Steemit Crypto Academy Season 4 Beginners' course - Task 7: Dex, Cex, Popular Exchanges and Trading Cryptos
![Screenshot_20210909-100130[1].png](https://steemitimages.com/640x0/https://cdn.steemitimages.com/DQmaMEQnBZwGbGCc89PRkvdWw74E3cZYwNuGFxVECfmSWiL/Screenshot_20210909-100130[1].png)
It is with great pleasure to join the season 4 of the crypto academy. I am @sandrakez and welcome to my Task 7 of the beginner's fixed course. I will be answering the following question
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.
Let's dive into it...
What Is An Exchange?
Exchange is a service where you can buy and sell .
Cryptocurrency exchanges are virtual platforms that allow its users to change their virtual assets to fiat money or other desired cryptocurrencies.
In the world today, these exchange platforms have made it possible for one to send or receive from one another effortless, regardless of location. Executing swift transactions at low rates and making it easy for its users to move their assets however they choose.
Broadly speaking, there are two types of exchanges. Centralized cryptocurrency exchange (CCX) and Decentralized cryptocurrency exchange(DCE).
Differences between a Wallet and an Exchange
There are lots of comparison between wallet and exchange however, they are actually quite different.
Exchange is a service where you can buy and sell crypto also convert fiat currency into crypto. In most cases wallets are incorporated into this exchange. This wallets are essentially web-based.
With wallets, it has been designed for long- term storage. For security of your crypto, measures have been put in place to give you and you alone access and full control over your assets. This measures include keys that only you possess(private keys).
| Wallet | Exchange |
|---|---|
| Wallets are designed for long term storage of cryptocurrency | Exchanges offer Trading, selling, buying |
| Wallets use keys that run on very long and hard to remember. It is for access of individual user, you and you alone have your private keys which are used to log in and out of wallet. | Exchanges allow exchange access to your passwords. This is due to the centralized nature it runs on. |
| Wallets assure a level of high security and easy access to its users | Exchanges due to its limited level of security have restrictions to amounts its users can own. |
Advantages and Disadvantages of DEX and CEX.
| Advantages of DEX | Disadvantages of DEX |
|---|---|
| In a decentralized exchange privacy is paramount. Certain measures are not taken like identity verification, it is made easy by just connecting your wallet and sign transaction. | There is limited trading. Certain features and functionality are limited e.g margin trades, limit orders . |
| As mentioned earlier no identity checks this reduces risk of user data falling into wrong hands | Due to low scalability, they are not fast and efficient. |
| Private keys are quite very private as just the user possess it , this eliminates susceptibility to hackers | With this keys comes some irreversible consequences. If you loose your key, your money goes with it. |
| Advantages of CEX | Disadvantages of CEX |
|---|---|
| Centralized exchanges offer other means of exchange. Using fiat to buy crypto, quick purchases with credit/debit cards | If you're looking for an exchange platform where you require privacy CEX is not for you. Here, your identity is known, certain documents for mode of identification is required to enable any kind transaction on the platform. |
| User experience is made easy. Making provision for movement of relatively high amount within minute | Custodial wallets, this means that a third party has authority on your crypto. This could evidently be seen as a security risk. |
| CEX support more features such as margin trading, margin lending, exchange staking amongst its users. | Due to the centralized nature, it is prone to attacks. Users have no control over their keys, making them targets to hacks. |
My experience using an Exchange
The exchange platform I've used so far is Binance. Getting to sign up, there were so many security protocols. From asking for facial recognition to uploading an identification card. At first, i wasn't sure of all that i mean this is how peoples information leak on the web, i was skeptical. I remember calling a friend who told me, that is the way it runs.
My first transaction on Binance, i remember transferring just a small amount of steem for practice first. I wanted to get a hang of it went smoothly a lot to do. I learnt a few things while trying to sell my steem. The buyers info is as important. The buyers time limit, buyers limit orders, the currency you which to receive, certain things i had to look out for before making a transaction. It was a very interesting experience and i maneuvered through and learnt from it.
And i must commend their interface quiet easy to use with low trading fees.
So far, i haven't had any issues with my transactions. I hope it stays that way
Conclusion
We have learnt about wallets and exchanges. Both are necessary to engage in crypto investments. As much as the decentralized exchange offer full access to users money with no third party involves. The centralized exchanges offer its users a place to trade their virtual assets with ease to fiat money and withdraw with ease too.
Centralized exchange are run by organization who can implement policies as they wish that could affect its users while, Decentralized exchange users are in control of their assets and can do with it as they please.
I will like to thank @imagen for this lecture.