Crypto Academy Contest / S1W2- Reviewing Centralized Exchanges by @srrebullient
Good day everyone,
I am happy to be taking part in the second week of the Steemit engagement challenge on SteemitCryptoAcademy titled: Reviewing Centralized Exchanges.
Before I proceed with the tasks, I would like to talk briefly about what a cryptocurrency Exchange is.
Cryptocurrency Exchanges are online platforms that allow users to convert their cryptocurrencies to fiat or trade them for other compatible cryptocurrencies of their choice.
The values of these crypto-assets are generated on these digital platforms based on the rate of their supply and demand with an increase in demand leading to an increase in value and vice versa.
Currently, there are two types of cryptocurrency Exchanges and there are Decentralized exchanges and Centralized Exchanges. And on this task, we will be focusing on Centralized Exchanges.
Haven talked about what an Exchange is, we will here move to discuss what a centralized exchange is and its benefits to crypto users.
Just as the name implies, a centralized exchange is a type of cryptocurrency Exchange whose operations are governed by the company that owns it.
This type of cryptocurrency Exchange operates more like a traditional bank because users do have not access to their private key but operate on the platform based on the absolute trust they have in the exchange owners as all activities and transactions are carried out based on the approval of the exchange.
- Binance
- Houbi-pro
- Kraken
- Poloniex
- Bitpay
- Coinbase, etc.
In as much as there are a series of limitations as regards centralized exchanges, they also have a lot of benefits to crypto users and this benefit includes;
- Liquidity
Centralized Exchanges have very high liquidity which therefore makes the conversion of cryptocurrencies faster and more efficient.
This is unlike what is seen on many decentralized exchanges which may hold one's asset for days due to a lack of enough liquidity.
- See example.
The above screenshot shows a friend complaining to me about how he has been unable to sell his coin on a profit decentralized exchange and the issue was clearly seen as a lack of liquidity.
- Conversion
In as much as both centralized and decentralized exchanges, allow users to convert from one cryptocurrency to another compatible cryptocurrency, only centralized exchanges allow the purchase of cryptocurrencies with fiat through bank transfers, debit or credit cards deposit, or various other methods.
- Transperancy
Centralized Exchanges make their operators known to use thus creating a level of transparency and trust. This is not the case with decentralized exchanges thus issues encountered on those types of exchanges are usually left without attendance as there is no availabiktu5of customer care service unlike in centralized exchanges.
- Leverage trading
Leverage Trading is regarded as the most profitable type of cryptocurrency trading and it is only carried out on centralized exchanges. These exchanges allow users to borrow funds which in turn allows them to open trading positions much bigger than what their actual capital could have afforded.
- Transaction volume
Centralized Exchanges have a much higher transaction volume of various cryptocurrency pairs. Therefore activity details can easily be gotten from these exchanges in other to keep crypto users updated on crypto-related activities.
This informations and records bring about negative and positive sentiments in the minds of crypto users and traders thus leading to a major source of sentimental analysis.
- See below
The above news from Binance is enough to create sentiments in the minds of Ape and Solana holders thus leading them to sell off or convert to other cryptocurrencies. This can also cause traders to take sell positions in anticipation of a temporary decline in the prices of those assets.
Crypto assets are very valuable and as such requires careful handling.
I do not deposit my assets on newly discovered exchanges all in the name of trying it out. Therefore, the first thing I do while looking for an Exchange to trade is seeking recommendations.
Seeking recommendations from friends allows me the opportunity to weigh various options given based on their opinions.
- Customers review
Based on the various options I have gotten from seeking recommendations, I move to the play store or other platforms in other to view the rating and read up reviews from those that have used it.
- Binance vs Coinbase review on play store.
- Liquidity
Selling or conversion of cryptocurrencies to fiat on low liquidity exchanges is difficult therefore I will have to make sure that there's high liquidity on any exchange I want to trade on.
- Transaction/trading fees.
I will also make enquires that transaction and trading fees because I am choosing the exchange majorly for trades and transaction purposes and not storage therefore low-level transaction and trading fees will be very important.
- Security
Security is a top priority for me. Therefore I will make enquires to know if the exchange has undergone any form of hack attacks in the past and also find out how they responded to the attack.
- History/Records
I will always prefer to trade on exchanges with good records over a long period and not a newly found exchange with a lot of mouth-watering offers.
My favorite centralized exchange is Binance because the several recommendations, customer reviews, low trading fees, good background history, and alot of other nice offers it has.
Binance which has its headquarters on Cayman Island is a centralized cryptocurrency exchange that was founded in September 2017 by Changpeng Zhao who is commonly known as CZ. It has ever since grown to become the largest cryptocurrency exchange in the world with a total market capitalization of 90B.
The exchange allows both spot and leverage trading and always has an input wallet for storing crypto assets.
It also offers a lot of earning opportunities such as staking, trading, NFTs, etc.
- Some unique features of Binance
Binance offers a good APY which can go up to 120% on locked assets. This serves as a means of making extra income for those who can't go through the risk of trading.
- See steps
Binance NFT marketplace is another unique feature of the Binance exchange. This NTF platform allows the purchase and listing of various NFTs on the BSC blockchain and it can be accessed through the main Binance exchange application.
- See below
Other unique features of Binance include its P2P trading functionality which now serves as an alternative for Nigerians to easily trade their cryptocurrencies for fiat.
There are several other features of Binance such as inbuilt storage wallets, separate futures and spot wallets, etc.
