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Chapter 3:  Crypto Exchanges

DEX VS CEX: Two Sides of the Crypto Exchange Industry

Interesting Fact:
Did you know that the reported trading volume of decentralized exchanges (DEXs) exceeded $1 trillion in 2021?
easy
10 minutes

In this section, we are going to talk about the differences between DEXs VS CEXs, or decentralized and centralized crypto exchanges!

When you’re just starting out with crypto, one of the very first things that you’ll probably think to do is find yourself an exchange platform - a place where you could buy, sell, or trade cryptocurrencies whenever you please. During your research, you will likely soon notice that there’s a huge variety of different exchanges to pick from - that can be overwhelming!

In addition to that, you might also see two large groups of people, arguing online - fans of CEXs, as well as avid DEX supporters. If all of that sounds like alien-speak to you, worry not - this is where I come in, to help you understand these complicated crypto concepts, easily!

In this section, we’re going to talk about the differences between DEXs VS CEXs. I will first tell you what those two terms mean, in general, and after that, we’ll compare and contrast them, and figure out which of the two would fit your wants and needs the best!

So, let’s get to it!

DEX vs CEX: Which is Best for YOU? (Explained with Animation)

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Video Explainer: DEX VS CEX: Two Sides of the Crypto Exchange Industry

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DEX vs CEX: Which is Best for YOU? (Explained with Animation)

DEX vs CEX: Which is Best for YOU? (Explained with Animation) DEX vs CEX: Which is Best for YOU? (Explained with Animation)

What is a Centralized Crypto Exchange (CEX)?

Let's begin by jumping straight into the fun stuff, and talk about what are CEXs and DEXs, starting with the former.

What is a centralized crypto exchange, or a CEX? A really simple way of looking at it is this - most of the exchange platforms that you’ve heard about are probably considered to be CEXs! These include Binance, Kraken, KuCoin, Coinbase, and so on.

DEX VS CEX: Centralized crypto exchange.

“Centralized” is the key term that we want to look at here. Essentially, it means that all of these exchanges have a single, governing authority behind them - such as a company or a designated team of people looking over and managing all of the processes of the exchange.

On top of that, CEXs are also known for how they deal with customers’ funds, as well as how they execute orders. Centralized exchanges use traditional order booking processes - you place an order to buy or sell some crypto, and it gets matched with another person’s order of the opposite nature.

To understand DEXs VS CEXs better, think of it this way - imagine that centralized exchanges are like ride-on-demand services. When you need to go to your friend’s house, you can press a few buttons, and order a ride from one of the available drivers. In order to book an actual ride, however, you will need to first register on the app, and provide it with your personal details, as well as a valid payment method.

So, while a service like this is very simple to use, and booking a ride takes only a few seconds to do, you need to, for a lack of a better term, “dox” yourself to the company - in other words, reveal a lot of personal information about yourself, before you can get a ride with one of their drivers.

That’s fine for a lot of people - at the same time, though, there are others who are less keen on handing over their names and payment details to a huge company. This group of people prefers to catch a taxi, the old-school way - find one in the nearest parking lot, or call up a taxi company and ask it to send a driver to their location.

Of course, this isn’t as convenient as clicking a few buttons on an app. However, it allows you to pay for your ride in cash, and preserve the privacy of your information. Essentially, this example works well to illustrate DEXs, or decentralized exchanges.

What is a Decentralized Crypto Exchange (DEX)?

What is a decentralized crypto exchange? As the term itself implies, DEX platforms have no single governing authority behind them. So, there’s no company that you could reach out to, and no CEO that you could look up, and blame if something went wrong.

How does a DEX work, then? Well, essentially, most DEXs are governed by something called DAOs, or Decentralized Autonomous Organizations - a key point in our DEX VS CEX comparison!

DEX VS CEX: Decentralized crypto exchange.

DAOs are, admittedly, a really complex topic to get into. If you’d like to figure out what is a DAO in a thorough way, there's a dedicated section for that in our Crypto 101 Handbook - check it out! For the sake of keeping things simple in this section, though, suffice to say that a DAO is a group of people who are fans of a specific cryptocurrency project, hold its token, and thus, have the right to vote on the direction of the project, its updates, and so on.

So, essentially, decentralized exchanges are governed by the actual users of these platforms. The lack of a centralized authority allows for these platforms to retain a lot of privacy and anonymity features - which is, once again, what some people are looking for, to begin with.

CEXs VS DEXs - Which is the Better Option for You?

Continuing on, now that you have a pretty good idea of what are CEXs and DEXs, the big question that remains unanswered is this - which one should you use?

DEX VS CEX: Centralized exchanges VS Decentralized exchanges.

Indeed, if we were to look at our earlier example with the drive-on-demand services and traditional taxis, the differences between the two are, admittedly, pretty negligible. Eventually, you would still end up driving to your friend's house - so, the end goal is the same.

With DEXs VS CEXs, though, things aren’t quite *that* simple. One of the first major differences that you will immediately notice between these two types of platforms has to do with usability.

Imagine that centralized exchanges are like modern, automatic cars. The cars are full of cool features, and pretty simple to drive. On top of that, there are plenty of additional widgets that are there to help you out on the road - automatic parking, cruise control, and so on.

DEX VS CEX: Centralized exchange example.

With the top-tier CEXs, your cryptocurrency acquisition process is likely going to be super-simple, quick, and full of helpful guides along the way. Centralized exchanges tend to be very newbie-friendly, which is definitely a point worth considering!

On the other hand, decentralized crypto exchange platforms are like older, manual transmission cars. They still serve the same function - to take you from point A to point B -, but you need to be much more involved, and understand how the car works, in the first place.

This example illustrates the feeling that many people might have with DEXs. If you want to use a decentralized exchange, you need to already have a cryptocurrency wallet, as well as some funds within it. Then, you need to be able to find the coins or tokens that you’re looking to trade, verify their contract address, and so on.

DEX VS CEX: Decentralized exchange example.

It’s a far more complicated process than just hopping on a centralized exchange platform, and buying your first crypto in a matter of minutes!

The two other points that I’ve just mentioned are equally as important to consider - the fact that, with DEX, you need to have a wallet of your own, as well as the lack of traditional payment support on such exchange platforms.

As we’ve established previously, centralized exchanges allow you to store your crypto assets on their wallets. If you’d like to learn how that works, specifically, check out this section!

My point here, though, is that, with DEXs, this feature is not available. Now, is that a good or a bad thing? Well, it depends! While storing your cryptocurrencies on an exchange is super-convenient, it’s also a bit risky - what if the exchange gets hacked, and the hackers gain access to your assets?

On the flip side, decentralized exchanges eliminate this issue, altogether. You are the only one responsible for what happens to your cryptos - even if the underlying exchange gets hacked, since you aren’t storing your cryptocurrencies on it, your funds would technically be safe. That being said, some people just want to avoid the hassle that comes with managing a wallet of your own, or want to have the chance to communicate with customer support, if something goes wrong - a feature that, once again, isn’t available with decentralized exchanges.

Traditional payment methods are another key point to mention, too. If you’re looking to *BUY* cryptocurrencies with euros, US dollars, or any other traditional currency, then centralized exchanges are kind of your only option. That’s because DEXs don’t have this feature - remember, they are anonymity-driven! There wouldn’t really be all that much anonymity if you’d end up revealing all of your bank details to the exchange, now would it?

DEX VS CEX: Traditional payment methods.

To add to all of that, comparing DEXs VS CEXs, you will also soon notice that the latter are a bit primitive, when compared to their centralized counterparts. While centralized exchanges aim to offer as many different features to their users as possible (just take a look at Binance, as an example), DEXs are really mostly focused on one, single thing - trading one crypto asset for another.

Now, while it may seem like centralized exchanges are superior to DEXs in every single way, that really isn’t the case. Remember - with a centralized crypto exchange, you will have to reveal a lot of information about yourself, in addition to your bank details, residential address, and so on. There is no anonymity - something that’s still considered by many to be one of the core pillars of crypto and blockchain technology!

Furthermore, CEXs are also usually very slow to add new coins & tokens, and some platforms even have a habit of freezing their users’ funds, or halting their trading functionality for any and all reasons they see fit. None of these are issues that you would come across with a decentralized exchange!

Final Thoughts

Wrapping things up, the conclusion is actually quite simple - both centralized and decentralized exchanges have their own, specific pros and cons, and are both also very specific in the benefits that they provide. Industry newcomers and casual traders prefer using CEXs, due to the simplicity and feature variety that these platforms offer. Crypto veterans and hardcore enthusiasts, on the other hand, love and appreciate DEXs - here, they can trade anonymously, and access all of the newly-launched crypto coins and tokens.

Now that you understand the basics of what is a decentralized and what is a centralized crypto exchange, you should be able to distinguish your preference, as well!

