Centralized Exchanges : What It Entails #002

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Hello crypto friends,

With a heart filled with joy, I humbly come before you all today to discuss on an issue of great importance in the cryptospace.

I believe you are all doing perfectly fine and are enjoying your activities in the community.

In our last discussion on centralized exchanges, we learnt about what a centralized exchange is and we also learnt some of it's different component.

Today, being another beautiful day, we shall be learning about it's unique functionalities.

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FUNCTIONS OF CENTRALIZED EXCHANGE

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Centralized exchange serves so many functions in the financial ecosystem and some of them are:

• PRICE DISCOVERY:

One major function of a centralized exchange in the financial market is price discovery.

Through the aggregation of buy and sell orders, the centralized exchanges are able to determine the market price for various financial asset in the cryptomarket.

• LIQUIDITY PROVISION:

Another great function of centralized exchange is the provision of liquidity in the financial system.

Liquidity is understood to be the ease at which buying and selling takes place in the financial.

A centralized exchange aids the provision of liquidity by matching buyers and sellers together in the financial market, thus facilitating an efficient buying and selling mechanism.

• ORDER EXECUTION:

Another unique function of a centralized exchange is it's ability to excute orders initiated by it's users.

Centralized exchanges aims at executing orders very quick, thus ensuring that each commodity is sold and bought at the price at which the order was initiated.

Doing this helps to build trust of investors/traders as their orders are being filled immediately.

• SECURITY MEASURES:

One great functions a centralized exchange offer is the security of users asset.

And this is one of the expected function of a centralized exchange, because an exchange that lacks a strong security measures will be vulnerable to hackers and no one will patronize them.

Centralized exchange helps to maintain security in so many ways and one of them is by saving the private keys of users.

By saving user's keys, they give users the opportunity to always retrieve their password incase it gets misplaced.

Also, centralized exchanges makes use of biometric verification and 2FA to grant anyone access to an account.

Without these verification, it becomes impossible to access an account

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CONCLUSION

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Centralized exchanges indeed plays an important role in the financial market.

Today, we have examined the basic functions of a centralized exchange.

In our next discussion, we shall examine more if this.