Steemit Crypto Academy Contest / S1W2 – Reviewing Centralized Exchanges By @paulyoung

Greetings to everyone
Good to be part of this week contest. I sincere gratitude to the professors because their unbiased efforts are commendable.

As demanded, I will discuss about my centralized exchange and review my favorite centralized exchange as well. Thank for reading through

The advent of currency either fiat or crypto birthed an idea of a trustworthy saver. Just like banks pilot transactions that relates to fiat currencies, an exchange is responsible for crypto currencies service.

A novice may decide to ask what is the meaning of an exchange in crypto currency technology. In order to clarify thoughts, let’s discuss about an exchange

Introduction to exchange

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An exchange is a platform that offers cryptocurrency users a service of buying, selling (conversion of their crypto currency to a fiat currency) saving a crypto currencies (either long or short term) and swapping of cryptocurrencies then making their profits from transaction fee.

Types of exchange

Although there are hundreds of crypto currency exchange, they are all categorized into two types which are; Centralized exchange (e.g: Bittrex, Coinbase and Poloniex etc) and Decentralized exchange (e.g: dYdX, paraSwap, PankcakeSwap, sushiswap etc).

As demanded, this writeup will focus on centralized exchange.

QUESTION: Discuss briefly a centralized exchange and its benefits to crypto users

As it name implies, a centralized exchange (CEX) is an online cryptocurrency exchange organization that have a third party (administrator) which control/monitor transactions done on it.

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In Centralized exchange (CEX), the administrators are in total control of the crypto currency owner private keys while the owners are issued a password which they choose during their registration process.

In centralized exchange (CEX), the administrators custody the crypto currency and ensure that an owner have access after passing through series of verifications.

On centralized exchange (CEX), a Know Your Customer (KYC) verifications are compulsory. This always includes are live shot photograph, uploading of valid identification cards, email and phone number as well.

Benefits to users

There are several benefits noticed by user of a centralized exchange (CEX). Below are some of the basics;

• User friendly: Compared with decentralized exchange (DEX), it is very simple to use. Users can easily interact with admins and obtain information about their challenges at ease.

• Interactive/Educative: Centralized exchange are relentless in updating their users about latest service which might interest them. Furthermore, most new crypto currencies would exist for years without awareness of crypto currency users but the listing of this cryptocurrency create an easy awareness.

Most centralized exchange (e.g Binance) offers users an opportunity to learn about crypto currencies and blockchain technology.

• Account recovery: As far as the user still know his/her KYC details, recovering an account is 100% possible on centralized exchange.

• Security: Centralized exchange offers users a nice security of their assets. Unlike decentralized exchange which private keys are only used, verifications through user’s email, password and short message service (sms) is done before a transaction is initiate. Transaction made to wrong wallet can be traced out easily because they have the receiver’s identification details.

QUESTION: What i consider when choosing an exchange

These are the major things I take into consideration before choosing an exchange;

• Reputation: I can not leave my assets under the control of an exchange that have not set a good record. A recommendation from a friend, google play store review and only research are the first step that I make in order to gather proper information about them.

• Security: It is always my second consideration. Any exchange that does not have multiple verification of identity before accepting a transaction is a turn off to me I.e protection of users account using a security method known as Two Factors Authentication (2FA).

• Transaction fees: Some exchange transaction fees are costly than others.

• Complexity: If I can’t perform majority of services without much stress, I will automatically dislike the exchange.

• Customer care service (admin): I check users complain of feedback service. This is very necessary because certain challenges needs a direct communication with agents so if the service is poor, I will opt out of choosing it.

• Liquidity: Slow transaction is not proper. I check their speed as well.

QUESTION: Rewiew of my favorite centralized exchange and it unique features.

Among all the centralized exchanges that exists,
Binance is my favorite. The features that its comprises of are top notch. Currently, Binance record the highest trading volume (about $10 billion) compared with any other exchange (both centralized and decentralized exchange). This any many others makes it have a rating of been number one exchange since April 2018 till today.

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Brief history of Binance

Binance came into existence through the service of two tech experts by name Yi He and Changpeng Zhao.

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This world class service company was founded in China and relocated to Japan in 2017 because of a foresight of crypto currency banning in China and now have several branching in different countries including Hong Kong, but it is currently encountering restrictions in USA.

Features of Binance

Security

In terms of security, Binance is know for using a Two Authentication Factor (2FA) to protect users funds. After registration, verification of identity using valid ID card (e.g National passport), live capture passport is mandatory for user that want to person every service rendered.

Transaction fee and speed

This centralized exchange charges is very cheap for transaction initiate. The liquidity is also a greenlight to users.

Staking

Use of Binance exchange can stake their coin and gain rewards. This helps long term savers to making profits. The higher the amount, the greater the profits.

Reliable Agent

I don’t thing there’s any complain about their customer care service go anymore. Their feedback is less than 5hrs no matter the complain.

Educative

Anybody can learn on Binance exchange about cryptocurrencies, blockchain, NFT and gift card for free. The available courses are categorized into three; beginners, intermediate and advanced.

Everyday, more topics are added and old topics are update as well.

Informative

There is a news blog on Binance. No need users to search for latest news because Binance offers top news on daily about their service and crypto currencies.

Transaction with fiat currency

Unlike other exchanges, Binance support deposits and withdrawals with fiat currencies.

Honestly, this amazing centralized exchange features are too numerous to mention.

QUESTION: is there anything about your favorite exchange you will like to be changed? Discuss

Definitely, there are few things which are;

• Increase fait currencies withdrawal: Currently, many currencies are not listed, about 11 currencies only. It will be nice if other valuable currencies are added.

• 10USDT rules: There is limitations to trading some crypto currencies with minimum 10USDT. This is a turn off for users that can’t afford such amount at that particular time. I think there should be a reconsideration.

• Verification stress: Although the have to obtain a clear details, Binance verification can be frustrating. I doubt if someone can verify Binance on one attempt. This have make some people to loose interest even though it was their favorite.

• Technically bias: Transactions speed is faster when a huge amount of trade is done that less amounts ($20).
  

QUESTION: what short coming do you see on centralized exchange and how do you think user funds can be protected since we don’t have access to our wallet private keys?

There are certain shortcomings that every centralized exchanges should take into consideration which are;
Verification stress and timeframe should be considered should be reduced.

Transaction charges is a turn off in some exchange. When the amount of transaction is large, the cost can be clearly expensive.

Poor customer response it another shortcomings of some exchange.

Slow liquidity is another problem is common in some exchanges.

Centralized exchange are main targets of hackers since any success is a privilege to millions dollars fund.

Centralized exchange operation is against the true nature of cryptocurrency blockchain. Initially, it i was expected that cryptocurrency should be 100% decentralized in operation but it adaption have counter the goal.

In order to protect users funds, they should give users access to their proven keys and also improve their security system with latest technology.

Conclusion

The advent of centralized I have help in the spread/adaptation of crypto currency technology in various countries. Million dollars worth of crypto currency (e.g Bitcoin) have been lost and on decentralized exchange and Private wallets but CEX have help people that can’t safeguard funds.

Contacting a buyer/seller wouldn’t have been an easy task if there was no centralized exchange. Although crypto currency was meant to be decentralized in every operation but it would have encounter lot of setbacks without centralized exchange.

I humbly invite @benson6 @davosimple @unyimeetuk @tempestinyang @ukpono @ruthjoe @isgledysduarte @stellaheart @cherry-bliss @deepak94 to participate in this engagement contest

Thanks for reading