fiat (or traditional, government-issued) currency, such as the US dollar or the Euro.<\/p>\n<p>As you can imagine, buying and selling crypto is definitely a common practice, <strong>especially if you&rsquo;re not looking to become a day trader<\/strong>, and are only interested in accumulating as big of a portfolio as possible. The most common method of buying crypto these days is to visit a popular <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-centralized-exchange-cex/">centralized exchange<\/strong><\/a>, register on it, add a payment method (such as a credit or debit card), and make your purchase.<\/p>\n<p><em>Simple, right? Well, yes, it really is!<\/em> This is why buying and selling crypto is so popular, especially among industry newbies - you don&rsquo;t need to worry about the technical stuff, complex gas fees, and so on.<\/p>\n<p>Now, when it comes to what is <strong>crypto trading<\/strong>, things are a bit more interesting.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Crypto day trading: Crypto trading.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//optimized//what_is_crypto_buying_trading_swapping_02.jpg/" alt=\"Crypto day trading: Crypto trading.\" width=\"1000\" height=\"637\" \/><\/p>\n<p>As the term might imply, when you trade cryptocurrency, you&rsquo;re essentially giving away your crypto for some other coin or token, instead of fiat money. If that sounds a bit confusing, here&rsquo;s an example:<\/p>\n<p>Imagine that your friend opened up an apple shop. You come to visit, and even though you don&rsquo;t really like apples, you&rsquo;re a supportive friend, and decide to get a few of them for yourself.<\/p>\n<p>Now, your friend allows you to either BUY the apples, or TRADE them. If you choose the prior option, you would simply pay your friend with money, and get the apples in return, as with most other shops in the world.<\/p>\n<p>However, if don&rsquo;t have any money with you, but have brought along a few pears, your friend would accept them for the apples, too. This would constitute a trade - <strong>you give an asset in order to receive an asset<\/strong>, both of which don&rsquo;t involve traditional money.<\/p>\n<p>Trading crypto is, honestly, a very common activity, as well. Think about it this way - once you&rsquo;ve bought some crypto on the exchange that I mentioned earlier, you might want to trade it for some other asset, on that same exchange. Most centralized exchanges have designated trading interfaces, where you can do just that.<\/p>\n<p>Now, this is where it gets a bit more tricky. Up to this point, we&rsquo;ve talked about centralized exchange platforms - however, crypto trading can be performed on <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-decentralized-exchange-dex/">decentralized exchanges<\/strong><\/a>, as well! Many traders actually prefer using DEXs, since they can often find small, less-known tokens on these platforms, and try to become early investors in said tokens.<\/p>\n<p>If centralized and decentralized exchanges are a mystery to you, there's a dedicated section on this very topic - <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//dex-vs-cex/">check it out<\/strong><\/a>!<\/p>\n<p>In addition to that, you may also choose to both buy, as well as trade crypto in person - you would meet up with somebody, and perform the transaction that you both agreed upon. I wouldn&rsquo;t really recommend doing so, however, for obvious privacy and security reasons.<\/p>\n<p>Though <strong>why would somebody TRADE cryptocurrencies<\/strong>, when they can simply buy them? Isn&rsquo;t the latter much simpler and faster to do?<\/p>\n<p>Well, yes - but there are multiple reasons why you&rsquo;d choose the trading route.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Crypto day trading: Not all cryptocurrencies can be bought with fiat money.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//optimized//what_is_crypto_buying_trading_swapping_04.jpg/" alt=\"Crypto day trading: Not all cryptocurrencies can be bought with fiat money.\" width=\"1000\" height=\"696\" \/><\/p>\n<p>For starters, <strong>not all cryptocurrencies can be &ldquo;bought&rdquo; with fiat money<\/strong>. If you want to own some sort of a coin or token that doesn&rsquo;t have a fiat pair on the exchange that you&rsquo;re using, and can only be acquired by exchanging another crypto asset for it, you will likely need to perform a trade, in order to get it! Note that I&rsquo;m using the term &ldquo;exchanging&rdquo; interchangeably with &ldquo;trading&rdquo; - this is just to keep things simple and clear.<\/p>\n<p>Here&rsquo;s an example of what I just told you - imagine that you&rsquo;ve just bought your first <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoin, on an exchange platform. Now, you also noticed that there&rsquo;s another token on that same exchange - we&rsquo;ll call it the <strong>X token<\/strong>. Now, this token only has a BTC pair - meaning, it can only be acquired by trading Bitcoin for it. Since, for some reason, you really want to become an owner of X token, you decide to enter a trade on the exchange, and trade some of your Bitcoin for the aforementioned X token. Simple!<\/p>\n<p>Next up, many individuals who partake in crypto trading do so in order to <strong>make a potential profit<\/strong>. These people are called &ldquo;day traders&rdquo; - they are constantly analyzing the market, and making educated guesses about which cryptocurrencies are going to rise or fall in price.<\/p>\n<p>Is crypto day trading worth it? Well, it&rsquo;s a super-complex process, and there are few day traders who are able to do it for a living - however, trading different cryptos is an essential activity here, as buying &amp; selling simply wouldn&rsquo;t suffice!<\/p>\n<p><strong>Crypto day traders<\/strong> are people who also participate in <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-leverage/">leverage crypto trading<\/strong><\/a>, or <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-margin-trading/">margin trading<\/strong><\/a>, as well. These are some advanced trading strategies that involve borrowing money from the exchange platform, in order to boost your position.<\/p>\n<p>With all of that said, let&rsquo;s look into the last term - <strong>crypto swapping<\/strong>.<\/p>\n<p>At first glance, crypto swapping might look almost identical to trading. However, there&rsquo;s one, big difference between the two - with trading, you enter an <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-order-book/">order book<\/strong><\/a>, and wait for someone to match your trade. With swapping, on the other hand,<strong> everything happens instantly<\/strong> - you simply swap some of your crypto asset for another, of equal value.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Crypto day trading: Swapping VS Trading.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//optimized//what_is_crypto_buying_trading_swapping_03.jpg/" alt=\"Crypto day trading: Swapping VS Trading.\" width=\"1000\" height=\"549\" \/><\/p>\n<p><strong>Is swapping crypto a taxable event, then? <\/strong>Well, this is something that depends on both the region that you live in, as well as the tax laws in place, at the point in time when you&rsquo;re reading this section! It&rsquo;s important that you look into the intricacies of crypto day trading and swapping, tax-wise, before you perform any of these activities!<\/p>\n<p>Going back to crypto swapping, if you&rsquo;re feeling a bit confused, you can think about it this way - cryptocurrency trading is performed when you want to maximize your potential profit, and are speculating on how the market will act and react. On the other hand, crypto swaps are all about convenience - they are super-simple to execute, happen instantly, and allow you to exchange your crypto coin or token for a different asset, hassle-free.<\/p>\n<h2>The Use Cases of Crypto Buying VS Trading VS Swapping<\/h2>\n<p>At this point, you should have a pretty good understanding of the differences and similarities between crypto buying VS trading VS swapping. Now, one more thing that I&rsquo;d like to talk about is <strong>the actual use cases of these types of transactions<\/strong>.<\/p>\n<p>Or, in other words, in what situations would buying, trading, and swapping crypto be most beneficial?<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Crypto day trading: The use cases of crypto buying, trading, and swapping.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//optimized//what_is_crypto_buying_trading_swapping_05.jpg/" alt=\"Crypto day trading: The use cases of crypto buying, trading, and swapping.\" width=\"1000\" height=\"626\" \/><\/p>\n<p><strong>Starting off with crypto buying<\/strong>, this is quite self-explanatory. If you&rsquo;re just at the beginning of your crypto journey, and still haven&rsquo;t even registered on an exchange platform, it's highly likely that your very first mission is to acquire some coins or tokens for yourself. Unless you get lucky with an <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-airdrop/">airdrop, or receive crypto as a gift from your friend, chances are that you&rsquo;ll end up buying the assets, with fiat money.<\/p>\n<p>Buying crypto is also the main activity that long-term investors participate in, too. Say, you&rsquo;re a fan of Bitcoin, and a huge believer that this specific crypto asset will grow in price, in the long run. In this situation, you&rsquo;d probably try to buy BTC quite often, and thus, grow your portfolio. Long-term investors usually don&rsquo;t really need any trading or swapping functionality - they just buy their asset, transfer it to their wallets, and forget it.<\/p>\n<p>On the flip side, though, <strong>crypto day trading<\/strong> is for those cryptocurrency enthusiasts who are a bit more involved with the market, or who want to acquire crypto coins and tokens that aren&rsquo;t listed on any of the big, centralized exchanges. Don&rsquo;t get me wrong, though - crypto trading isn&rsquo;t only for hardcore day traders and people who are trying to make a living out of it!<\/p>\n<p>Instead, trading is something that the vast majority of crypto-savvy people will surely participate in. This is especially true if you&rsquo;re looking to get more involved with <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-defi/">DeFi, <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-non-fungible-token-nft/">NFTs, <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-staking/">staking and <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-yield-farming/">yield farming<\/strong><\/a>, and so on.<\/p>\n<p>Not familiar with the terms I just mentioned? Check out other sections on this Crypto 101 Handbook - it has all of those concepts explained in detail, and many more!<\/p>\n<p>Lastly, <strong>swapping<\/strong> is going to be best for anyone who&rsquo;s looking to exchange their cryptos in a super-quick and seamless manner. If you&rsquo;re not actively trying to make a profit, but instead find yourself in need of a different crypto asset, utilizing a cryptocurrency swap is probably the way to go!<\/p>\n<p>At the end of the day, however, it all boils down to the example I gave earlier - the one with your friend opening an apple shop. You can come in, and buy an apple, or trade something for that apple - I mean, you might even be able to do half an hour&rsquo;s worth of work, and get the apple as a reward!<\/p>\n<p>My point here is that <strong>there are multiple ways of how you can acquire a specific asset<\/strong>. The very same is true with crypto, as well - buying, trading, and swapping cryptocurrencies are all different types of transactions that you can utilize.<\/p>","definition":"Did you know that the difference between trading and swapping lies in the finality of a transaction?","status":"published","meta_title":"Crypto Day Trading: Different Strategies","meta_description":"Trying to figure out crypto day trading strategies? You're in luck! Here you'll find information about crypto buying, swapping, and trading.","meta_keywords":"crypto day trading, what is crypto trading, crypto swapping, leverage trading crypto, crypto margin trading, free crypto trading, is day trading crypto worth it, is swapping crypto taxable","modified_content":"<p>In this section, I&rsquo;m going to tell you about <strong>crypto day trading<\/strong>, or, to be more precise, - buying, trading, and swapping!<\/p>\n<p>Whenever we talk about performing transactions with crypto, there&rsquo;s a variety of terms that get thrown around. Some people &ldquo;trade&rdquo; cryptocurrencies, while others prefer to &ldquo;buy and sell them&rdquo;. Then, you also have the &ldquo;cool kids&rdquo; in the back, who &ldquo;only swap their cryptos, because that&rsquo;s the way to go&rdquo;.<\/p>\n<p>Are there any differences between any of these transactions, or is it all the same thing, but with different names? <strong>Well, that&rsquo;s exactly what I&rsquo;ll explain in this section!<\/strong><\/p>\n<p>So, we&rsquo;re going to talk about crypto day trading - in other words, buying, trading, and swapping cryptocurrencies. I&rsquo;ll explain each of these terms, on their own, and then we&rsquo;ll look into the actual similarities and differences between them. In the end, we will also talk about which of these activities might suit your specific wants and needs best!<\/p>\n<p><em>So, let&rsquo;s get to it!<\/em><\/p>\n<div class=\"container\">\n <div class=\"row justify-content-center\">\n <div class=\"col-md-10 suggested-comparisons pb-3 mb-4\">\n <div class=\"d-flex flex-row\">\n <div class=\"text-center\">\n <div class=\"img-block-yt\">\n <img src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//images//compare-crypto-exchanges.gif/"/n alt=\"Crypto Day Trading VS Swapping: What\u2019s More Rewarding? (Animated)\"\n title=\"Crypto Day Trading VS Swapping: What\u2019s More Rewarding? (Animated)\" class=\"border-0\">\n <p>Video Explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"col-xs-10 col-sm-10 col-md-10 text-left py-3 yt-info\">\n <h4 class=\"mb-1\">Video Explainer: Crypto Day Trading: The Difference Between Buying, Trading, and Swapping<\/h4>\n <p class=\"py-1 mb-0 youtube-video-subtitle\">Reading is not your thing? Watch the \"Crypto Day Trading: The Difference Between Buying, Trading, and Swapping\" video explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div class=\"col-12 col-md-11 px-3\">\n <div class=\"wrapper mb-0\">\n <div class=\"position-relative youtube mb-4 bg-transparent p-0 video-modal-popup\" data-toggle=\"modal\"\n data-target=\"#video-modal\" data-id=\"zAO1i0Ej_WE\" data-title=\"CryptoFinallyExplained\">\n <div class=\"video-gradient-top\"><\/div>\n <p class=\"text-left dyk-video-title\">Crypto Day Trading VS Swapping: What\u2019s More Rewarding? (Animated)<\/p>\n <img data-srcset=\"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/crypto-day-trading-vs-swapping-whats-more-rewarding-animated.jpg?tr=w-420 500w,\n https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/crypto-day-trading-vs-swapping-whats-more-rewarding-animated.jpg?tr=w-760 1000w\"\n alt=\"Crypto Day Trading VS Swapping: What\u2019s More Rewarding? (Animated)\"\n title=\"Crypto Day Trading VS Swapping: What\u2019s More Rewarding? (Animated)\"\n class=\"p-0 lazyload\">\n <img class=\"play-button lazyload\" data-target=\"#video-modal\"\n data-src=\"https:\/\/assets.bitdegree.org\/crypto\/assets\/video-button.png?tr=w-85\"\n alt=\"Crypto Day Trading VS Swapping: What\u2019s More Rewarding? (Animated)\">\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div>\n <a href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n class=\"btn yt-promo mb-2\" target=\"_blank\" rel=\"nofollow noopener noindex\">\n <div class=\"row justify-content-center align-items-center mx-0 text-center\">\n <div class=\"col-4 col-md-4\">\n <i class=\"fab fa-youtube yt-dyk-btn\"><\/i>\n <\/div>\n <div class=\"col-8 col-md-8 text-center yt-promo-text\">\n <h4 class=\"m-0 text-white\">SUBSCRIBE<\/h4>\n <span>ON YOUTUBE<\/span>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n<div class=\"modal fade\" id=\"video-modal\" tabindex=\"-1\" role=\"dialog\">\n <div class=\"modal-dialog modal-dialog-centered modal-lg\" role=\"document\">\n <div class=\"modal-content\">\n <div class=\"modal-body p-0\">\n <button type=\"button\" class=\"video-modal-close close\" data-dismiss=\"modal\" aria-label=\"Close\">\n <i aria-hidden=\"true\" class=\"fas fa-times\"><\/i>\n <\/button>\n <div id=\"iframe\"><\/div>\n <\/div>\n <a class=\"text-decoration-none\"\n href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n rel=\"nofollow noopener noindex\" target=\"_blank\">\n <div class=\"modal-footer p-0 d-block bg-white\">\n <div class=\"row justify-content-center m-0\">\n <div class=\"col-3 col-md-4 col-lg-2 p-0\">\n <img class=\"w-100 h-100\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//crypto-subscribe.jpg/" alt=\"Subscribe\">\n <\/div>\n <div class=\"col-9 col-md-8 col-lg-2 px-0 d-flex\">\n <div class=\"modal-subscribe w-100\">\n <p class=\"m-0 mt-1 mr-3\">SUBSCRIBE<br>\n <span class=\"m-0\">ON YOUTUBE<\/span>\n <\/p>\n <\/div>\n <\/div>\n <div class=\"col-12 col-md-12 col-lg-8 p-0 text-center d-flex justify-content-center align-items-center\">\n <div class=\"modal-subscribe-text\">\n <h4 class=\"m-0\">Understand crypto with ease<\/h4>\n <span>New explainer videos every week!