If you are planning to buy/sell cryptocurrencies and other digital assets, the most convenient way of doing it is to transact with a reliable crypto exchange. Cryptocurrency exchange platforms are privately-owned and facilitate the trading of cryptocurrencies and other digital assets. There are centralized and decentralized exchanges, and each one has its own advantages and disadvantages. This article provides information on some of the many benefits of dealing with cryptocurrency exchanges when investing or trading cryptocurrencies.
CEX Or Centralized Exchanges
A centralized exchange acts as an intermediary between the buyer and seller and earns money via commissions and transaction fees. In fact, a CEX is quite similar to a stock exchange for digital assets. CEXs operate using an order book system where buying and selling orders are listed and sorted out by the intended buying or selling price. A CEX has a matching engine (an algorithm) to match buyers and sellers depending on the best executable price as per the desired lot size.
DEX Or Decentralized Exchanges
A DEX allows peer to peer transactions directly from your digital wallet without having to go through an intermediary. In fact, a DEX will usually rely on self-executing pieces of code on a blockchain or smart contract. Smart contracts will also allow for more privacy and fewer transaction costs or slippage. Decentralized exchanges are more suitable for sophisticated traders.
Benefits Of Cryptocurrency Exchanges
Crypto exchanges are reliable since centralized exchanges provide another layer of security to protect your investment. When you facilitate your transactions through a centralized platform, you can be comfortable knowing that your investment is safe. On the other hand, centralized exchanges are beginner and user-friendly. Peer to peer transactions and crypto wallets can become complicated at times and are ideal for advanced investors.
Decentralized exchanges help prevent market manipulation due to the nature of allowing peer to peer transactions. They help protect traders from fake or wash trading. DEXs don’t require customers to fill out know-your-customer (KYC) forms, which helps offer privacy and anonymity to users. On the other hand, such platforms don’t exercise censorship. Hence, you will find more cryptocurrencies and digital assets available on these platforms compared to centralized ones. When you use a DEX, you don’t have to transfer your assets to a third party. Hence, the risk of your organization or company being hacked is minimal.
The aforementioned article provides information on some of the many benefits of dealing with cryptocurrency exchanges when investing or trading cryptocurrencies. There are resources available at Top Canada Crypto exchange for more information.