Hello friends,
Myself @rubinabano,

It's another amazing. week to learn in the crypto academy. I want to specially thank and appreciate professor @yousafharoonkhan for given a well detailed lecture which i have read and understood. I will be writing the task given by the professor in this post.

Centralized Decentralized Exchange definition

Centralized exchange:-

Basically in centralized exchange the exchange act as a middle person between the buyer and seller. For the process of connecting the buyers and sellers, they will take a certain amount of fee from both the buyers and sellers. And in a centralized exchange, we should need to meet certain criteria which are required by the exchange. And we have to submit documents to verify your account to unlock the full freedom of buying and trading process. The centralized exchange has the advantage of neat looking user interface and an easily understandable way of trading. Hence it attracts the major new traders into the concept of a centralized exchange.

Decentralized exchange:-

In the decentralized exchange, there is no middle person between buyers and sellers we are directly connected to the buyers and the sellers. Hence we should not need to pay any fees for a middle person. In a decentralized exchange, we have no concept of verifying our account to use its full limit. If we have a token we can able to do all the things which we need of. The main disadvantage of a decentralized exchange is the user interface and the concept of decentralized exchange looks complex for the new users.

Difference Between Decentralized and Centralized Exchanges.

Here is a quick difference between decentralized and centralized Exchanges

Trading Method

I am going to be discussing their difference based on the following topics:

Popularity

We all know that centralized exchange is more popular than decentralized exchange because it came in to the market first. Even though decentralized exchange might have some amazing benefits over centralized exchange, it is still the most popular and thats because this exchange has a better infrastructure and liquidity to offer. But decentralized exchange is gaining popularity as more of this exchange is been developed.

Features.

When it comes to features of these exchanges, centralized exchange has more over decentralized exchange. These features includes performing margin trading, using the portfolio management tools and giving a trader the chance to better their trade by giving users the access to multiple advanced order types. But decentralized exchanges does not have much order types and also does not perform the margin trading to their users, maybe that can be be looked into if more advantaged exchanges are developed.

Fees.

When it comes to fees, decentralized exchanges has zero or very little charges for carrying out transactions on the exchange. Unlike a centralized exchange that has charges attached to every transaction carried out by a user. These usually differ for different exchanges based on the features they provide.

Control.

In a centralized exchange, a third party authority is in control of the accounts of users that is, users dont have direct access to run transaction in the exchange. Unlike decentralized exchange, the users has the full control over their account and runs any transaction on the exchange with their personal private key.

Security.

Coming to the security aspect, decentralized exchange offers more protection than centralized exchange. Centralized exchange has more risk of been hacked because of the third party who has access to a user private keys and funds thereby making the user lose all his funds.
But with decentralized exchange, the risk of been hacked or a user losing his funds is not there.

Speed.

Centralized exchange has shown its speed by been fast in executing orders or transactions. Unlike decentralized exchange that is quite slower in the sense that it takes up to one minutes to execute an order. So in this case, centralized exchange is better.

Regulation.

Centralized exchanges are easier to control than decentralized exchanges. Centralized platforms require licenses and must follow the laws of their region's local regulatory authority.

Liquidity.

Decentralized exchange does not have much liquidity because of the order matching process takes time. Unlike centralized exchange, it has more liquidity because this exchange allows multiple users trade base on the market trends. For example if a particular asset is in demand, different users can buy and sell it because the exchange has market makers that virtually add liquidity to the exchange

Two Best Centralized Exchanges of 2021

There are so many centralized cryptocurrency exchanges, I trade on almost about 5 exchanges but my most preferred are Binance and Poloniex.

Binance & poloniex

Binance

This is a Centralized exchange where users can trade cryptocurrencies of any choice. It stipulates crypto wallet for storing of digital funds for its users. Binance has its own token currency that was created July 2017 - Binance Coin (BNB). It also has supporting programs which helps it's traders or users to make good investment decisions. It came into limelight in the year 2017 and has since been so relevant.

poloniex

Poloniex was founded early 2013, then it came into limelight after having the ability of polarizing names in digital asset exchanges. Poloniex created a good relationship with users and assured it's users with so much transaction security..Like literally you can't transact each step without a security acceptance. Poloniex is the most accessible cryptocurrency exchange that gives a wide variation of digital assets and it's one of the best exchange that I have used.Poloniex guarantees a lot of customer to store offline because of their storage structure. It limits the risk and exposure of hackers and other threats online.I mostly use it for exchanges TRX / BTC.

MataMask and Uniswap

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Uniswap

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conclusion

This week's agenda in my country was the theft of the cryptocurrency assets of hundreds of thousands of people. If you are a cryptocurrency investor, trust should be first for you. As we learned from this homework, the reliability of DEXs is quite high. I think people will be able to store their crypto assets more securely if the use of decentralized exchanges becomes widespread.

CC:
@yousafharoonkhan