<\/span>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n<\/div>\n<h2>Crypto Buying VS Trading VS Swapping: Definitions and Key Differences<\/h2>\n<p>Now, let's look into crypto day trading by first talking about <strong>&ldquo;buying&rdquo;<\/strong>.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Crypto day trading: Crypto Buying.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//optimized//what_is_crypto_buying_trading_swapping_01.jpg/" alt=\"Crypto day trading: Crypto Buying.\" width=\"1000\" height=\"576\" \/><\/p>\n<p>Admittedly, this is actually the simplest type of crypto transaction, of the three. If you&rsquo;ve ever transacted with crypto, there&rsquo;s a pretty good chance that you have bought cryptocurrency, at some point!<\/p>\n<p>The term &ldquo;buying&rdquo; essentially means that <strong>you&rsquo;ve paid money for the cryptocurrency that you&rsquo;ve acquired<\/strong>. Now, I must be specific here - &ldquo;money&rdquo;, as in, <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-fiat/">fiat (or traditional, government-issued) currency, such as the US dollar or the Euro.<\/p>\n<p>As you can imagine, buying and selling crypto is definitely a common practice, <strong>especially if you&rsquo;re not looking to become a day trader<\/strong>, and are only interested in accumulating as big of a portfolio as possible. The most common method of buying crypto these days is to visit a popular <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-centralized-exchange-cex/">centralized exchange<\/strong><\/a>, register on it, add a payment method (such as a credit or debit card), and make your purchase.<\/p>\n<p><em>Simple, right? Well, yes, it really is!<\/em> This is why buying and selling crypto is so popular, especially among industry newbies - you don&rsquo;t need to worry about the technical stuff, complex gas fees, and so on.<\/p>\n<p>Now, when it comes to what is <strong>crypto trading<\/strong>, things are a bit more interesting.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Crypto day trading: Crypto trading.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//optimized//what_is_crypto_buying_trading_swapping_02.jpg/" alt=\"Crypto day trading: Crypto trading.\" width=\"1000\" height=\"637\" \/><\/p>\n<p>As the term might imply, when you trade cryptocurrency, you&rsquo;re essentially giving away your crypto for some other coin or token, instead of fiat money. If that sounds a bit confusing, here&rsquo;s an example:<\/p>\n<p>Imagine that your friend opened up an apple shop. You come to visit, and even though you don&rsquo;t really like apples, you&rsquo;re a supportive friend, and decide to get a few of them for yourself.<\/p>\n<p>Now, your friend allows you to either BUY the apples, or TRADE them. If you choose the prior option, you would simply pay your friend with money, and get the apples in return, as with most other shops in the world.<\/p>\n<p>However, if don&rsquo;t have any money with you, but have brought along a few pears, your friend would accept them for the apples, too. This would constitute a trade - <strong>you give an asset in order to receive an asset<\/strong>, both of which don&rsquo;t involve traditional money.<\/p>\n<p>Trading crypto is, honestly, a very common activity, as well. Think about it this way - once you&rsquo;ve bought some crypto on the exchange that I mentioned earlier, you might want to trade it for some other asset, on that same exchange. Most centralized exchanges have designated trading interfaces, where you can do just that.<\/p>\n<p>Now, this is where it gets a bit more tricky. Up to this point, we&rsquo;ve talked about centralized exchange platforms - however, crypto trading can be performed on <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-decentralized-exchange-dex/">decentralized exchanges<\/strong><\/a>, as well! Many traders actually prefer using DEXs, since they can often find small, less-known tokens on these platforms, and try to become early investors in said tokens.<\/p>\n<p>If centralized and decentralized exchanges are a mystery to you, there's a dedicated section on this very topic - <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//dex-vs-cex/">check it out<\/strong><\/a>!<\/p>\n<p>In addition to that, you may also choose to both buy, as well as trade crypto in person - you would meet up with somebody, and perform the transaction that you both agreed upon. I wouldn&rsquo;t really recommend doing so, however, for obvious privacy and security reasons.<\/p>\n<p>Though <strong>why would somebody TRADE cryptocurrencies<\/strong>, when they can simply buy them? Isn&rsquo;t the latter much simpler and faster to do?<\/p>\n<p>Well, yes - but there are multiple reasons why you&rsquo;d choose the trading route.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Crypto day trading: Not all cryptocurrencies can be bought with fiat money.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//optimized//what_is_crypto_buying_trading_swapping_04.jpg/" alt=\"Crypto day trading: Not all cryptocurrencies can be bought with fiat money.\" width=\"1000\" height=\"696\" \/><\/p>\n<p>For starters, <strong>not all cryptocurrencies can be &ldquo;bought&rdquo; with fiat money<\/strong>. If you want to own some sort of a coin or token that doesn&rsquo;t have a fiat pair on the exchange that you&rsquo;re using, and can only be acquired by exchanging another crypto asset for it, you will likely need to perform a trade, in order to get it! Note that I&rsquo;m using the term &ldquo;exchanging&rdquo; interchangeably with &ldquo;trading&rdquo; - this is just to keep things simple and clear.<\/p>\n<p>Here&rsquo;s an example of what I just told you - imagine that you&rsquo;ve just bought your first <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoin, on an exchange platform. Now, you also noticed that there&rsquo;s another token on that same exchange - we&rsquo;ll call it the <strong>X token<\/strong>. Now, this token only has a BTC pair - meaning, it can only be acquired by trading Bitcoin for it. Since, for some reason, you really want to become an owner of X token, you decide to enter a trade on the exchange, and trade some of your Bitcoin for the aforementioned X token. Simple!<\/p>\n<p>Next up, many individuals who partake in crypto trading do so in order to <strong>make a potential profit<\/strong>. These people are called &ldquo;day traders&rdquo; - they are constantly analyzing the market, and making educated guesses about which cryptocurrencies are going to rise or fall in price.<\/p>\n<p>Is crypto day trading worth it? Well, it&rsquo;s a super-complex process, and there are few day traders who are able to do it for a living - however, trading different cryptos is an essential activity here, as buying &amp; selling simply wouldn&rsquo;t suffice!<\/p>\n<p><strong>Crypto day traders<\/strong> are people who also participate in <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-leverage/">leverage crypto trading<\/strong><\/a>, or <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-margin-trading/">margin trading<\/strong><\/a>, as well. These are some advanced trading strategies that involve borrowing money from the exchange platform, in order to boost your position.<\/p>\n<p>With all of that said, let&rsquo;s look into the last term - <strong>crypto swapping<\/strong>.<\/p>\n<p>At first glance, crypto swapping might look almost identical to trading. However, there&rsquo;s one, big difference between the two - with trading, you enter an <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-order-book/">order book<\/strong><\/a>, and wait for someone to match your trade. With swapping, on the other hand,<strong> everything happens instantly<\/strong> - you simply swap some of your crypto asset for another, of equal value.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Crypto day trading: Swapping VS Trading.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//optimized//what_is_crypto_buying_trading_swapping_03.jpg/" alt=\"Crypto day trading: Swapping VS Trading.\" width=\"1000\" height=\"549\" \/><\/p>\n<p><strong>Is swapping crypto a taxable event, then? <\/strong>Well, this is something that depends on both the region that you live in, as well as the tax laws in place, at the point in time when you&rsquo;re reading this section! It&rsquo;s important that you look into the intricacies of crypto day trading and swapping, tax-wise, before you perform any of these activities!<\/p>\n<p>Going back to crypto swapping, if you&rsquo;re feeling a bit confused, you can think about it this way - cryptocurrency trading is performed when you want to maximize your potential profit, and are speculating on how the market will act and react. On the other hand, crypto swaps are all about convenience - they are super-simple to execute, happen instantly, and allow you to exchange your crypto coin or token for a different asset, hassle-free.<\/p>\n<h2>The Use Cases of Crypto Buying VS Trading VS Swapping<\/h2>\n<p>At this point, you should have a pretty good understanding of the differences and similarities between crypto buying VS trading VS swapping. Now, one more thing that I&rsquo;d like to talk about is <strong>the actual use cases of these types of transactions<\/strong>.<\/p>\n<p>Or, in other words, in what situations would buying, trading, and swapping crypto be most beneficial?<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Crypto day trading: The use cases of crypto buying, trading, and swapping.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//optimized//what_is_crypto_buying_trading_swapping_05.jpg/" alt=\"Crypto day trading: The use cases of crypto buying, trading, and swapping.\" width=\"1000\" height=\"626\" \/><\/p>\n<p><strong>Starting off with crypto buying<\/strong>, this is quite self-explanatory. If you&rsquo;re just at the beginning of your crypto journey, and still haven&rsquo;t even registered on an exchange platform, it's highly likely that your very first mission is to acquire some coins or tokens for yourself. Unless you get lucky with an <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-airdrop/">airdrop, or receive crypto as a gift from your friend, chances are that you&rsquo;ll end up buying the assets, with fiat money.<\/p>\n<p>Buying crypto is also the main activity that long-term investors participate in, too. Say, you&rsquo;re a fan of Bitcoin, and a huge believer that this specific crypto asset will grow in price, in the long run. In this situation, you&rsquo;d probably try to buy BTC quite often, and thus, grow your portfolio. Long-term investors usually don&rsquo;t really need any trading or swapping functionality - they just buy their asset, transfer it to their wallets, and forget it.<\/p>\n<p>On the flip side, though, <strong>crypto day trading<\/strong> is for those cryptocurrency enthusiasts who are a bit more involved with the market, or who want to acquire crypto coins and tokens that aren&rsquo;t listed on any of the big, centralized exchanges. Don&rsquo;t get me wrong, though - crypto trading isn&rsquo;t only for hardcore day traders and people who are trying to make a living out of it!<\/p>\n<p>Instead, trading is something that the vast majority of crypto-savvy people will surely participate in. This is especially true if you&rsquo;re looking to get more involved with <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-defi/">DeFi, <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-non-fungible-token-nft/">NFTs, <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-staking/">staking and <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-yield-farming/">yield farming<\/strong><\/a>, and so on.<\/p>\n<p>Not familiar with the terms I just mentioned? Check out other sections on this Crypto 101 Handbook - it has all of those concepts explained in detail, and many more!<\/p>\n<p>Lastly, <strong>swapping<\/strong> is going to be best for anyone who&rsquo;s looking to exchange their cryptos in a super-quick and seamless manner. If you&rsquo;re not actively trying to make a profit, but instead find yourself in need of a different crypto asset, utilizing a cryptocurrency swap is probably the way to go!<\/p>\n<p>At the end of the day, however, it all boils down to the example I gave earlier - the one with your friend opening an apple shop. You can come in, and buy an apple, or trade something for that apple - I mean, you might even be able to do half an hour&rsquo;s worth of work, and get the apple as a reward!<\/p>\n<p>My point here is that <strong>there are multiple ways of how you can acquire a specific asset<\/strong>. The very same is true with crypto, as well - buying, trading, and swapping cryptocurrencies are all different types of transactions that you can utilize.<\/p>","youtube_video":{"id":42,"channel_id":1,"sort":54,"video_title":"Crypto Day Trading VS Swapping: What\u2019s More Rewarding? (Animated)","description":"What is crypto day trading, and how is it different from buying, trading, and swapping crypto?\n\nWhenever you\u2019re looking to get yourself some cryptocurrencies, chances are that you\u2019re going to be barraged with a variety of terminology - do you want to buy crypto? Or, perhaps, trade it? What do swaps have to do with any of it, to begin with?\n\nIn this video, I am going to tell you all about crypto day trading - specifically, buying, trading, and swapping. I\u2019ll explain each of these terms, separately, and we\u2019ll also talk about where all of these types of transactions are going to be best to utilize.\n\nHave you ever bought, traded, or swapped crypto? Share your experiences in the comment, below the video!\n\nVideo Time Table:\n\n0:00 Introduction to Crypto Day Trading, Swapping & Buying\n1:00 Crypto Buying Explained\n1:59 Crypto Trading Explained\n3:37 Crypto Day Trading VS Buying\n5:17 Crypto Swapping Explained\n6:20 Use Cases of Trading, Buying & Swapping\n8:30 Wrap-up: Crypto Day Trading, Swapping & Buying Compared\n\nMore Related Videos:\n\n\ud83d\udd11 How do Cryptocurrency Exchanges Work?\nhttps:\/\/www.youtube.com\/watch?v=sRawseOB8TY\n\ud83d\udd11 What is a Cryptocurrency\nhttps:\/\/www.youtube.com\/watch?v=eVLUrZtKhBk\n\ud83d\udd11 Crypto Fees Explained\nhttps:\/\/www.youtube.com\/watch?v=c1NItwMjjAs\n\nGet Quick Crypto Tips on Twitter - Follow:\nhttps:\/\/twitter.com\/crypto_xplained\n\n#CryptoDayTrading #WhatisCryptoTrading #CryptoSwapping","video_id":"zAO1i0Ej_WE","duration":529,"view_count":379,"thumbnail_url":"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/crypto-day-trading-vs-swapping-whats-more-rewarding-animated.jpg","thumbnail_width":1280,"thumbnail_height":720,"published_at":"2022-11-16T15:14:21.000000Z","created_at":"2022-11-16T23:00:03.000000Z","updated_at":"2024-01-09T23:00:04.000000Z","channel":{"id":1,"title":"CryptoFinallyExplained","channel_id":"UCOryUY0yxC08eJtK23mNgiA","main_playlist_id":"UUOryUY0yxC08eJtK23mNgiA"}}}" :prev-section="{"id":335,"chapter_id":3,"order":1,"featured_image_id":3070,"youtube_video_id":40,"author_id":1,"created_at":"2022-10-06T07:36:47.000000Z","updated_at":"2023-12-21T14:15:33.000000Z","slug":"how-do-cryptocurrency-exchanges-work","title":"How do Cryptocurrency Exchanges Work?","content":"<p><strong>In this section, I will explain how do cryptocurrency exchanges work!