Basics of Trading and Finance (Part 05) : Some Indications to the weakness of Centralized Exchange (CEX)
Intro
IntroAs a moderator of the Tron Fan Club community, I regularly write various tutorials on crypto blockchain and Tron related matters. The main purpose of these tutorials is to make our new users aware of these topics. In continuation of that I am writing tutorials on trading and finance. Hope you can easily learn some details of trading and finance through this tutorial series.
I've covered some basic discussion about centralized exchange sites in the previous four tutorials. Basically the first five tutorials I wanted to cover are very basic about finance and Centralized finance so that you understand some of the intricacies of trading, exchanges and centralized exchanges. Today I will show you some more important aspects of finding weaknesses of centralized trading.
There are many reputed exchange sites and trading sites based in different countries around the world. All currencies accepted on these sites can be bought and traded. Exchange sites charge us a fee when we want to withdraw a token and in many cases also charge a fee at the time of deposit. In some cases a fee is also charged for trading. Exchange sites basically charge such fee as maintenance fees and trading fees to facilitate the exchange and trading of traders.
Based on the disadvantages of centralized exchange sites that I mentioned in the previous two tutorials, today I am sharing with you some indicators that will help you understand whether the exchange site is in a weak or strong state. Any business company, organization always tries to provide maximum support and service to its customers. Any interruption in support and service has an impact on their brand value and impact ratio. So no exchange site or trading company ever wants to disappoint its customers.
But if you see any such incident happening on any exchange site then you will understand that there is some problem here. For example, you may want to withdraw one of your tokens but the withdrawal is delayed, which means that the exchange site may not have this currency and therefore you are experiencing delay in withdraw it. Many times your wallet, certain tokens are frozen for the same reason. In some cases, it is seen that all transactions with a particular currency are completely stopped for a temporary period. Exchange sites sometimes suspend their operations without any notice for a specific span of time.
Basically if the exchange site maintains everything as per rules then there is no need for them to do this. Because whatever you withdraw or deposit you will be doing it from your own money. You don't have to pay for your withdrawal from the exchange's pocket, rather you withdraw from your wallet. And it is through your withdrawal that the exchange sites do their business. So why would they suspend their business activities? This cannot happen under normal conditions but such events happen under abnormal conditions.
In the history of trading and exchange sites of the world, we have witnessed many such incidents where various tokens are sold at very low prices, accounts are frozen, withdrawals are blocked, trading is temporarily stopped without any notice. Such acts are mainly done in the moment before any major scam of that exchange or exchange site is closed. Basically, when the customer's assets are moved to the back end and put into another business or used for their own needs, they face these problems only if they cannot meet up. We have also seen various exchange sites going bankrupt due to these issues at various times.
So keep these abnormal indicators in mind and try to understand the weaknesses of the exchange site in any abnormal situation. Keep your eyes and ears open if you want to trust any centralized exchange site. If their activities are questionable, you should consider alternatives to your money or assets.
I will end the first five tutorials here and in the next five tutorials I will try to discuss some pros and cons of centralized and decentralized exchange sites. Thank you
Great job explaining the weaknesses of centralized exchange sites and providing indicators to identify them. Your article is informative and helpful for those interested in trading and investing. Keep up the good work!