, provided the exchange continue to get an increasing number of users. All we need from the system is an increase in security, possibly by including multiple strong passwords.

Conclusion

Centralized exchanges are the most used type of exchanges today, and I believe that the advantages of centralized exchanges are greater than it's disadvantages. I personally think centralized exchanges can still tackle some of their major challenges, which would be awesome for crypto traders, because many users prefer the centralized exchanges.

I find this contest really educative and broad, so I would like to here from you all. Between centralized and decentralized exchange, which do you prefer? The comment section is open for anyone who has suggestion.

Thanks for your time here...