<\/strong><\/p>\n<p>So - you&rsquo;ve heard about cryptocurrencies, you are really excited to jump into this industry, and you are looking for a great way to start your crypto journey by buying some coins and tokens for yourself. Naturally, your very first instinct would be to visit a crypto exchange!<\/p>\n<p>However, as you go to register on a select exchange platform of your choice, you catch yourself wondering - <strong>how do cryptocurrency exchanges work, really?<\/strong> Is there, like, a person who takes care of all of your orders? What about some of the additional features of exchanges, such as crypto storage and user data collection? Well, that&rsquo;s what we&rsquo;ll talk about, today!<\/p>\n<p>In this section, we are going to talk about cryptocurrency exchanges, and how they work. Specifically, I&rsquo;ll tell you about the history of crypto exchange platforms, how these exchanges store your crypto and facilitate trades, as well as a bit about the different types of exchanges that you might come across, too!<\/p>\n<p><em>Without further ado, let&rsquo;s get to it!<\/em><\/p>\n<h2>The History of Cryptocurrency Exchange Platforms<\/h2>\n<p>To start things off, let&rsquo;s first look into what is a crypto exchange, as well as the general history of crypto exchanges, shall we? Don&rsquo;t worry - I won&rsquo;t bore you with the technical details, and we&rsquo;ll only focus on the bigger picture!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How do cryptocurrency exchanges work: The history of crypto exchange platforms.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_are_crypto_exchanges_01.o.jpg/" alt=\"How do cryptocurrency exchanges work: The history of crypto exchange platforms.\" width=\"1000\" height=\"505\" \/><\/p>\n<p>Truth be told, cryptocurrency exchanges have a pretty exciting, yet also often rocky history. Today, it&rsquo;s really difficult to track the very first exchange - if there&rsquo;s one thing for certain, though, it&rsquo;s the fact that the first few exchanges that came around after the creation of <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoin back in 2009 were very basic, in their design. <strong>All you could really do was trade BTC<\/strong> - admittedly, that was arguably all the market needed, back in those days!<\/p>\n<p>As time went on, the number of cryptocurrencies grew, exponentially - this is especially true after <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-ethereum-eth/">Ethereum launched, and brought <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-smart-contract/">smart contracts<\/strong><\/a> to the world of crypto. With all of these new coins and tokens, exchanges needed to keep up, as well - slowly but surely, some of <strong>the top exchange platforms in the industry started introducing new features to their clients<\/strong>. Now, you could not only trade crypto, but also buy it with fiat money, lend and borrow coins &amp; tokens, stake your favorite assets, and so on.<\/p>\n<p>Essentially, it seems that with every new wave of crypto technology (such as <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-non-fungible-token-nft/">NFTs, <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-defi/">DeFi, crypto gaming, and so on), there come new features available on crypto exchanges, as well. This is really good, since it means that exchanges are &ldquo;keeping up&rdquo; with the trends, and catering to their clients&rsquo; wants and needs.<\/p>\n<p>While all of that sounds like sunshine and rainbows, the reality, however, is quite different. Historically speaking, <strong>there have been countless instances when exchanges got hacked<\/strong>, and the funds kept on them got stolen, never to be seen again. If you were to keep your crypto on such an exchange, you&rsquo;d likely lose the entirety of your portfolio!<\/p>\n<p>Anyone learning about what is a crypto exchange should also look into one of the most legendary of such instances that happened in 2011, with <strong>the infamous Mt. Gox crypto exchange<\/strong>. While it&rsquo;s a story that requires a separate section, in of its own, the short version is that, over the period of a few years, huge amounts of Bitcoin were being stolen from the exchange&rsquo;s <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-hot-wallet/">hot wallet<\/strong><\/a>, in addition to users having their data leaked to malicious third-party data harvesters. Today, Mt. Gox is still seen as one of the most notorious instances of crypto hacking, and has become a sort of a legend among crypto enthusiasts worldwide.<\/p>\n<p>All of those things - both the good, as well as the bad ones - bring us to the present date. Today, there are a few world-famous exchanges on the market, as well as hundreds of alternatives. For example, probably the biggest crypto exchange in the world is <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//goon//binance/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>Binance<\/strong><\/a> - a platform that houses a huge variety of different features and services, and acts as a sort of a crypto hub. So, <strong>each platform strives to be better than its competitors<\/strong>, when it comes to offering their users the ability to interact with their crypto in as many different ways as possible.<\/p>\n<p>Truth be told, many present-day exchanges can now be considered <strong>crypto hubs<\/strong>, due to the sheer variety of features that they offer!<\/p>\n<h2>How Do Cryptocurrency Exchanges Work?<\/h2>\n<p>Now that you know a bit about the history behind crypto exchange platforms, let&rsquo;s continue by focusing on the core question at hand - <strong>how do cryptocurrency exchanges work?<\/strong><\/p>\n<p>For this, I&rsquo;ll need you to use your imagination, since we&rsquo;re going to go through a few examples.<\/p>\n<p>For starters, imagine that you&rsquo;re a newbie investor, and are looking to buy your very first Bitcoin. You decide to go with a popular exchange platform, such as the aforementioned Binance.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How do cryptocurrency exchanges work: An example with Binance.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_are_crypto_exchanges_02.o.jpg/" alt=\"How do cryptocurrency exchanges work: An example with Binance.\" width=\"1000\" height=\"956\" \/><\/p>\n<p>The very first thing that you&rsquo;ll need to do is register on the exchange, and provide it with <strong>proof of your identity<\/strong>. In this regard, crypto exchanges act as any other financial institution - they need to identify you, as a means to prevent any fraud, money laundering, and other shady activities that malicious people might think of doing.<\/p>\n<p>Once you pass all of the identification processes, you will now be permitted to buy your very first crypto. Since this is 2022 and not 2010, most exchanges - Binance included - will allow you to <strong>use a <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-fiat/">fiat payment method, such as a credit or debit card<\/strong>.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How do cryptocurrency exchanges work:\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_are_crypto_exchanges_03.o.jpg/" alt=\"How do cryptocurrency exchanges work:\" width=\"1000\" height=\"627\" \/><\/p>\n<p>Think of it as if you were to go and purchase ice cream from a vendor at the beach. You choose which ice cream it is that you want, pay for it with an accepted payment method <em>(perhaps the ice cream vendor only accepts cash?)<\/em>, and that&rsquo;s it - you can enjoy your fozen treat. Buying crypto these days is really that simple!<\/p>\n<p>All that you need to do is pick the cryptocurrency that you&rsquo;d like to buy (such as Bitcoin), add a payment method, and enter the amount of money that you wish to spend. In just a few seconds, your exchange account will be credited with your newly-acquired BTC!<\/p>\n<p><strong>Now, where does all of that Bitcoin go, you might ask?<\/strong> Well, this is a big part of understanding how do cryptocurrency exchanges work - the crypto exchange will create an account for you, specific to that cryptocurrency that you&rsquo;ve bought. Your account will be distinguished by a <strong>public wallet address<\/strong> <em>(some people call it a public key - that&rsquo;s not entirely correct, but ya, it still refers to the same thing, in this context).<\/em><\/p>\n<p>So, instead of you having to go out and &ldquo;create&rdquo; a wallet account for yourself, the exchange that you are using will create one for you. Also, that address will be specific to the crypto asset that you&rsquo;ve bought - this is true for most cryptocurrencies. That&rsquo;s because, as you might know, most cryptocurrencies are based on their own networks, and can&rsquo;t really communicate with one another directly - thus, they can&rsquo;t be stored on the same wallet, either!<\/p>\n<p>If all of that sounds really complicated to you, make sure to <strong>check out other sections in our Crypto 101 Handbook<\/strong>. You&rsquo;ll be able to find all of the concepts that I&rsquo;ve just mentioned - crypto wallets, different blockchains, and so on - explained in detail. However, let me still give you an example, to illustrate my point.<\/p>\n<p>Imagine that you&rsquo;ve decided to fill your car up with some fuel. You pull up to the gas station, and instinctively start filling your car&rsquo;s tank up with petrol. After all, it&rsquo;s a petrol car! Nearby, you notice a few charging stations, for electric vehicles.<\/p>\n<p>Now, can you charge up your petrol car at an electric station? No, of course not! That&rsquo;s because petrol cars are completely different from electric ones, even though both of them are still vehicles that serve the same general purposes.<\/p>\n<p>The same is true with cryptocurrencies, too - <strong>they can&rsquo;t be stored in a single wallet, since they are based on completely different networks<\/strong>. However, in the car example, there are both petrol pumps and electric charging stations available in the same gas station. This is equivalent to a cryptocurrency exchange housing multiple different wallets, on the same, single client&rsquo;s account!<\/p>\n<p>Haha, I admit - these are some of the more-advanced concepts to wrap your head around! However, it&rsquo;s still at the core of the services that cryptocurrency exchanges provide.<\/p>\n<p>Once you have your Bitcoin, the next thing that you might want to do is trade it - once again, that&rsquo;s a service that you will find available on all exchanges. In this regard, trading works very similarly to how it does with stocks - you have the <strong>market makers<\/strong> (people who create an order, or buy) <strong>and<\/strong> <strong>takers<\/strong> (people who will fill out that order, or sell). The exchange&rsquo;s mission is to match these two people with one another, and fulfill the order!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How do cryptocurrency exchanges work: Market takers and market makers.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_are_crypto_exchanges_04.o.jpg/" alt=\"How do cryptocurrency exchanges work: Market takers and market makers.\" width=\"1000\" height=\"722\" \/><\/p>\n<p>Of course, as you can imagine, usually things aren&rsquo;t as simple as that. For example, you might be trading with a <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-liquidity-pool/">liquidity pool<\/strong><\/a> of the crypto exchange, instead of an actual person on the other end. Furthermore, I won&rsquo;t even get into the details of advanced trading features, such as <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-leverage/">leveraged or <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-margin-trading/">margin trading<\/strong><\/a> - that&rsquo;s a whole, separate section.<\/p>\n<h2>CEXs and DEXs<\/h2>\n<p>Up to this point, we&rsquo;ve exclusively talked about what are known as <strong>centralized, or custodial exchanges<\/strong>. These are cryptocurrency exchange platforms that have a company behind them, and that allow you to keep your crypto on their platforms.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How do cryptocurrency exchanges work: CEXs and DEXs.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_are_crypto_exchanges_05.o.jpg/" alt=\"How do cryptocurrency exchanges work: CEXs and DEXs.\" width=\"1000\" height=\"734\" \/><\/p>\n<p>However, there&rsquo;s another popular form of exchanges, as well - those of a decentralized nature.<\/p>\n<p>Now, I won&rsquo;t go too in-depth into <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-decentralized-exchange-dex/">DEXs, and how they work, since it&rsquo;s quite a hefty and complicated topic, in of its own.<\/p>\n<p>As far as this section is concerned, though, you should know that <strong>DEXs offer peer-to-peer trading, and don&rsquo;t hold any of your cryptocurrencies<\/strong>. Such exchanges preserve the anonymity and privacy of their users, however, they are also considered to be quite complicated, in addition to placing the entirety of the cryptocurrency management and wallet creation process on you - the user. So, as you study what is a decentralized cryptocurrency exchange, just keep in mind that, if something were to go wrong, there would be <strong>no customer support<\/strong> to reach out to - that can be scary!<\/p>\n<p>While decentralized exchanges are a really cool concept, if you&rsquo;re just starting out, <strong>it&rsquo;s best to stick to the popular, established platforms<\/strong>. With them creating a wallet for you, and allowing you to store your crypto with them, it&rsquo;s a far more beginner-friendly approach. On top of that, the traditional buyer-seller matching available with centralized exchanges is much simpler to understand, if you&rsquo;re just trying to figure out how cryptocurrency exchanges work!<\/p>","definition":"Did you know that you can trade digital assets on cryptocurrency exchanges anytime you want? This includes daytime, nighttime, weekends, and holidays.","status":"published","meta_title":"How do Cryptocurrency Exchanges Work?","meta_description":"Trying to find a simple yet thorough answer to the question: \"how do cryptocurrency exchanges work?\" You'll find exactly that, right here!","meta_keywords":"how do cryptocurrency exchanges work, what is a crypto exchange, biggest crypto exchange in the world, what is a decentralized crypto exchange","modified_content":"<p><strong>In this section, I will explain how do cryptocurrency exchanges work!<\/strong><\/p>\n<p>So - you&rsquo;ve heard about cryptocurrencies, you are really excited to jump into this industry, and you are looking for a great way to start your crypto journey by buying some coins and tokens for yourself. Naturally, your very first instinct would be to visit a crypto exchange!<\/p>\n<p>However, as you go to register on a select exchange platform of your choice, you catch yourself wondering - <strong>how do cryptocurrency exchanges work, really?<\/strong> Is there, like, a person who takes care of all of your orders? What about some of the additional features of exchanges, such as crypto storage and user data collection? Well, that&rsquo;s what we&rsquo;ll talk about, today!<\/p>\n<p>In this section, we are going to talk about cryptocurrency exchanges, and how they work. Specifically, I&rsquo;ll tell you about the history of crypto exchange platforms, how these exchanges store your crypto and facilitate trades, as well as a bit about the different types of exchanges that you might come across, too!<\/p>\n<p><em>Without further ado, let&rsquo;s get to it!