Centralized Exchanges

I am sitting down to look back at my illustrious crypto adventures (going on 3 months now). I decided I would start at the beginning. My first account was on Coinbase, an exchange recommended to me as a novice investor. Having never been involved with crypto and only knowing of two coins, Bitcoin and Ethereum, COINBASE opened my eyes to an entire world of coins, tokens, etc. I signed up one day and the very next Coinbase went public and at that point, I knew I was golden.

I love diving into things. Copious amounts of research are the key to understanding, and I never have an issue with doing copious amounts of research. I joined an online RPG/Strategy game based upon the Romance of the Three Kingdoms books. It was completely fan-driven and while the RPG portion was easy (people posting dialogue on a phpBB forum) the strategy portion was not. It involved calculations, formulas, results and everything was done by hand. I signed up to be a staff member to help with the calculations, and however, it happened I ended up being the admin and ran the entire game. My son had just been born and I was up late with him trying to get him to fall asleep and I had an epiphany. I could create a system to automate the strategy portion of the game! This was easy enough except for the fact that I was a self-trained programmer who understood C++ and MFC (Microsoft Foundation Classes) but knew very little about PHP, which at the time was the obvious choice to program the strategy portion of the game with. There was only one thing to do, learn PHP. I spent weeks learning PHP, MySQL, and HTML in order to revolutionize the game and I did just that. I took a task that took 8 hours total for a few people and turned it into a 2-minute task involving one person pushing a button. It even submitted the results as posts on the phpBB. That game is long gone but what I learned is not, and the value I gained from doing the research and ultimately the work paved the way for complex projects at work. Putting in the work pays dividends.

Back to Coinbase. What I love about Coinbase is they lay everything out for you to be able to DYOR (do your own research) into one of their handpicked crypto lineups. By handpicked I mean they have a limited amount of crypto available for trading. They do their own research and theoretically, the crypto they list is considered a "safer" project. I say "safer" because in this volatile market based upon an ever-changing technology, nothing is truly "safe". On Coinbase you get links to whitepapers, websites, and news related to the crypto you have an interest in. You can see graphs showing you how the value of the crypto has risen and fallen so you can try to see trends.

I bought three cryptos, Bitcoin, Ethereum, and ANKR. Bitcoin and Ethereum were no brainers. I had heard of them as have most new investors, so they just seem like a good draw. It doesn't hurt that in April their price was magnificent so it is natural to be drawn to them. ANKR on the other hand was my first unknown. Before I bought ANKR I went on their website and read up on what they wanted to achieve. They talked about Web 3.0. What the heck was Web 3.0? I opened a new browser tab and began to read and tried to understand Web 3.0. ANKR was creating tools for Web 3.0. There was excitement in what I read. I read the whitepaper and liked what I read. The price was $0.17 so it was very low priced (I have since learned about very very low priced crypto, but at the time this was cheap). I bought $200 worth and I was happy with my purchase.

Coinbase really helped me to get the basis for what I should be looking at in order to be informed on crypto. I didn't know crypto projects had whitepapers until Coinbase. Now I do and that is the first thing I look at if I am serious about putting some money into a cryptocurrency. So Coinbase made me a more informed investor and for that, I have to thank the platform. They also give away free money. I am all about free money. If it's free it's for me. Never pass up a free lunch. You get the point.

Coinbase has a learning section where investors can view small presentations about crypto, take a multiple choice quiz (in which even if you get the answer wrong you can just keep going until you get the right answer), and earn a dollar or more in the crypto you are learning about. Since April I have earned probably around $30 and learned about numerous crypto projects along the way. This is a feature I have only seen on Coinbase and I love it. Generally, I get the crypto and then moved it over to Ethereum, but I have at times invested more of my funds into that crypto because the project looks interesting.

Pretty quickly after I made an account with Coinbase, I suddenly found out about Crypto.com. It made perfect sense to join that exchange as well. I wondered what the difference was between the two so started researching. Through my research, I kept seeing "centralized exchange". Essentially what I found was Coinbase, Crypto.com, Binance, Exodus, and Gemini are all centralized exchanges. A centralized exchange is an exchange that is operated by a private business.

There are some very good advantages to a centralized exchange:

• It is generally easy to use for crypto newcomers
• Liquidity, though only with certain crypto
• Ability to trade different coins, such as Ethereum to Bitcoin, Bitcoin to Polygon, etc.
• Ability to withdraw crypto to fiat to your bank account

What I learned is there are some disadvantages to a centralized exchange:

• All crypto is held on the exchange so it could be said that you don't actually own the crypto, the centralized exchange does
• Limited crypto to trade
• The private company behind the exchange is a for-profit company, earning revenue by charging fees for transfers
• Earning percentage rates are lower than other methods

Centralized exchanges have interest-paying crypto available. The most important thing to know is that each centralized exchange may offer a different interest rate. They will offer a rate that is generally less than if the investor looks elsewhere due to the fact the exchange is actually taking some of the fee. For example, on Coinbase the crypto Cosmos (ATOM) earns 5.00% APY when staking. Trust Wallet offers 7.38% APY on Cosmos. EXODUS offers 9.03% APY on Cosmos. The Cosmos Hub offers 9.70% APY. The Cosmos Hub is the group behind the creation of the cryptocurrency and offers the best APY. The others offer less not because they are being paid less. On the contrary, they earn the same 9.70% the investor would. The difference is the centralized exchange is taking a cut of the fee. Coinbase is taking 4.70%, Trust Wallet is taking 2.32% and Exodus is taking 0.67%.

Centralized exchanges are a step up from banks. They offer greater abilities to earn on the crypto you hold and offer you the ability to buy and sell crypto. Some of them even offer services that look a lot like stock market exchanges. I am not an expert on that facet of the exchange, so at this time I can't talk to it. What I do know is my quest for knowledge drove me to want to learn what the difference between centralized and decentralized exchanges was. That is a story for another time, or for next time.

Information Station:

Coinbase - https://www.coinbase.com/

ANKR Website - https://www.ankr.com/

ANKR Whitepaper - https://whitepaper.io/document/445/ankr-network-whitepaper