Cryptocurrencies and decentralized technologies are booming nowadays. The numbers, the data, the statistics speak for themselves. The market capitalization has grown, the trading volume has spiked and more the individual & institutional adoption has reached a global scale.
The increasing rate towards the cryptocurrencies points to the growing tendency and reliability towards blockchain technology. As the main feature of the technology is, it’s a peer-to-peer network without anyone’s interference.
While dealing with cryptocurrencies, one needs to use a platform which offers buying/selling of cryptocurrencies. Therefore, a person who wants to hold cryptos needs to get it through an exchange.
So which exchange provides a better user experience with high security for funds and improved features? Continue reading to know more.
What is CEX and DEX ?
Centralised Crypto Exchanges
They basically are the third party operator who monitors the deals on their platform. The features of the centralized exchanges can be listed as below,
- They allow fiat to crypto transactions
- The market makers and takers will be part of the platform
- All the entries will be maintained in the database
- The trading volume will be huge
- The transaction speed is more
- Converting crypto into fiat will be easier
- It complies to the KYC/AML regulations
- The user’s private keys are stored in the system
- The centralized exchange is more prone to hacking or any security branches.
Decentralized Crypto Exchanges
These are basically only a platform, unlike big companies such as in centralized exchanges, which provides space so that the users can interact with each other. Hence no registration required nor any compliance of KYC/AML required.
The features of decentralized exchanges are listed below,
- They have no third party operators
- DEX does not allow fiat currencies
- In most of the cases, market takers may be from another platform
- The trading transactions are directly updated on crypto nodes and hence no database is required
- The crypto trading volume will be less compared to that of CEX
- As DEX updates the transactions in real-time, the transaction speed is sometimes low.
- DEX does not support Fiat currencies and hence liquidity is a major challenge
- No KYC fulfilment required, neither the user’s private keys are stored on the platform.
- The DEX is a complete end-to-end network, there are negligible chances of getting hacked.
How Dencentralized Exchanges Grew
By going through the above-mentioned features, one can easily be attracted towards the centralized exchanges as their policies make sure user funds are secured. But still, the user base of the decentralized exchanges has swelled drastically.