<\/em><\/p>\n<div class=\"container\">\n <div class=\"row justify-content-center\">\n <div class=\"col-md-10 suggested-comparisons pb-3 mb-4\">\n <div class=\"d-flex flex-row\">\n <div class=\"text-center\">\n <div class=\"img-block-yt\">\n <img src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//images//compare-crypto-exchanges.gif/"/n alt=\"How do Cryptocurrency Exchanges Work? (Easily Explained!)\"\n title=\"How do Cryptocurrency Exchanges Work? (Easily Explained!)\" class=\"border-0\">\n <p>Video Explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"col-xs-10 col-sm-10 col-md-10 text-left py-3 yt-info\">\n <h4 class=\"mb-1\">Video Explainer: How do Cryptocurrency Exchanges Work?<\/h4>\n <p class=\"py-1 mb-0 youtube-video-subtitle\">Reading is not your thing? Watch the \"How do Cryptocurrency Exchanges Work?\" video explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div class=\"col-12 col-md-11 px-3\">\n <div class=\"wrapper mb-0\">\n <div class=\"position-relative youtube mb-4 bg-transparent p-0 video-modal-popup\" data-toggle=\"modal\"\n data-target=\"#video-modal\" data-id=\"sRawseOB8TY\" data-title=\"CryptoFinallyExplained\">\n <div class=\"video-gradient-top\"><\/div>\n <p class=\"text-left dyk-video-title\">How do Cryptocurrency Exchanges Work? (Easily Explained!)<\/p>\n <img data-srcset=\"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/how-do-cryptocurrency-exchanges-work-easily-explained.jpg?tr=w-420 500w,\n https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/how-do-cryptocurrency-exchanges-work-easily-explained.jpg?tr=w-760 1000w\"\n alt=\"How do Cryptocurrency Exchanges Work? (Easily Explained!)\"\n title=\"How do Cryptocurrency Exchanges Work? (Easily Explained!)\"\n class=\"p-0 lazyload\">\n <img class=\"play-button lazyload\" data-target=\"#video-modal\"\n data-src=\"https:\/\/assets.bitdegree.org\/crypto\/assets\/video-button.png?tr=w-85\"\n alt=\"How do Cryptocurrency Exchanges Work? (Easily Explained!)\">\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div>\n <a href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n class=\"btn yt-promo mb-2\" target=\"_blank\" rel=\"nofollow noopener noindex\">\n <div class=\"row justify-content-center align-items-center mx-0 text-center\">\n <div class=\"col-4 col-md-4\">\n <i class=\"fab fa-youtube yt-dyk-btn\"><\/i>\n <\/div>\n <div class=\"col-8 col-md-8 text-center yt-promo-text\">\n <h4 class=\"m-0 text-white\">SUBSCRIBE<\/h4>\n <span>ON YOUTUBE<\/span>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n<div class=\"modal fade\" id=\"video-modal\" tabindex=\"-1\" role=\"dialog\">\n <div class=\"modal-dialog modal-dialog-centered modal-lg\" role=\"document\">\n <div class=\"modal-content\">\n <div class=\"modal-body p-0\">\n <button type=\"button\" class=\"video-modal-close close\" data-dismiss=\"modal\" aria-label=\"Close\">\n <i aria-hidden=\"true\" class=\"fas fa-times\"><\/i>\n <\/button>\n <div id=\"iframe\"><\/div>\n <\/div>\n <a class=\"text-decoration-none\"\n href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n rel=\"nofollow noopener noindex\" target=\"_blank\">\n <div class=\"modal-footer p-0 d-block bg-white\">\n <div class=\"row justify-content-center m-0\">\n <div class=\"col-3 col-md-4 col-lg-2 p-0\">\n <img class=\"w-100 h-100\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//crypto-subscribe.jpg/" alt=\"Subscribe\">\n <\/div>\n <div class=\"col-9 col-md-8 col-lg-2 px-0 d-flex\">\n <div class=\"modal-subscribe w-100\">\n <p class=\"m-0 mt-1 mr-3\">SUBSCRIBE<br>\n <span class=\"m-0\">ON YOUTUBE<\/span>\n <\/p>\n <\/div>\n <\/div>\n <div class=\"col-12 col-md-12 col-lg-8 p-0 text-center d-flex justify-content-center align-items-center\">\n <div class=\"modal-subscribe-text\">\n <h4 class=\"m-0\">Understand crypto with ease<\/h4>\n <span>New explainer videos every week!<\/span>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n<\/div>\n<h2>The History of Cryptocurrency Exchange Platforms<\/h2>\n<p>To start things off, let&rsquo;s first look into what is a crypto exchange, as well as the general history of crypto exchanges, shall we? Don&rsquo;t worry - I won&rsquo;t bore you with the technical details, and we&rsquo;ll only focus on the bigger picture!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How do cryptocurrency exchanges work: The history of crypto exchange platforms.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_are_crypto_exchanges_01.o.jpg/" alt=\"How do cryptocurrency exchanges work: The history of crypto exchange platforms.\" width=\"1000\" height=\"505\" \/><\/p>\n<p>Truth be told, cryptocurrency exchanges have a pretty exciting, yet also often rocky history. Today, it&rsquo;s really difficult to track the very first exchange - if there&rsquo;s one thing for certain, though, it&rsquo;s the fact that the first few exchanges that came around after the creation of <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoin back in 2009 were very basic, in their design. <strong>All you could really do was trade BTC<\/strong> - admittedly, that was arguably all the market needed, back in those days!<\/p>\n<p>As time went on, the number of cryptocurrencies grew, exponentially - this is especially true after <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-ethereum-eth/">Ethereum launched, and brought <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-smart-contract/">smart contracts<\/strong><\/a> to the world of crypto. With all of these new coins and tokens, exchanges needed to keep up, as well - slowly but surely, some of <strong>the top exchange platforms in the industry started introducing new features to their clients<\/strong>. Now, you could not only trade crypto, but also buy it with fiat money, lend and borrow coins &amp; tokens, stake your favorite assets, and so on.<\/p>\n<p>Essentially, it seems that with every new wave of crypto technology (such as <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-non-fungible-token-nft/">NFTs, <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-defi/">DeFi, crypto gaming, and so on), there come new features available on crypto exchanges, as well. This is really good, since it means that exchanges are &ldquo;keeping up&rdquo; with the trends, and catering to their clients&rsquo; wants and needs.<\/p>\n<p>While all of that sounds like sunshine and rainbows, the reality, however, is quite different. Historically speaking, <strong>there have been countless instances when exchanges got hacked<\/strong>, and the funds kept on them got stolen, never to be seen again. If you were to keep your crypto on such an exchange, you&rsquo;d likely lose the entirety of your portfolio!<\/p>\n<p>Anyone learning about what is a crypto exchange should also look into one of the most legendary of such instances that happened in 2011, with <strong>the infamous Mt. Gox crypto exchange<\/strong>. While it&rsquo;s a story that requires a separate section, in of its own, the short version is that, over the period of a few years, huge amounts of Bitcoin were being stolen from the exchange&rsquo;s <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-hot-wallet/">hot wallet<\/strong><\/a>, in addition to users having their data leaked to malicious third-party data harvesters. Today, Mt. Gox is still seen as one of the most notorious instances of crypto hacking, and has become a sort of a legend among crypto enthusiasts worldwide.<\/p>\n<p>All of those things - both the good, as well as the bad ones - bring us to the present date. Today, there are a few world-famous exchanges on the market, as well as hundreds of alternatives. For example, probably the biggest crypto exchange in the world is <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//goon//binance/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>Binance<\/strong><\/a> - a platform that houses a huge variety of different features and services, and acts as a sort of a crypto hub. So, <strong>each platform strives to be better than its competitors<\/strong>, when it comes to offering their users the ability to interact with their crypto in as many different ways as possible.<\/p>\n<p>Truth be told, many present-day exchanges can now be considered <strong>crypto hubs<\/strong>, due to the sheer variety of features that they offer!<\/p>\n<h2>How Do Cryptocurrency Exchanges Work?<\/h2>\n<p>Now that you know a bit about the history behind crypto exchange platforms, let&rsquo;s continue by focusing on the core question at hand - <strong>how do cryptocurrency exchanges work?<\/strong><\/p>\n<p>For this, I&rsquo;ll need you to use your imagination, since we&rsquo;re going to go through a few examples.<\/p>\n<p>For starters, imagine that you&rsquo;re a newbie investor, and are looking to buy your very first Bitcoin. You decide to go with a popular exchange platform, such as the aforementioned Binance.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How do cryptocurrency exchanges work: An example with Binance.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_are_crypto_exchanges_02.o.jpg/" alt=\"How do cryptocurrency exchanges work: An example with Binance.\" width=\"1000\" height=\"956\" \/><\/p>\n<p>The very first thing that you&rsquo;ll need to do is register on the exchange, and provide it with <strong>proof of your identity<\/strong>. In this regard, crypto exchanges act as any other financial institution - they need to identify you, as a means to prevent any fraud, money laundering, and other shady activities that malicious people might think of doing.<\/p>\n<p>Once you pass all of the identification processes, you will now be permitted to buy your very first crypto. Since this is 2022 and not 2010, most exchanges - Binance included - will allow you to <strong>use a <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-fiat/">fiat payment method, such as a credit or debit card<\/strong>.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How do cryptocurrency exchanges work:\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_are_crypto_exchanges_03.o.jpg/" alt=\"How do cryptocurrency exchanges work:\" width=\"1000\" height=\"627\" \/><\/p>\n<p>Think of it as if you were to go and purchase ice cream from a vendor at the beach. You choose which ice cream it is that you want, pay for it with an accepted payment method <em>(perhaps the ice cream vendor only accepts cash?)<\/em>, and that&rsquo;s it - you can enjoy your fozen treat. Buying crypto these days is really that simple!<\/p>\n<p>All that you need to do is pick the cryptocurrency that you&rsquo;d like to buy (such as Bitcoin), add a payment method, and enter the amount of money that you wish to spend. In just a few seconds, your exchange account will be credited with your newly-acquired BTC!<\/p>\n<p><strong>Now, where does all of that Bitcoin go, you might ask?<\/strong> Well, this is a big part of understanding how do cryptocurrency exchanges work - the crypto exchange will create an account for you, specific to that cryptocurrency that you&rsquo;ve bought. Your account will be distinguished by a <strong>public wallet address<\/strong> <em>(some people call it a public key - that&rsquo;s not entirely correct, but ya, it still refers to the same thing, in this context).<\/em><\/p>\n<p>So, instead of you having to go out and &ldquo;create&rdquo; a wallet account for yourself, the exchange that you are using will create one for you. Also, that address will be specific to the crypto asset that you&rsquo;ve bought - this is true for most cryptocurrencies. That&rsquo;s because, as you might know, most cryptocurrencies are based on their own networks, and can&rsquo;t really communicate with one another directly - thus, they can&rsquo;t be stored on the same wallet, either!<\/p>\n<p>If all of that sounds really complicated to you, make sure to <strong>check out other sections in our Crypto 101 Handbook<\/strong>. You&rsquo;ll be able to find all of the concepts that I&rsquo;ve just mentioned - crypto wallets, different blockchains, and so on - explained in detail. However, let me still give you an example, to illustrate my point.<\/p>\n<p>Imagine that you&rsquo;ve decided to fill your car up with some fuel. You pull up to the gas station, and instinctively start filling your car&rsquo;s tank up with petrol. After all, it&rsquo;s a petrol car! Nearby, you notice a few charging stations, for electric vehicles.<\/p>\n<p>Now, can you charge up your petrol car at an electric station? No, of course not! That&rsquo;s because petrol cars are completely different from electric ones, even though both of them are still vehicles that serve the same general purposes.<\/p>\n<p>The same is true with cryptocurrencies, too - <strong>they can&rsquo;t be stored in a single wallet, since they are based on completely different networks<\/strong>. However, in the car example, there are both petrol pumps and electric charging stations available in the same gas station. This is equivalent to a cryptocurrency exchange housing multiple different wallets, on the same, single client&rsquo;s account!<\/p>\n<p>Haha, I admit - these are some of the more-advanced concepts to wrap your head around! However, it&rsquo;s still at the core of the services that cryptocurrency exchanges provide.<\/p>\n<p>Once you have your Bitcoin, the next thing that you might want to do is trade it - once again, that&rsquo;s a service that you will find available on all exchanges. In this regard, trading works very similarly to how it does with stocks - you have the <strong>market makers<\/strong> (people who create an order, or buy) <strong>and<\/strong> <strong>takers<\/strong> (people who will fill out that order, or sell). The exchange&rsquo;s mission is to match these two people with one another, and fulfill the order!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How do cryptocurrency exchanges work: Market takers and market makers.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_are_crypto_exchanges_04.o.jpg/" alt=\"How do cryptocurrency exchanges work: Market takers and market makers.\" width=\"1000\" height=\"722\" \/><\/p>\n<p>Of course, as you can imagine, usually things aren&rsquo;t as simple as that. For example, you might be trading with a <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-liquidity-pool/">liquidity pool<\/strong><\/a> of the crypto exchange, instead of an actual person on the other end. Furthermore, I won&rsquo;t even get into the details of advanced trading features, such as <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-leverage/">leveraged or <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-margin-trading/">margin trading<\/strong><\/a> - that&rsquo;s a whole, separate section.<\/p>\n<h2>CEXs and DEXs<\/h2>\n<p>Up to this point, we&rsquo;ve exclusively talked about what are known as <strong>centralized, or custodial exchanges<\/strong>. These are cryptocurrency exchange platforms that have a company behind them, and that allow you to keep your crypto on their platforms.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How do cryptocurrency exchanges work: CEXs and DEXs.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_are_crypto_exchanges_05.o.jpg/" alt=\"How do cryptocurrency exchanges work: CEXs and DEXs.\" width=\"1000\" height=\"734\" \/><\/p>\n<p>However, there&rsquo;s another popular form of exchanges, as well - those of a decentralized nature.<\/p>\n<p>Now, I won&rsquo;t go too in-depth into <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-decentralized-exchange-dex/">DEXs, and how they work, since it&rsquo;s quite a hefty and complicated topic, in of its own.<\/p>\n<p>As far as this section is concerned, though, you should know that <strong>DEXs offer peer-to-peer trading, and don&rsquo;t hold any of your cryptocurrencies<\/strong>. Such exchanges preserve the anonymity and privacy of their users, however, they are also considered to be quite complicated, in addition to placing the entirety of the cryptocurrency management and wallet creation process on you - the user. So, as you study what is a decentralized cryptocurrency exchange, just keep in mind that, if something were to go wrong, there would be <strong>no customer support<\/strong> to reach out to - that can be scary!