What are Centralized & Decentralized Exchanges?

Centralized exchanges (CEXs) : Centralized exchanges are cryptocurrency exchanges that are centrally owned and operated by a single entity.

The concept of centralization refers to the use of middle man or third parties to assist in the management of a transaction. Buyers and sellers trust this middle man to handle their digital assets.

Decentralized Exchange (DEXs):

Decentralized exchange is almost the opposite of centralized exchange. Decentralized Exchange (DX) is a peer-to-peer (P2P) marketplace that connects cryptocurrency buyers and sellers to trade.

Decentralized cryptocurrency exchange is a Multi-centered cryptocurrency exchange that has no specific authority.

Which has no single authority. That means no one can control you here. Decentralized cryptocurrency exchange sites are now on the rise. Dex is more secure because they are operating at the top of the blockchain, users have direct access to their funds, central authorities do not have access to funds so users here are more secure and blockchain is non-hackable so we don't have to worry about decentralized exchanges.

Difference Between Centralized and Decentralized Exchange.

Centralized:

• Control: On a centralized crypto exchange, all the assets in your account are controlled by a third party that runs the exchange.

• Security: Centralized exchanges are less secure.

• Popularity: Centralized crypto exchanges are more popular.

• Fees: Centralized platforms charge a specific fee for their services to their users.

Decentralized:

• Control: In decentralized exchange, all control of your account remain in your hands.

• Security : Decentralized exchanges provide more protection. This means high security benefits

• Popularity: Centralized crypto exchanges are less popular.

• Fees: Decentralized exchanges have zero fees or very minimal fees.

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2 Best Centralized Exchanges of 2021

Binance:

My trading history on Binance.

Binance is a centralized cryptocurrency exchange, It is one of the most popular cryptocurrency exchanges right now on trading in more than 45 digital currencies. Binance has its own crypto token , Called Binance Coin(BNB).
24 hours trading volume of around 20 billion.

KuCoin:

My trading balance on Kucoin

KuCoin is another popular cryptocurrency exchange. It has a reputation for being user-friendly great for newbies, reliable and secure. The platform is currently ranked 41 on the list of the largest crypto exchanges by coinmarketcap with an 24-hour trading volume of around $200 million.

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MetaMask

MetaMask is one of the most popular blockchain crypto wallets out there build on Ethereum blockchain. This wallet is compatible with the most used browsers in the world, including Chrome, Firefox, Brave and Microsoft Edge. In today's post I will show you how to add Metamask wallet extensions to Chrome browser. Let's get started.

• First, do a Google search for Metamask Extension for Chrome and click Metamask Chrome Extension.

• Now click Add to Chrome.

• After clicking, a popup will open, click on Add extension. Then here you go, Metamask wallet extension added on you chrome browser.

• Now click Get Started.

• Now you can see two options, one is you can import if you have an account created earlier and the other is you can create a new account. We will create a new account in this tutorial. So click Create a wallet.

• Read the shown agreement carefully and click on I agree.

• Now choose the password for that character and go to the next step. Click Create.

• This step is important, because in this step you will be given the secret backup phrase of your account, you have to enter and save it properly. Click here to reveal the secret words also, You will be given to download at the bottom right, you need to download that secret backup phrase and save it offline.

• In the next step, your account will be created only if the secret words are entered correctly and sequentially. Congratulations, you have successfully created your Metamask wallet account.

• Now here you go, you can now start swapping.

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Uniswap

Uniswap is a decentralized crypto exchange platform that runs on the Ethereum blockchain. Uniswap platform was created in 2018 based on Ethereum blockchain, which is world second-largest crypto project.

Centralized exchanges occupied a large area such as, Binance, coinbase. These platform are run by single authority. The require user funds have to be traded using the traditional order book keeping them under control. Order book based trade is where the buy and sell orders are in a list and have to be placed in a certain amount.

And Uniswap is completely different exchange platform that fully decentralized its mean there is no authority that they can access your funds. Uniswap is a type of trading platform called automated liquidity protocol. And also its a open source DEXs that any one can build another Decentralized exchanges like Uniswap, anyone can copy the system and create their own DEXs.

There is no order book in Uniswap, you don't have to order like Centralized Exchange platform to do any crypto exchange. It is an automated liquidity pool exchange.

In the above screenshot you can see,its all-time trading volume $108B+, liquidity providers is 72K+, 33M+ all-time trades and 200+ defi integrations. Today, Uni's 24-hour volume is $813M according to coinmarketcap.

Why Uniswap?

Well, We know that the purpose of the Centralized Exchange Platform is to make huge profits(profit-driven). Also, when a coin is listed on a centralized exchange, a much higher fee has to be paid as a listing charge. But on Uniswap user can easily list token on the exchange for completely free.

Uniswap Products

When you enter the official website of Uniswap[https://uniswap.org/], you will see an option called Products. There are several products that are provided by Uniswap, Products are Uniswap app, analytics, token lists, unisocks, sybill, and Unipig.

Uniswap App

You can access the Uniswap App from the App option on the website. I am also giving a link here[ https://app.uniswap.org ], Make sure the link and go ahead .

Now you need to connect to your external wallet to Uniswap app. Since it is a completely decentralized exchange. They do not hold any user funds. The transaction needs to be done by connecting to the user's external wallet here. I am going to connect to my multi chain wallet, Trust Wallet.

Follow the screenshot below,

• Click Connect Wallet .When you click on Connect Wallet, two options will pop up. One is Connect the other is View QR code.

• You can connect the wallet through both. I will connect directly from the wallet. So i am going to click Connect .

• I have two wallets installed on my phone. I am going to select the trust wallet.

• As soon as you select the wallet, A popup will open immediately. Clicking on Approve will connect your Trust wallet with the Uniswap app.

• It shows that i am connected to https://app.uniswap.org, Connected successfully. Now I can buy ERC20 by swapping.

Now i can swap any tokens here.

• When you go to import a token, a warning message will open in front of you. Which is the worthy read. When a warning is given from an exchange platform, whether it is centralized or decentralized, never ignore it. After understanding the warning, click i understand and Import.

• I will take an example step to see. Suppose I swap 5LINK in USDT. That's why I need to import with LINK from the Search and select the coin that I will swap. Since there is no LINK in my wallet, it shows Insufficient Balance. If you take a look at the transaction details below, you will see how much your wallet will receive along with the transaction fee.

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There is some more information that shows Uniswap Analytics, Top Token, Top Pair.

Uniswap Analytics

Top Tokens

Top Pairs

Advantage of Uniswap:

• One of the advantages of this is that it is decentralized which is very easy to access.

• Anyone can use it without any registration process, just connecting their external wallet.

• Another advantage is, on Uniswap new tokens that can directly access liquidity.

• on Uniswap user can easily list token on the exchange for completely free.

Disadvantage:

• Since anyone can create a token, there are fake tokens in the list. Because it does not require permission.

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Thanks to professor @yousafharoonkhan.