Cryptocurrency exchanges are platforms that facilitate the trading of cryptocurrencies for other assets, including digital and fiat currencies.
We have two major types of cryptocurrency exchanges which are:
- Centralized Exchange.
- Decentralized Exchange.
These exchanges have critical differences and they both offer solutions to different problems crypto asset owners may have. Let’s give it a little dive to know what the types of exchanges entails
A Centralised exchange (CEX) is an organization that allows crypto traders to buy and sell crypto assets on a large scale. They act as a third party between a buyer and a seller. Approximately 99% of all crypto transactions go through centralized exchanges.
One of the first centralized exchanges is Binance which was founded in 2017 and according to Coingecko, it sees a daily volume of $11,163,054,530.
Some examples of centralized exchanges are: Coinbase, Gemini.
Advantages of Centralized Exchanges.
- User-friendly: Centralized Exchanges offer a familiar, friendly way of trading and investing in cryptocurrencies.
- Reliable: Centralized exchanges offer higher levels of comfort, security, and reliability.
Disadvantages of Centralized Exchanges.
- Transaction Fees: Centralized exchanges often charge high transaction fees for their services. This can be especially high when trading in large amounts.
- Hacking Risk: Centralized exchanges are operated by companies that are responsible for the holdings of their customers. Large exchanges usually hold large amounts of bitcoin thus, making them a target for hackers and theft.
A decentralized exchange (DEX) is a blockchain-based platform that lets traders buy and sell tokens without a middleman, and directly from their web 3.0 wallets, without the need to deposit to a trading account.
Popular decentralized exchanges are built on top of layer-one protocols, meaning that they are built directly on the blockchain.
Examples are UniSwap, and PancakeSwap.
Advantages of Decentralized Exchanges.
- Anonymity: Decentralized exchanges do not require customers to fill out know-your-customer (KYC) forms, offering privacy and anonymity to users.
- Preventing market manipulation:. Decentralized exchanges prevent market manipulation due to their nature of allowing for the peer-to-peer exchange of cryptocurrencies.
Disadvantages of Decentralized Exchanges:.
- Complexity:. Users of decentralized exchanges must remember the keys and passwords to their crypto wallets, or their assets are lost forever and cannot be recovered. This makes it less convenient for users.
- Decentralized exchanges do not allow for the trading of fiat currencies for digital ones, making it difficult for users that do not already hold cryptocurrencies.
There are a myriad of things that can be done on a cryptocurrency exchange and a sure and secure platform that can be used to enjoy the amazing features of a cryptocurrency exchange is the “SCALLOP EXCHANGE”.
On the Scallop Exchange, you can:.
- Deposit crypto(buy with a credit card) and sell your crypto on the market.
- Trade Futures.
- Trade with Margin.
Read more on how you can make the most out of the quick and easy Scallop Exchange here:.
You can also follow the easy steps on how to connect your Metamask wallet on the scallop decentralized dashboard.