<\/p>\n<p>While decentralized exchanges are a really cool concept, if you&rsquo;re just starting out, <strong>it&rsquo;s best to stick to the popular, established platforms<\/strong>. With them creating a wallet for you, and allowing you to store your crypto with them, it&rsquo;s a far more beginner-friendly approach. On top of that, the traditional buyer-seller matching available with centralized exchanges is much simpler to understand, if you&rsquo;re just trying to figure out how cryptocurrency exchanges work!<\/p>","youtube_video":{"id":40,"channel_id":1,"sort":56,"video_title":"How do Cryptocurrency Exchanges Work? (Easily Explained!)","description":"Wondering how do cryptocurrency exchanges work?\n\nTrading and exchanging crypto has become a pretty common process - it seems like everyone is doing it these days, no matter if you\u2019re an industry veteran, or a newcomer! However, have you ever thought about what is a crypto exchange, and how do crypto exchanges work, to begin with?\n\nIn this video, I will tell you all about it. We\u2019ll look into the history of crypto exchanges, in general, and I will then tell you about what happens when you first register on an exchange, buy your initial crypto, and start trading. Additionally, we will also touch on the differences between centralized and decentralized exchanges, too!\n\nDo you have a favorite crypto exchange that you use? Share your experiences with the rest of us, in the comment section below!\n\nVideo Time Table:\n\n0:00 Introduction to How do Cryptocurrency Exchanges Work\n1:05 The History of Crypto Exchange Platforms\n3:49 How do Cryptocurrency Exchanges Work?\n7:31 What are CEXs and DEXs?\n8:53 Wrap-up: How do Cryptocurrency Exchanges Work?\n\nMore Related Videos:\n\n\ud83d\udd11 Crypto Fees Explained: How Not to Overpay?\nhttps:\/\/www.youtube.com\/watch?v=c1NItwMjjAs\n\ud83d\udd11 How to Avoid Crypto Taxes?\nhttps:\/\/www.youtube.com\/watch?v=ERzU_Xz_P-o\n\ud83d\udd11 What is DeFi in Crypto?\nhttps:\/\/www.youtube.com\/watch?v=GVeoES3lKfQ&t=59s\n\nGet Quick Crypto Tips on Twitter - Follow:\nhttps:\/\/twitter.com\/crypto_xplained\n\n#HowdoCryptocurrencyExchangesWork #WhatisaCryptoExchange #WhatisaDecentralizedCryptoExchange","video_id":"sRawseOB8TY","duration":557,"view_count":661,"thumbnail_url":"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/how-do-cryptocurrency-exchanges-work-easily-explained.jpg","thumbnail_width":1280,"thumbnail_height":720,"published_at":"2022-10-18T15:05:49.000000Z","created_at":"2022-10-18T23:00:04.000000Z","updated_at":"2024-01-09T23:00:04.000000Z","channel":{"id":1,"title":"CryptoFinallyExplained","channel_id":"UCOryUY0yxC08eJtK23mNgiA","main_playlist_id":"UUOryUY0yxC08eJtK23mNgiA"}}}" :model="{"id":336,"chapter_id":3,"order":2,"featured_image_id":3071,"youtube_video_id":41,"author_id":1,"created_at":"2022-10-11T08:32:10.000000Z","updated_at":"2023-12-22T06:28:13.000000Z","slug":"dex-vs-cex","title":"DEX VS CEX: Two Sides of the Crypto Exchange Industry","content":"<p>In this section, we are going to talk about the <strong>differences between DEXs VS CEXs<\/strong>, or decentralized and centralized crypto exchanges!<\/p>\n<p>When you&rsquo;re just starting out with crypto, one of the very first things that you&rsquo;ll probably think to do is find yourself an exchange platform - <strong>a place where you could buy, sell, or trade cryptocurrencies whenever you please<\/strong>. During your research, you will likely soon notice that there&rsquo;s a huge variety of different exchanges to pick from - that can be overwhelming!<\/p>\n<p>In addition to that, you might also see two large groups of people, arguing online - fans of CEXs, as well as avid DEX supporters. If all of that sounds like alien-speak to you, worry not - this is where I come in, to help you understand these complicated crypto concepts, easily!<\/p>\n<p>In this section, we&rsquo;re going to talk about the differences between DEXs VS CEXs. I will first tell you what those two terms mean, in general, and after that, we&rsquo;ll compare and contrast them, and figure out which of the two would fit your wants and needs the best!<\/p>\n<p><em>So, let&rsquo;s get to it!<\/em><\/p>\n<h2>What is a Centralized Crypto Exchange (CEX)?<\/h2>\n<p>Let's begin by jumping straight into the fun stuff, and talk about what are CEXs and DEXs, starting with the former.<\/p>\n<p><strong>What is a centralized crypto exchange, or a CEX?<\/strong> A really simple way of looking at it is this - most of the exchange platforms that you&rsquo;ve heard about are probably considered to be CEXs! These include <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//goon//binance/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>Binance<\/strong><\/a>, <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//goon//kraken/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>Kraken<\/strong><\/a>, KuCoin, Coinbase, and so on.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"DEX VS CEX: Centralized crypto exchange.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//optimized//cex_vs_dex_01.jpg/" alt=\"DEX VS CEX: Centralized crypto exchange.\" width=\"1000\" height=\"736\" \/><\/p>\n<p><strong>&ldquo;Centralized&rdquo;<\/strong> is the key term that we want to look at here. Essentially, it means that all of these exchanges have a single, governing authority behind them - such as a company or a designated team of people looking over and managing all of the processes of the exchange.<\/p>\n<p>On top of that, CEXs are also known for how they deal with customers&rsquo; funds, as well as how they execute orders. <strong>Centralized exchanges use traditional order booking processes<\/strong> - you place an order to buy or sell some crypto, and it gets matched with another person&rsquo;s order of the opposite nature.<\/p>\n<p>To understand DEXs VS CEXs better, think of it this way - imagine that <strong>centralized exchanges are like ride-on-demand services<\/strong>. When you need to go to your friend&rsquo;s house, you can press a few buttons, and order a ride from one of the available drivers. In order to book an actual ride, however, you will need to first register on the app, and provide it with your personal details, as well as a valid payment method.<\/p>\n<p>So, while a service like this is very simple to use, and booking a ride takes only a few seconds to do, you need to, for a lack of a better term, &ldquo;dox&rdquo; yourself to the company - in other words, <strong>reveal a lot of personal information about yourself<\/strong>, before you can get a ride with one of their drivers.<\/p>\n<p>That&rsquo;s fine for a lot of people - at the same time, though, there are others who are less keen on handing over their names and payment details to a huge company. This group of people prefers to catch a taxi, the old-school way - find one in the nearest parking lot, or call up a taxi company and ask it to send a driver to their location.<\/p>\n<p>Of course, this isn&rsquo;t as convenient as clicking a few buttons on an app. However, it allows you to pay for your ride in cash, and preserve the privacy of your information. <strong>Essentially, this example works well to illustrate DEXs, or decentralized exchanges.<\/strong><\/p>\n<h2>What is a Decentralized Crypto Exchange (DEX)?<\/h2>\n<p>What is a decentralized crypto exchange? As the term itself implies, <strong>DEX platforms have no single governing authority behind them<\/strong>. So, there&rsquo;s no company that you could reach out to, and no CEO that you could look up, and blame if something went wrong.<\/p>\n<p>How does a DEX work, then? Well, essentially, most DEXs are governed by something called <strong>DAOs, or Decentralized Autonomous Organizations<\/strong> - a key point in our DEX VS CEX comparison!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"DEX VS CEX: Decentralized crypto exchange.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//optimized//cex_vs_dex_02.jpg/" alt=\"DEX VS CEX: Decentralized crypto exchange.\" width=\"1000\" height=\"717\" \/><\/p>\n<p>DAOs are, admittedly, a really complex topic to get into. If you&rsquo;d like to figure out what is a DAO in a thorough way, there's a <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//what-is-a-dao-in-crypto/">dedicated section<\/strong><\/a> for that in our Crypto 101 Handbook - check it out! For the sake of keeping things simple in this section, though, suffice to say that a DAO is a group of people who are fans of a specific cryptocurrency project, hold its token, and thus, have the right to vote on the direction of the project, its updates, and so on.<\/p>\n<p>So, essentially, <strong>decentralized exchanges are governed by the actual users of these platforms<\/strong>. The lack of a centralized authority allows for these platforms to retain a lot of privacy and anonymity features - which is, once again, what some people are looking for, to begin with.<\/p>\n<h2>CEXs VS DEXs - Which is the Better Option for You?<\/h2>\n<p>Continuing on, now that you have a pretty good idea of what are CEXs and DEXs, the big question that remains unanswered is this - <strong>which one should you use?<\/strong><\/p>\n<p><strong><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"DEX VS CEX: Centralized exchanges VS Decentralized exchanges.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//optimized//cex_vs_dex_03.jpg/" alt=\"DEX VS CEX: Centralized exchanges VS Decentralized exchanges.\" width=\"1000\" height=\"265\" \/><\/strong><\/p>\n<p>Indeed, if we were to look at our earlier example with the drive-on-demand services and traditional taxis, the differences between the two are, admittedly, pretty negligible. Eventually, you would still end up driving to your friend's house - so, the end goal is the same.<\/p>\n<p>With DEXs VS CEXs, though, things aren&rsquo;t quite *that* simple. One of the first major differences that you will immediately notice between these two types of platforms has to do with usability.<\/p>\n<p>Imagine that <strong>centralized exchanges are like modern, automatic cars<\/strong>. The cars are full of cool features, and pretty simple to drive. On top of that, there are plenty of additional widgets that are there to help you out on the road - automatic parking, cruise control, and so on.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"DEX VS CEX: Centralized exchange example.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//optimized//cex_vs_dex_04.jpg/" alt=\"DEX VS CEX: Centralized exchange example.\" width=\"1000\" height=\"1011\" \/><\/p>\n<p>With the top-tier CEXs, your cryptocurrency acquisition process is likely going to be super-simple, quick, and full of helpful guides along the way. Centralized exchanges tend to be very newbie-friendly, which is definitely a point worth considering!<\/p>\n<p>On the other hand, <strong>decentralized crypto exchange platforms are like older, manual transmission cars<\/strong>. They still serve the same function - to take you from point A to point B -, but you need to be much more involved, and understand how the car works, in the first place.<\/p>\n<p>This example illustrates the feeling that many people might have with DEXs. If you want to use a decentralized exchange, you need to already have a <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-wallet/">cryptocurrency wallet<\/strong><\/a>, as well as some funds within it. Then, you need to be able to find the coins or tokens that you&rsquo;re looking to trade, verify their contract address, and so on.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"DEX VS CEX: Decentralized exchange example.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//optimized//cex_vs_dex_05.jpg/" alt=\"DEX VS CEX: Decentralized exchange example.\" width=\"1000\" height=\"1013\" \/><\/p>\n<p>It&rsquo;s a far more complicated process than just hopping on a centralized exchange platform, and buying your first crypto in a matter of minutes!<\/p>\n<p>The two other points that I&rsquo;ve just mentioned are equally as important to consider - the fact that, <strong>with DEX, you need to have a wallet of your own<\/strong>, as well as the lack of traditional payment support on such exchange platforms.<\/p>\n<p>As we&rsquo;ve established previously, centralized exchanges allow you to store your crypto assets on their wallets. If you&rsquo;d like to learn how that works, specifically, <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//how-do-cryptocurrency-exchanges-work/">check out this section<\/strong><\/a>!<\/p>\n<p>My point here, though, is that, with DEXs, this feature is not available. <em>Now, is that a good or a bad thing? Well, it depends!<\/em> While storing your cryptocurrencies on an exchange is super-convenient, it&rsquo;s also a bit risky - what if the exchange gets hacked, and the hackers gain access to your assets?<\/p>\n<p>On the flip side, decentralized exchanges eliminate this issue, altogether. <strong>You are the only one responsible for what happens to your cryptos<\/strong> - even if the underlying exchange gets hacked, since you aren&rsquo;t storing your cryptocurrencies on it, your funds would technically be safe. That being said, some people just want to avoid the hassle that comes with managing a wallet of your own, or want to have the chance to communicate with customer support, if something goes wrong - a feature that, once again, isn&rsquo;t available with decentralized exchanges.<\/p>\n<p><strong>Traditional payment methods<\/strong> are another key point to mention, too. If you&rsquo;re looking to *BUY* cryptocurrencies with euros, US dollars, or any other traditional currency, then centralized exchanges are kind of your only option. That&rsquo;s because DEXs don&rsquo;t have this feature - remember, they are anonymity-driven! There wouldn&rsquo;t really be all that much anonymity if you&rsquo;d end up revealing all of your bank details to the exchange, now would it?<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"DEX VS CEX: Traditional payment methods.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//optimized//cex_vs_dex_06.jpg/" alt=\"DEX VS CEX: Traditional payment methods.\" width=\"1000\" height=\"664\" \/><\/p>\n<p>To add to all of that, comparing DEXs VS CEXs, you will also soon notice that the latter are a bit primitive, when compared to their centralized counterparts. While centralized exchanges aim to offer <strong>as many different features to their users as possible<\/strong> (just take a look at Binance, as an example), DEXs are really mostly focused on one, single thing - <strong>trading one crypto asset for another<\/strong>.<\/p>\n<p>Now, while it may seem like centralized exchanges are superior to DEXs in every single way, that really isn&rsquo;t the case. Remember - with a centralized crypto exchange, you will have to reveal a lot of information about yourself, in addition to your bank details, residential address, and so on. <strong>There is no anonymity<\/strong> - something that&rsquo;s still considered by many to be one of the core pillars of crypto and blockchain technology!<\/p>\n<p>Furthermore, <strong>CEXs are also usually very slow to add new coins &amp; tokens<\/strong>, and some platforms even have a habit of freezing their users&rsquo; funds, or halting their trading functionality for any and all reasons they see fit. None of these are issues that you would come across with a decentralized exchange!<\/p>\n<h2>Final Thoughts<\/h2>\n<p>Wrapping things up, the conclusion is actually quite simple - <strong>both centralized and decentralized exchanges have their own, specific pros and cons<\/strong>, and are both also very specific in the benefits that they provide. Industry newcomers and casual traders prefer using CEXs, due to the simplicity and feature variety that these platforms offer. Crypto veterans and hardcore enthusiasts, on the other hand, love and appreciate DEXs - here, they can trade anonymously, and access all of the newly-launched crypto coins and tokens.