One thing about Binance exchange I would like to change is its KYC verification pattern.
The Binance verification process is very stressful and takes a lot of time. It appears as though the verification setup finds it difficult to properly read and interpret users' details.
I have been trying to verify my Binance using my permanent voter's card but the verification process keeps failing once it gets to reading my card details thus leaving me with an unverified Binance account and a small number of funds unaccessible in my Binance wallet.
- See below
Another thing I will like to change is the inability of unverified users to perform transactions.
I will like to change this because trading cryptocurrencies has no age limit and in a country like Nigeria, it is hard for one who is below 18 to obtain any form of ID card. This lack of ID hinders those who are not yet up to 18 years from trading cryptocurrencies using Binance.
I suggest that Binance should have a maximum transaction of at least $500 for those who are yet to verify their account.
This is a feature found on the Houbi-pro wallet and it is very nice so I would like Binance to adopt it as fast as possible.
- See below
In as much as the centralized trading exchange is beneficial and full of interesting features, there are still a series of shortcomings regarding such exchanges and they include;
- Lack of total privacy.
Centralize exchanges don't allow absolute user privacy because it demands a series of verifications with user details in other to guarantee the user access to their various functionalities.
- Lack of absolute security.
A centralized exchange does not guarantee total security because users ain't the ones in charge of their private keys. The private keys are entrusted to the exchange company thus giving them access to users' assets.
In as much as most of these centralized exchanges are reliable, there are also prone to hackers.
- Limited efficiency
Centralized Exchanges don't always guarantee efficiency. A user might want to make a quick transaction and it will happen that the centralized exchange is currently undergoing maintenance thus forcing the user to wait.
Just as what we saw on Binance some days back where they suspended Steem deposit for days thus leading users to look for alternative exchanges while those who already sent Steem to Binance before seeing the update had to wait till the suspension is over before they got their asset back into their Binance wallet.
The best way to protect users' funds is for users to have their funds stored on decentralized exchange/wallets.
Funds stored on centralized exchanges are left in the trust of the exchange because this exchange has the user's private keys in trust and any hack attack on the exchange will leave the user's private keys unguarded thus leading to a loss of funds.
Cryptocurrency Exchanges are the basic things when it comes to trading and storing cryptocurrencies because one who is new to cryptocurrency will have to first look for an Exchange.
We have seen a series of advantages of centralized exchanges but just like analysis, it is always best to use both possibly, a centralized exchange for trading and a decentralized exchange/wallet for storage.
I would like to invite @swaylee, @whitestallion, mato445, @goodybest, and @ngoenyi to take part in this contest.
Thank you...
Great post my friend i like the way your work is arrange, and the way you applied the markdown tools, also you explained everything about Binance in detail, keep up the good work
Thank you so much.
Your encouraging words are greatly appreciated.
Wow this is a nicely executed work, well explained and very detailed work. Indeed Binance seems to be the favourite exchange of a lot crypto traders. Well done
Thank you for your encouraging words.
Indeed Binance flexibility made it stand out amongst other centralized exchanges that's why it's currently the largest and one with the most market cap.
This is really a great post and it's so long and educational. It would take me a long time to discover this much information. You have done more than just research, you have a open a new book of knowledge for those who use centralized exchanges without having this much knowledge. I am definitely amazed expect mine on Wednesday, I wonder if I would be able to surpass you based on this contest but we won't know until I try. I wish you the best of luck in your pursuit for top 3. I enjoyed reading and I learnt of the shortcomings of centralized exchanges which I didn't know. Keep up the good work and steem on
You're indeed good with words @swaylee and I really appreciate your encouraging words. Honestly, there's a lot to write about Binance but I decided to select only but a few features in other not to bore my audience.
I really look forward to seeing your own .
Thank you once again for stopping by.
I love the way you presented your article. That KYC verification on Binance is really annoying and stressful, before I could verify my account it was a long process and I had to wait for days, I would also like if something is done about it.
Best wishes.
Thank you for your nice remarks.
Binance is actually the favorite for all and we hope something is done about their verification real fast.
Great work indeed.
Thanks for taking part in this contest to impact
Thank you so much for your encouraging words.
I really appreciate
Funds stored in centralised exchange are ment for temporary purposes such as trading, buying and selling. It's not advisable to store your funds on the exchange.
You're absolutely right. Just like I said on the post, centralized exchanges are not meant for storage/investment purposes rather such assets should be moved to a decentralized wallet or exchange for security purposes.
I cannot deny the fact that I have learnt something new today reading your review about centralized exchanges.
I have been trying to verify my Binance using my permanent voter's card but the verification process keeps failing once it gets to reading my card details thus leaving me with an unverified Binance account and a small number of funds unaccessible in my Binance wallet.
This is a predominant issue every binance user face during verification. I believe with this your article, the binance team will start making plans of carrying out a corrective maintenance on the software application.
Thanks for sharing with us!
Thank you so much for finding my review helpful.
I'm deeply encouraged.
You're welcome
Hola @srrebullient que excelente análisis en que has realizado
Ya veo que ciertamente Binance es uno de los exchanges centralizados más cotizados, es por su robustez y desempeño integral
Me gusta, creo que pronto estaré abriendo mi cuenta allí para probar el desarrollo como tal
Gracias
I'm glad you found my post useful.
Well, Binance has stood the test of time so I can boldly recommend it. You should as well carry out your own research in other to know what works best for you.