Steemit Crypto Academy Season 4 Beginners' course - Task 7: Dex, Cex, Popular Exchanges and Trading Cryptos By @tasmiya
It is a great pleasure for me who is joining season 4 of the crypto academy. I am @tasmiya and welcome to my Task 7 of the beginner fixed course. I will answer the following questions.
QUESTION THREE
3.) 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.
Exchange
An exchange is a service or platform where a user can buy, sell and also hold cryptocurrencies. It is an online marketplace where different types of cryptocurrencies can be bought and sold. An exchange allows users to trade digital currency by buying and selling them. It is also saved for future use. Cryptocurrency exchanges are virtual platforms that allow users to change their virtual assets to fiat money. They are connected to each other by peer to peer modal in this way buy and selling is very fast and reliable.
Exchange can also be centralized or decentralized, centralized exchange are an exchange that is built by a company and with one person when all details of the transaction are kept In the companies database. The users don't have privacy.
Decentered exchanges are not that common but are built on thousands of nodes in which users can do anything they want without any mediator, I.e In decentered exchanges users have full privacy of their account and they are very secured, it is not easy to hack decentralized exchange.
Some famous online marketplaces.
•Binance
•Huobi
•Uniswap
•karaken
•Coinbase etc .
Differences between a Wallet and an Exchange
There are lots of comparisons between wallet and exchange although, they are very different. It has been designed for long-term storage.
| Wallet | Exchanges |
|---|---|
| 1. A Wallet is software or a program that is used to store and save money. | On the other hand exchange is not a program it is a marketplace. |
| 2. Wallets have keys that the user can use to access his funds | But the exchange did not have these types of keys. |
| 3. Buying and selling of crypto-asset are not done in a wallet | buying, and selling of crypto-asset are done in exchange. |
| 4. wallet is not built on blockchain | But the exchange is made in the blockchain. |
| 5. Wallet is designed to store and save crypto currency for log term | But Exchange gives the advantages to users to sell, buy and trade cryptocurrency. |
| 6. Wallet has high-level security that is completely controlled by the user | Exchanges due to their limited level of security have restrictions to amounts its users can own. |
Advantages and Disadvantages of Decentralized Exchange (DEX)
As you know Decentralized exchange is an exchange that is connected with peers to peers model. It is nor control by a signal user.
Advantages (DEX)
It provides very high-level security. It is foolproof. Because it is controlled by a single user and no third party is involved in it.
Decentralized exchange is very secure, It is not easy to hack.
The details of the user are not displayed on a public domain or an authority.Private keys are secured by the users, not with anyone that can extort their funds. The transactions are stored on various servers. This means that there is no central server that stores all the transactions.
It is not regulated by the government. This is another advantage of decentralized.
Disadvantages (DEX)
It is fully controlled by the user, so some kind of fraud account can create by a fake person to cheat persons.
If some kind of mistake is done like a transaction, so it is not reversed by the user.
Decentralized exchange is not too popular nowadays.
Advantages and Disadvantages of Centralized Exchange(CEX)
Advantages(CEX)
It is very popular, so it has very high trading volume or peoples.
Transaction in this exchange is very very accurate fast than decentralized exchange.
Centralized exchanges provide higher liquidity, which means it is easier to convert crypto to cash for withdrawing.
Disadvantages(CEX)
Centralized exchanges is not too secure like decentralized, so it is hacked by a hacker easily.
It does not provide full privacy for the user on their account.
Owners of centralized exchange platforms can manipulate the trading volume or even the prices of assets displayed on their platform.
Have you used an Exchange before.Whats the Experience?
I have used the Binance exchange before and since joining I have enjoyed their service even though it is a centralized exchange, one thing I have enjoyed is the speed of buying and peer to peer transactions. so I can get my money back quickly and with my peers don't let me worry about who to sell to or who to buy from.
Binance exchange allows me to trade in futures trading, where I get the opportunity to double my crypto assets when there is money in the market.
Binance exchange helps me know the current and recent price of a crypto asset and allows me to keep my crypto assets and according to research since is the largest trader in the world.
CONCLUSION
As you know Exchange is a marketplace that is an online trading platform. It is in two types one is centralized form and the other is a decentralized form. Decentralized is more secure because it is controlled by the user with keys.
A wallet is a software that is used for the storage of Cryptos assets and keys which could be online or offline. Wallets are managed completely by the user.
Trading in an Exchange is a good and profitable experience especially when the user buys when the price is low and sells when the price is high.
Please do not use the #club5050 tag unless you have made power-ups in the last month that are equal or greater than any amount you have cashed out.