<\/p>\n<p>Now that you understand the basics of what is a decentralized and what is a centralized crypto exchange, you should be able to distinguish your preference, as well!<\/p>","definition":"Did you know that the reported trading volume of decentralized exchanges (DEXs) exceeded $1 trillion in 2021?","status":"published","meta_title":"DEX VS CEX: What's the Difference?","meta_description":"DEX VS CEX: How do they differ? Which one should you choose? Find answers to these and other questions you may have on this subject here!","meta_keywords":"dex vs cex, what is a decentralized crypto exchange, what is a centralized crypto exchange","modified_content":"<p>In this section, we are going to talk about the <strong>differences between DEXs VS CEXs<\/strong>, or decentralized and centralized crypto exchanges!<\/p>\n<p>When you&rsquo;re just starting out with crypto, one of the very first things that you&rsquo;ll probably think to do is find yourself an exchange platform - <strong>a place where you could buy, sell, or trade cryptocurrencies whenever you please<\/strong>. During your research, you will likely soon notice that there&rsquo;s a huge variety of different exchanges to pick from - that can be overwhelming!<\/p>\n<p>In addition to that, you might also see two large groups of people, arguing online - fans of CEXs, as well as avid DEX supporters. If all of that sounds like alien-speak to you, worry not - this is where I come in, to help you understand these complicated crypto concepts, easily!<\/p>\n<p>In this section, we&rsquo;re going to talk about the differences between DEXs VS CEXs. I will first tell you what those two terms mean, in general, and after that, we&rsquo;ll compare and contrast them, and figure out which of the two would fit your wants and needs the best!<\/p>\n<p><em>So, let&rsquo;s get to it!<\/em><\/p>\n<div class=\"container\">\n <div class=\"row justify-content-center\">\n <div class=\"col-md-10 suggested-comparisons pb-3 mb-4\">\n <div class=\"d-flex flex-row\">\n <div class=\"text-center\">\n <div class=\"img-block-yt\">\n <img src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//images//compare-crypto-exchanges.gif/"/n alt=\"DEX vs CEX: Which is Best for YOU? (Explained with Animation)\"\n title=\"DEX vs CEX: Which is Best for YOU? (Explained with Animation)\" class=\"border-0\">\n <p>Video Explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"col-xs-10 col-sm-10 col-md-10 text-left py-3 yt-info\">\n <h4 class=\"mb-1\">Video Explainer: DEX VS CEX: Two Sides of the Crypto Exchange Industry<\/h4>\n <p class=\"py-1 mb-0 youtube-video-subtitle\">Reading is not your thing? Watch the \"DEX VS CEX: Two Sides of the Crypto Exchange Industry\" video explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div class=\"col-12 col-md-11 px-3\">\n <div class=\"wrapper mb-0\">\n <div class=\"position-relative youtube mb-4 bg-transparent p-0 video-modal-popup\" data-toggle=\"modal\"\n data-target=\"#video-modal\" data-id=\"x01npBGKiv4\" data-title=\"CryptoFinallyExplained\">\n <div class=\"video-gradient-top\"><\/div>\n <p class=\"text-left dyk-video-title\">DEX vs CEX: Which is Best for YOU? (Explained with Animation)<\/p>\n <img data-srcset=\"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/dex-vs-cex-which-is-best-for-you-explained-with-animation.jpg?tr=w-420 500w,\n https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/dex-vs-cex-which-is-best-for-you-explained-with-animation.jpg?tr=w-760 1000w\"\n alt=\"DEX vs CEX: Which is Best for YOU? (Explained with Animation)\"\n title=\"DEX vs CEX: Which is Best for YOU? (Explained with Animation)\"\n class=\"p-0 lazyload\">\n <img class=\"play-button lazyload\" data-target=\"#video-modal\"\n data-src=\"https:\/\/assets.bitdegree.org\/crypto\/assets\/video-button.png?tr=w-85\"\n alt=\"DEX vs CEX: Which is Best for YOU? (Explained with Animation)\">\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div>\n <a href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n class=\"btn yt-promo mb-2\" target=\"_blank\" rel=\"nofollow noopener noindex\">\n <div class=\"row justify-content-center align-items-center mx-0 text-center\">\n <div class=\"col-4 col-md-4\">\n <i class=\"fab fa-youtube yt-dyk-btn\"><\/i>\n <\/div>\n <div class=\"col-8 col-md-8 text-center yt-promo-text\">\n <h4 class=\"m-0 text-white\">SUBSCRIBE<\/h4>\n <span>ON YOUTUBE<\/span>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n<div class=\"modal fade\" id=\"video-modal\" tabindex=\"-1\" role=\"dialog\">\n <div class=\"modal-dialog modal-dialog-centered modal-lg\" role=\"document\">\n <div class=\"modal-content\">\n <div class=\"modal-body p-0\">\n <button type=\"button\" class=\"video-modal-close close\" data-dismiss=\"modal\" aria-label=\"Close\">\n <i aria-hidden=\"true\" class=\"fas fa-times\"><\/i>\n <\/button>\n <div id=\"iframe\"><\/div>\n <\/div>\n <a class=\"text-decoration-none\"\n href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n rel=\"nofollow noopener noindex\" target=\"_blank\">\n <div class=\"modal-footer p-0 d-block bg-white\">\n <div class=\"row justify-content-center m-0\">\n <div class=\"col-3 col-md-4 col-lg-2 p-0\">\n <img class=\"w-100 h-100\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//crypto-subscribe.jpg/" alt=\"Subscribe\">\n <\/div>\n <div class=\"col-9 col-md-8 col-lg-2 px-0 d-flex\">\n <div class=\"modal-subscribe w-100\">\n <p class=\"m-0 mt-1 mr-3\">SUBSCRIBE<br>\n <span class=\"m-0\">ON YOUTUBE<\/span>\n <\/p>\n <\/div>\n <\/div>\n <div class=\"col-12 col-md-12 col-lg-8 p-0 text-center d-flex justify-content-center align-items-center\">\n <div class=\"modal-subscribe-text\">\n <h4 class=\"m-0\">Understand crypto with ease<\/h4>\n <span>New explainer videos every week!<\/span>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n<\/div>\n<h2>What is a Centralized Crypto Exchange (CEX)?<\/h2>\n<p>Let's begin by jumping straight into the fun stuff, and talk about what are CEXs and DEXs, starting with the former.<\/p>\n<p><strong>What is a centralized crypto exchange, or a CEX?<\/strong> A really simple way of looking at it is this - most of the exchange platforms that you&rsquo;ve heard about are probably considered to be CEXs! These include <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//goon//binance/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>Binance<\/strong><\/a>, <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//goon//kraken/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>Kraken<\/strong><\/a>, KuCoin, Coinbase, and so on.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"DEX VS CEX: Centralized crypto exchange.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//optimized//cex_vs_dex_01.jpg/" alt=\"DEX VS CEX: Centralized crypto exchange.\" width=\"1000\" height=\"736\" \/><\/p>\n<p><strong>&ldquo;Centralized&rdquo;<\/strong> is the key term that we want to look at here. Essentially, it means that all of these exchanges have a single, governing authority behind them - such as a company or a designated team of people looking over and managing all of the processes of the exchange.<\/p>\n<p>On top of that, CEXs are also known for how they deal with customers&rsquo; funds, as well as how they execute orders. <strong>Centralized exchanges use traditional order booking processes<\/strong> - you place an order to buy or sell some crypto, and it gets matched with another person&rsquo;s order of the opposite nature.<\/p>\n<p>To understand DEXs VS CEXs better, think of it this way - imagine that <strong>centralized exchanges are like ride-on-demand services<\/strong>. When you need to go to your friend&rsquo;s house, you can press a few buttons, and order a ride from one of the available drivers. In order to book an actual ride, however, you will need to first register on the app, and provide it with your personal details, as well as a valid payment method.<\/p>\n<p>So, while a service like this is very simple to use, and booking a ride takes only a few seconds to do, you need to, for a lack of a better term, &ldquo;dox&rdquo; yourself to the company - in other words, <strong>reveal a lot of personal information about yourself<\/strong>, before you can get a ride with one of their drivers.<\/p>\n<p>That&rsquo;s fine for a lot of people - at the same time, though, there are others who are less keen on handing over their names and payment details to a huge company. This group of people prefers to catch a taxi, the old-school way - find one in the nearest parking lot, or call up a taxi company and ask it to send a driver to their location.<\/p>\n<p>Of course, this isn&rsquo;t as convenient as clicking a few buttons on an app. However, it allows you to pay for your ride in cash, and preserve the privacy of your information. <strong>Essentially, this example works well to illustrate DEXs, or decentralized exchanges.<\/strong><\/p>\n<h2>What is a Decentralized Crypto Exchange (DEX)?<\/h2>\n<p>What is a decentralized crypto exchange? As the term itself implies, <strong>DEX platforms have no single governing authority behind them<\/strong>. So, there&rsquo;s no company that you could reach out to, and no CEO that you could look up, and blame if something went wrong.<\/p>\n<p>How does a DEX work, then? Well, essentially, most DEXs are governed by something called <strong>DAOs, or Decentralized Autonomous Organizations<\/strong> - a key point in our DEX VS CEX comparison!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"DEX VS CEX: Decentralized crypto exchange.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//optimized//cex_vs_dex_02.jpg/" alt=\"DEX VS CEX: Decentralized crypto exchange.\" width=\"1000\" height=\"717\" \/><\/p>\n<p>DAOs are, admittedly, a really complex topic to get into. If you&rsquo;d like to figure out what is a DAO in a thorough way, there's a <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//what-is-a-dao-in-crypto/">dedicated section<\/strong><\/a> for that in our Crypto 101 Handbook - check it out! For the sake of keeping things simple in this section, though, suffice to say that a DAO is a group of people who are fans of a specific cryptocurrency project, hold its token, and thus, have the right to vote on the direction of the project, its updates, and so on.<\/p>\n<p>So, essentially, <strong>decentralized exchanges are governed by the actual users of these platforms<\/strong>. The lack of a centralized authority allows for these platforms to retain a lot of privacy and anonymity features - which is, once again, what some people are looking for, to begin with.<\/p>\n<h2>CEXs VS DEXs - Which is the Better Option for You?<\/h2>\n<p>Continuing on, now that you have a pretty good idea of what are CEXs and DEXs, the big question that remains unanswered is this - <strong>which one should you use?<\/strong><\/p>\n<p><strong><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"DEX VS CEX: Centralized exchanges VS Decentralized exchanges.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//optimized//cex_vs_dex_03.jpg/" alt=\"DEX VS CEX: Centralized exchanges VS Decentralized exchanges.\" width=\"1000\" height=\"265\" \/><\/strong><\/p>\n<p>Indeed, if we were to look at our earlier example with the drive-on-demand services and traditional taxis, the differences between the two are, admittedly, pretty negligible. Eventually, you would still end up driving to your friend's house - so, the end goal is the same.<\/p>\n<p>With DEXs VS CEXs, though, things aren&rsquo;t quite *that* simple. One of the first major differences that you will immediately notice between these two types of platforms has to do with usability.<\/p>\n<p>Imagine that <strong>centralized exchanges are like modern, automatic cars<\/strong>. The cars are full of cool features, and pretty simple to drive. On top of that, there are plenty of additional widgets that are there to help you out on the road - automatic parking, cruise control, and so on.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"DEX VS CEX: Centralized exchange example.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//optimized//cex_vs_dex_04.jpg/" alt=\"DEX VS CEX: Centralized exchange example.\" width=\"1000\" height=\"1011\" \/><\/p>\n<p>With the top-tier CEXs, your cryptocurrency acquisition process is likely going to be super-simple, quick, and full of helpful guides along the way. Centralized exchanges tend to be very newbie-friendly, which is definitely a point worth considering!<\/p>\n<p>On the other hand, <strong>decentralized crypto exchange platforms are like older, manual transmission cars<\/strong>. They still serve the same function - to take you from point A to point B -, but you need to be much more involved, and understand how the car works, in the first place.<\/p>\n<p>This example illustrates the feeling that many people might have with DEXs. If you want to use a decentralized exchange, you need to already have a <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-wallet/">cryptocurrency wallet<\/strong><\/a>, as well as some funds within it. Then, you need to be able to find the coins or tokens that you&rsquo;re looking to trade, verify their contract address, and so on.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"DEX VS CEX: Decentralized exchange example.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//optimized//cex_vs_dex_05.jpg/" alt=\"DEX VS CEX: Decentralized exchange example.\" width=\"1000\" height=\"1013\" \/><\/p>\n<p>It&rsquo;s a far more complicated process than just hopping on a centralized exchange platform, and buying your first crypto in a matter of minutes!<\/p>\n<p>The two other points that I&rsquo;ve just mentioned are equally as important to consider - the fact that, <strong>with DEX, you need to have a wallet of your own<\/strong>, as well as the lack of traditional payment support on such exchange platforms.<\/p>\n<p>As we&rsquo;ve established previously, centralized exchanges allow you to store your crypto assets on their wallets. If you&rsquo;d like to learn how that works, specifically, <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//how-do-cryptocurrency-exchanges-work/">check out this section<\/strong><\/a>!<\/p>\n<p>My point here, though, is that, with DEXs, this feature is not available. <em>Now, is that a good or a bad thing? Well, it depends!<\/em> While storing your cryptocurrencies on an exchange is super-convenient, it&rsquo;s also a bit risky - what if the exchange gets hacked, and the hackers gain access to your assets?<\/p>\n<p>On the flip side, decentralized exchanges eliminate this issue, altogether. <strong>You are the only one responsible for what happens to your cryptos<\/strong> - even if the underlying exchange gets hacked, since you aren&rsquo;t storing your cryptocurrencies on it, your funds would technically be safe. That being said, some people just want to avoid the hassle that comes with managing a wallet of your own, or want to have the chance to communicate with customer support, if something goes wrong - a feature that, once again, isn&rsquo;t available with decentralized exchanges.<\/p>\n<p><strong>Traditional payment methods<\/strong> are another key point to mention, too. If you&rsquo;re looking to *BUY* cryptocurrencies with euros, US dollars, or any other traditional currency, then centralized exchanges are kind of your only option. That&rsquo;s because DEXs don&rsquo;t have this feature - remember, they are anonymity-driven! There wouldn&rsquo;t really be all that much anonymity if you&rsquo;d end up revealing all of your bank details to the exchange, now would it?<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"DEX VS CEX: Traditional payment methods.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//optimized//cex_vs_dex_06.jpg/" alt=\"DEX VS CEX: Traditional payment methods.\" width=\"1000\" height=\"664\" \/><\/p>\n<p>To add to all of that, comparing DEXs VS CEXs, you will also soon notice that the latter are a bit primitive, when compared to their centralized counterparts. While centralized exchanges aim to offer <strong>as many different features to their users as possible<\/strong> (just take a look at Binance, as an example), DEXs are really mostly focused on one, single thing - <strong>trading one crypto asset for another<\/strong>.