Explain in your own words what an Exchange is. Differences between a Wallet and an Exchange. Mention the advantages and disadvantages of DEX and CEX. Have you used an Exchange before? tell us about your experience.
EXCHANGE
Exchanges are one of the important aspects of the crypto sphere. It is a digital marketplace where users can access to trade crypto assets. However, without the exchanges, it is very impossible to buy and sell crypto assets this shows how important exchange is. Remember, you can't buy crypto assets from your bank. Buying and selling of cryptocurrencies such as Steem, Bitcoin, Tron, Ethereum, and so on, you need to have an account with any of the exchange (decentralized or Centralized) platforms.
Moreover, exchange platforms serve as a possible means of converting, swapping, buying and selling cryptocurrencies with another cryptocurrency based on your choice. Also, it makes use of a smart contract which makes the transaction of funds easier, however, it acts as an intermediate between the buyer and seller and money is generated through the transaction fees and commissions of each trade.
Let's check the types of exchange platforms.
We have two types of exchange namely; Decentralized Exchange (DEX) and Centralized Exchange (CEX)
Decentralized Exchange
Decentralized exchanges are platforms that don't support the buying and selling g of crypto assets, however, has good security. Examples of DEX are as follows
UniSwap, Sushiswap, Pancake Swap, Inch Exchange, Tokenlon, Venues
Ox Protocol, Curve Finance, Coipound
Burger Swap, etc.
Centralized Exchange (CEX)
This is another exchange platform that is controlled by a central server. The central server here can be more than one person but they all control and hold our crypto assets which means they are prone to hackers. Here, we can store cryptocurrencies and trade them. Centralized exchanges include Binance, Probit, Huobi, Kraken, Kucoin, Hotbit,
Coinbase, Roqqu, etc.
Differences between a Wallet and an Exchange.
Most people mean place wallet from an exchange. I will differentiate the I'm to enable us to know they are different. However, both are very important in the affairs of cryptocurrency and can be used to trade cryptocurrencies.
| Exchange | Wallet |
|---|---|
| An Exchange is used to anticipate transactions as well as to store crypto assets. | Perhaps, a wallet is only used to store tokens and assets but can't be used for trading. |
| In exchange, you are given only one key which is the posting key | while in your wallet you are given both the private and posting keys. |
| Exchange platforms aid both fiat and cryptocurrency | while wallets such as metamask support only cryptocurrency, however, some like Trust wallet support all. |
| Exchange platforms are mostly centralized | wallets are decentralised which make it more secure over the exchange. |
Mention the advantages and disadvantages of DEX and CEX.
Advantages of Dex
It has good security as such makes hacking more difficult. The elimination of the third party makes it to be safe from hackers, fraudsters as well as limits malicious acts.
it is characterised by anonymity that's not like the KYC method as such makes users on Dex anonymous.
One of the basic things people complain about in the affair of cryptocurrency is the manipulation of the market, however in Dex it prevent such market manipulation and traders falling into fake trades as a result of the P2P system adapted.
Disadvantages of Dex
One of the disadvantages of the Dex is its complexity. Here in Dex, when users lose passwords of their wallets, means they can't get access to their funds which indicates their assets are lost and cannot be retrieved unless they get the keys.
The Dex has inadequate liquidity this is a result of scarcity of trading volume.
finally, another aspect is that its focus is on cryptocurrency and not for the exchange of fiat as such makes payment of fiat scarcity.
Let's check out CEX.
Advantages of CEX
It is very simple and friendly to use. In Cex such Binance lectures/tutors novices about cryptocurrencies, and how to make use of the wallet. With Binance applications and websites you can make transactions.
In the aspect of reliability of transactions, Cex plays a vital role. Cex has a good method of securing transactions via the use of the smart contract.
finally, a lost password can't be retrieved. However, is just by sending messages to their customer cares.
Disadvantages of Dex
The main issue of the Cex is that it is prone to hacking since it makes use of a central server. The Cex are governed by organisation and they hold all the crypto assets in the exchange. So, whatever happens to the central server affect all their customers' funds.
Another is their transaction fees. The Cex has high transaction fees they charge in each of the trades you make.
Have you used an Exchange before? tell us about your experience.
Yes, I have done lots of exchanges before which using Binance and other cex exchanges. Well, I will explain my experience at Binance. Honestly, Binance remains my favourite exchange and I have good experience with them. The best thing I adore about Binance is the way their customer care respond to issues. There was a time I made the transaction, and I have been notified by my Email that I have received the coin but in my Binance wallet, it has not arrived.
Immediately, I send a message to them instantly they rectified it and apologised. Another aspect I adore is the tutorial. They taught me how to place a trade and their application works most especially in the Future trading aspect. Also, it is very simple to use and prevent users from being scammed most especially in the aspect of P2P trading. They will send information to you to confirm your payment before releasing the coin showing how reliable they are.
Though one thing I dislike from them is the delay when you trigger a coin either buy or sell. This delay occurs majorly when the trade volume is high. Moreover, I can't mention all my experiences because I can't remember them all but believe me I had a good experience.
CONCLUSION
The exchange platform is very important and it is very easy to use when you understand the basic thing about them. However, an exchange is more of an online market and requires the connection of smartphones, and computers to access them. The exchange is used to buy, sell, and convert crypto assets.
The exchange has two types of platform namely, centralized and decentralized exchange. The centralized exchange is more creative and friendly whereas Decentralized Exchanges has good security. Moreover, it is ideal for users on the DEX to keep their keys or password in a safe place because once it's been tempered or misplaced, the funds in the wallet will be lost.
Finally, my experience on an Exchange platform specifically Binance is profitable in all aspects. However, it is good for the users to obtain a basic understanding of how exchange platform works.