Blockchain, the next futuristic development we are slowly getting ourselves into and it will change everything. From Simple good you purchase from a retail shop to Banking and Advanced Technological development, all industries will slowly adapt BlockChain. The reason for it is simple. It’s Fast, Cheaper, Less Vulnerable to Hacks, Backed by respective Community for support and Easy to Access from anywhere.
Cryptocurrencies are Digital assets used as Money ( LIKE BITCOIN, LITECOIN ) which was developed to be used as crypto fiat money in Blockchain world OR Tokens that used as a money for a Protocol ( ETHEREUM, TRON, EOS ). We’ll look more about this in another blog.
What’s an Cryptocurrency Exchange
Exchanges are Trading platforms where we Buy/Sell Crypto assets for Cash ( Buying Ethereum using Bank Account ) and we exchange Cryptos for Cryptos ( Buy ripple using Ethereum ). Currently major exchanges support both of the above. But there are some exchanges that are built on the Digital Blockchain also.
Types of Crypto Exchanges.
Centralised Cryptocurrency Exchanges. (CEX)
Centralised Exchanges have a central server used for Trading. Let’s take CEX-IO for example. CEX-IO is a well known Exchange for cryptos as it has alot major Cryptos you can exchange than any other exchanges.
CEX_IO has a central server. All users are registered here and all their cryptos are stored safely in a central wallet. It’s very safe. It’s Trusted by Many. YOU CAN BUY USING YOUR VISA / MASTER DEBIT OR CREDIT CARD.
Major Centralised Crypto Exchanges.
Advantages of Using Centralised Exchanges .
- You can Buy Cryptos Using Real Money.
- High amount of Trading Volumes and Liquidity.
- It’s Legal.
- Huge Promotions and Airdrops.
Only Centralised Legally Registered Exchanges have the ability to buy and sell for real money. Due to their popularity and huge user base (as of now), higher trading volumes can be seen here. hence, you can trade and earn profits hugely.( If you know Crypto trading very well ). You buy here, your cryptocurrency is legally approved. And you are backed by insurance if the Exchange closes or gets hacked. Mostly CCE are well funded. And for keeping their users motivated, they give airdrops( free cryptos).
Disadvantages of Using Centralised Exchanges.
- Vulnerable to Hacks.
- Easy Govt Controls.
- Less Privacy.
Although CCE are said to be safe, it’s not 100% safe. A well planned Attack could get access for the hacker to all the funds in the exchange as it has centralised one major Wallet. It’s a huge risk. Government can shutdown or Take control of the exchange anytime. Although you are insured by the Company, there is a minimum chance of getting 100% of your funds back. And last, your Private information is visible to the company and anyone controlls it. And your transactions are visible to the Govt. So hopefully they know how much you are worth.
Decentralised Crypto Exchanges ( DEX )
These kind of exchanges are in it’s early stage as it needs more people to trust and adapt. Below are few of evolving exchanges, currently.
Advantages of Decentralised Exchange
- Secured as they are running on the Blockchain
- Very Low fees compared to Centralised.
- No Government intervention.
- Privacy Guaranteed
- Low Liquidity.
- Less trading pairs compared to Large Exchanges.
- Not possible to Buy cryptos with Real money.
- Not Insured.
When both CEX and DEX compared, you can clearly see that CEX exchanges have more Liquidity and Power over DEX exchanges as they are funded and governed by large companies. Privacy and sudden Market changes and Govt interventions, may shut down these type of exchanges leaving your funds at risk.
The Best Place to Trade your cryptocurrency is at DEX as you know they are Secured and has Low Fees by locking your private data. But the best for now is to stick with the Well known Exchanges like CEX-IO to buy cryptocurrency using your money and Trade them in BINANCE. THATS WHAT I DO. We got to wait untill DEX gets what they miss now.