<\/p>\n<p>Now, while it may seem like centralized exchanges are superior to DEXs in every single way, that really isn&rsquo;t the case. Remember - with a centralized crypto exchange, you will have to reveal a lot of information about yourself, in addition to your bank details, residential address, and so on. <strong>There is no anonymity<\/strong> - something that&rsquo;s still considered by many to be one of the core pillars of crypto and blockchain technology!<\/p>\n<p>Furthermore, <strong>CEXs are also usually very slow to add new coins &amp; tokens<\/strong>, and some platforms even have a habit of freezing their users&rsquo; funds, or halting their trading functionality for any and all reasons they see fit. None of these are issues that you would come across with a decentralized exchange!<\/p>\n<h2>Final Thoughts<\/h2>\n<p>Wrapping things up, the conclusion is actually quite simple - <strong>both centralized and decentralized exchanges have their own, specific pros and cons<\/strong>, and are both also very specific in the benefits that they provide. Industry newcomers and casual traders prefer using CEXs, due to the simplicity and feature variety that these platforms offer. Crypto veterans and hardcore enthusiasts, on the other hand, love and appreciate DEXs - here, they can trade anonymously, and access all of the newly-launched crypto coins and tokens.<\/p>\n<p>Now that you understand the basics of what is a decentralized and what is a centralized crypto exchange, you should be able to distinguish your preference, as well!<\/p>","youtube_video":{"id":41,"channel_id":1,"sort":55,"video_title":"DEX vs CEX: Which is Best for YOU? (Explained with Animation)","description":"DEX vs CEX - which exchange is better to use?\n\nThe world of cryptocurrency exchanges is often a complicated one - this is especially true if you\u2019re looking into some advanced exchange functionality. One of the bigger points of confusion for many people has to do with centralized and decentralized exchanges.\n\nIn this video, I will tell you about both of these types of crypto exchange platforms. You will learn what is a decentralized crypto exchange and what is a centralized crypto exchange, as well as the differences and similarities between them. Lastly, I will also tell you about the pros and cons of using both of these types of exchanges.\n\nHave you ever traded on centralized or decentralized exchanges? What are the main differences you\u2019ve noticed? Share your thoughts in the comments below!\n\nVideo Time Table:\n\n0:00 Introduction to DEX vs CEX\n1:05 What is a DEX & a CEX?\n4:03 Which Exchange Should You Choose?\n8:00 Wrap-up: Decentralized Crypto Exchange vs Centralized Crypto Exchange\n\nMore Related Videos:\n\n\ud83d\udd11 How do Cryptocurrency Exchanges Work?\nhttps:\/\/www.youtube.com\/watch?v=sRawseOB8TY\n\ud83d\udd11 Is Decentralized Anonymous Blockchain a Myth?\nhttps:\/\/www.youtube.com\/watch?v=pLmw3W9IRiE\n\ud83d\udd11 What Does Staking Mean in Crypto?\nhttps:\/\/www.youtube.com\/watch?v=irhlfrCrywo\n\ud83d\udd11 What is a DAO in Crypto?\nhttps:\/\/www.youtube.com\/watch?v=toSViQmtqFQ\n\nGet Quick Crypto Tips on Twitter - Follow:\nhttps:\/\/twitter.com\/crypto_xplained\n\n#DexvsCex #WhatisaDecentralizedCryptoExchange #WhatisaCentralizedCryptoExchange","video_id":"x01npBGKiv4","duration":529,"view_count":758,"thumbnail_url":"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/dex-vs-cex-which-is-best-for-you-explained-with-animation.jpg","thumbnail_width":1280,"thumbnail_height":720,"published_at":"2022-11-09T15:45:16.000000Z","created_at":"2022-11-09T23:00:04.000000Z","updated_at":"2024-01-09T23:00:04.000000Z","channel":{"id":1,"title":"CryptoFinallyExplained","channel_id":"UCOryUY0yxC08eJtK23mNgiA","main_playlist_id":"UUOryUY0yxC08eJtK23mNgiA"}},"featured_image":{"id":3071,"uuid":"8daa15ea-1042-4247-a8e2-eb16ed6b92f0","name":"cex-vs-dex-featured-image.jpg","url":"https:\/\/assets.bitdegree.org\/crypto\/storage\/optimized\/cex-vs-dex-featured-image.jpg","path":"crypto\/storage\/optimized\/cex-vs-dex-featured-image.jpg","mime_type":"image\/jpeg","disk":"digitalOceanSpaces","size":34806,"width":768,"height":478,"custom_properties":null,"created_at":"2023-06-19T06:58:39.000000Z","updated_at":"2023-06-19T06:58:39.000000Z"}}" :chapter-list="[{"id":1,"title":"Blockchain","slug":"blockchain","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-blockchain.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/blockchain-101.jpg","rating":100,"sections":[{"chapter_id":1,"order":1,"slug":"what-is-blockchain","title":"What is the Blockchain?","status":"published","modified_content":null},{"chapter_id":1,"order":2,"slug":"decentralized-blockchain","title":"Anonymous & Decentralized Blockchains: The Cornerstone of Crypto","status":"published","modified_content":null},{"chapter_id":1,"order":3,"slug":"blockchain-transaction","title":"What is a Blockchain Transaction in Crypto?","status":"published","modified_content":null},{"chapter_id":1,"order":4,"slug":"crypto-fees","title":"The Different Types of Crypto Fees Explained","status":"published","modified_content":null},{"chapter_id":1,"order":5,"slug":"what-is-bridging-in-crypto","title":"The Key Notion Behind the Concept of Bridging in Crypto","status":"published","modified_content":null},{"chapter_id":1,"order":6,"slug":"types-of-blockchains","title":"Different Types of Blockchains: What to Look Out For?","status":"published","modified_content":null}]},{"id":2,"title":"Cryptocurrencies","slug":"cryptocurrencies","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-cryptocurrencies.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/cryptocurrencies-101.jpg","rating":100,"sections":[{"chapter_id":2,"order":1,"slug":"what-is-a-cryptocurrency","title":"What is a Cryptocurrency?","status":"published","modified_content":null},{"chapter_id":2,"order":2,"slug":"how-does-cryptocurrency-work","title":"How Does Cryptocurrency Work?","status":"published","modified_content":null},{"chapter_id":2,"order":3,"slug":"is-cryptocurrency-a-good-investment","title":"Is Cryptocurrency a Good Investment? The Pros & Cons","status":"published","modified_content":null},{"chapter_id":2,"order":4,"slug":"coin-vs-token","title":"Coin VS Token: How Do They Differ?","status":"published","modified_content":null},{"chapter_id":2,"order":5,"slug":"what-are-stablecoins","title":"What are Stablecoins, Altcoins & Wrapped Coins?","status":"published","modified_content":null},{"chapter_id":2,"order":6,"slug":"what-is-a-bitcoin","title":"Bitcoin: the Pioneer of the Crypto World","status":"published","modified_content":null},{"chapter_id":2,"order":7,"slug":"what-is-ethereum","title":"The Ultimate Blockchain for dApp Creation: Ethereum","status":"published","modified_content":null},{"chapter_id":2,"order":8,"slug":"what-is-cardano-in-crypto","title":"What is Cardano and What is It Used For?","status":"published","modified_content":null},{"chapter_id":2,"order":9,"slug":"what-is-shiba-inu-coin","title":"Shiba Inu: the Dogecoin Killer","status":"published","modified_content":null},{"chapter_id":2,"order":10,"slug":"what-is-solana-in-crypto","title":"Is Solana an Improved Version of Ethereum?","status":"published","modified_content":null},{"chapter_id":2,"order":11,"slug":"what-is-polkadot-in-crypto","title":"The Bridge Between Blockchains: Polkadot","status":"published","modified_content":null},{"chapter_id":2,"order":12,"slug":"what-is-polygon-in-crypto","title":"Polygon: the Essential Scaling Solution for Ethereum","status":"published","modified_content":null},{"chapter_id":2,"order":13,"slug":"what-is-luna-crypto","title":"The Bumpy Road of Terra (LUNA)","status":"published","modified_content":null},{"chapter_id":2,"order":14,"slug":"what-is-fantom-crypto","title":"Is Fantom (FTM) Yet Another Ethereum Killer?","status":"published","modified_content":null},{"chapter_id":2,"order":15,"slug":"what-is-aave-crypto","title":"Aave: Crypto Lending Trailblazer","status":"published","modified_content":null},{"chapter_id":2,"order":16,"slug":"what-is-algorand-crypto","title":"Did Algorand Truly Solve the Blockchain Trilemma?","status":"published","modified_content":null},{"chapter_id":2,"order":17,"slug":"what-is-olympus-dao","title":"Does Olympus DAO Have Anything to Do With Mythology?","status":"published","modified_content":null},{"chapter_id":2,"order":18,"slug":"what-is-avax","title":"Is Avalanche Network (AVAX) Rightfully Called the Future of DeFi?","status":"published","modified_content":null},{"chapter_id":2,"order":19,"slug":"what-is-monero-coin","title":"Monero: Where Cryptocurrency Meets Cryptography","status":"published","modified_content":null},{"chapter_id":2,"order":20,"slug":"what-is-ripple-xrp","title":"Is Ripple \"it\" When it Comes to Cross-Border Transactions?","status":"published","modified_content":null},{"chapter_id":2,"order":21,"slug":"practical-use-of-cryptocurrencies","title":"The Practical Use of Crypto","status":"published","modified_content":null}]},{"id":3,"title":"Crypto Exchanges","slug":"crypto-exchanges","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-crypto-exchanges.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-exchanges-101.jpg","rating":80,"sections":[{"chapter_id":3,"order":1,"slug":"how-do-cryptocurrency-exchanges-work","title":"How do Cryptocurrency Exchanges Work?","status":"published","modified_content":null},{"chapter_id":3,"order":2,"slug":"dex-vs-cex","title":"DEX VS CEX: Two Sides of the Crypto Exchange Industry","status":"published","modified_content":null},{"chapter_id":3,"order":3,"slug":"crypto-day-trading","title":"Crypto Day Trading: The Difference Between Buying, Trading, and Swapping","status":"published","modified_content":null},{"chapter_id":3,"order":4,"slug":"kyc-crypto","title":"KYC & AML: The Key to Complying With Legal Industry Standards","status":"published","modified_content":null},{"chapter_id":3,"order":5,"slug":"how-to-buy-crypto","title":"From Fiat to Crypto: How to Buy Crypto for the First Time","status":"published","modified_content":null},{"chapter_id":3,"order":6,"slug":"fiat-to-crypto","title":"Taking Profits: Turning Crypto Into Fiat","status":"published","modified_content":null},{"chapter_id":3,"order":7,"slug":"how-to-use-crypto","title":"You\u2019ve Got Crypto: What Can You Do With It?","status":"published","modified_content":null}]},{"id":4,"title":"Crypto Wallets","slug":"crypto-wallets","updated":false,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-crypto-wallets.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-wallets-101.jpg","rating":80,"sections":[{"chapter_id":4,"order":1,"slug":"what-is-a-crypto-wallet","title":"What is a Crypto Wallet?","status":"published","modified_content":null},{"chapter_id":4,"order":2,"slug":"hot-wallet-vs-cold-wallet","title":"Hot Wallet VS Cold Wallet: Which One to Pick?","status":"published","modified_content":null},{"chapter_id":4,"order":3,"slug":"non-custodial-wallet","title":"What are Non-Custodial Crypto Wallets?","status":"published","modified_content":null},{"chapter_id":4,"order":4,"slug":"what-is-metamask","title":"Metamask: The Leading Non-Custodial Wallet","status":"published","modified_content":null},{"chapter_id":4,"order":37,"slug":"how-safe-is-cryptocurrency","title":"The Key Crypto Wallet Safety Practices: How Safe Can Crypto Be?","status":"published","modified_content":null}]},{"id":5,"title":"NFTs","slug":"nfts","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-nfts.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/nfts-101.jpg","rating":100,"sections":[{"chapter_id":5,"order":2,"slug":"how-to-trade-nfts","title":"NFT Trading: The Ins and Outs","status":"published","modified_content":null},{"chapter_id":5,"order":3,"slug":"buying-nft","title":"Tips and Tricks of Choosing the Right NFTs","status":"published","modified_content":null},{"chapter_id":5,"order":4,"slug":"how-to-store-nft","title":"How to Store NFTs: Best Practices","status":"published","modified_content":null},{"chapter_id":5,"order":5,"slug":"how-to-create-an-nft","title":"How to Create Your Own NFTs?","status":"published","modified_content":null},{"chapter_id":5,"order":6,"slug":"how-to-make-passive-money-with-nft","title":"Making Passive Money with NFTs","status":"published","modified_content":null}]},{"id":6,"title":"dApps & Defi","slug":"dapps-and-defi","updated":true,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-dapps.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/dapps-defi-101.jpg","rating":80,"sections":[{"chapter_id":6,"order":1,"slug":"what-are-nfts","title":"What are Non-Fungible Tokens (NFTs)?","status":"published","modified_content":null},{"chapter_id":6,"order":1,"slug":"what-is-defi","title":"What is Decentralized Finance (DeFi)?","status":"published","modified_content":null},{"chapter_id":6,"order":2,"slug":"what-is-defi-2-0","title":"DeFi 2.0: The New Version of Decentralized Finance","status":"published","modified_content":null},{"chapter_id":6,"order":3,"slug":"what-are-dapps-in-crypto","title":"What Are dApps and How Do They Work?","status":"published","modified_content":null},{"chapter_id":6,"order":4,"slug":"defi-dapps","title":"Picking the Right dApps: Dos and Don'ts","status":"published","modified_content":null},{"chapter_id":6,"order":5,"slug":"what-is-web-3-0","title":"Web 3.0: The Future of the Internet","status":"published","modified_content":null},{"chapter_id":6,"order":6,"slug":"what-are-smart-contracts","title":"What is the Core Purpose of Smart Contracts?","status":"published","modified_content":null},{"chapter_id":6,"order":7,"slug":"what-is-a-dao-in-crypto","title":"The Notion of a Decentralized Autonomous Ogranization (DAO)","status":"published","modified_content":null},{"chapter_id":6,"order":8,"slug":"what-is-staking-in-crypto","title":"What is the Goal of Staking Crypto Assets?","status":"published","modified_content":null},{"chapter_id":6,"order":9,"slug":"what-is-liquidity-pool-in-crypto","title":"What is a Liquidity Pool and How Does It Work?","status":"published","modified_content":null},{"chapter_id":6,"order":10,"slug":"what-is-automated-market-maker","title":"Automated Market Maker: the Cornerstone of the Decentralized Crypto Exchange Industry","status":"published","modified_content":null},{"chapter_id":6,"order":11,"slug":"what-is-yield-farming-in-crypto","title":"The Main Yield Farming Techniques","status":"published","modified_content":null},{"chapter_id":6,"order":12,"slug":"what-is-an-oracle-in-crypto","title":"Crypto Oracles: The Link Between Blockchain and Outside World Data","status":"published","modified_content":null},{"chapter_id":6,"order":13,"slug":"crypto-gambling","title":"The Peculiarities of Decentralized Crypto Gambling","status":"published","modified_content":null},{"chapter_id":6,"order":14,"slug":"what-is-the-metaverse","title":"Metaverse: A New Perception of Reality","status":"published","modified_content":null}]},{"id":7,"title":"Trading & Investing","slug":"trading-and-investing","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-crypto-trading.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-trading-101.jpg","rating":80,"sections":[{"chapter_id":7,"order":1,"slug":"where-to-trade-crypto","title":"Where Can You Trade Cryptocurrencies?","status":"published","modified_content":null},{"chapter_id":7,"order":2,"slug":"how-to-invest-in-crypto","title":"Investing in Crypto: What Investing Options Do You Have?","status":"published","modified_content":null},{"chapter_id":7,"order":3,"slug":"ico-vs-ido","title":"ICO vs IDO vs IEO: Which One is the One?","status":"published","modified_content":null},{"chapter_id":7,"order":4,"slug":"what-is-an-airdrop","title":"What are Crypto Airdrops and How to Get Them?","status":"published","modified_content":null},{"chapter_id":7,"order":5,"slug":"how-to-get-free-crypto","title":"How to Get Free Crypto Assets?","status":"published","modified_content":null},{"chapter_id":7,"order":6,"slug":"how-to-arbitrage-crypto","title":"What is Crypto Arbitrage: The Main Principles","status":"published","modified_content":null},{"chapter_id":7,"order":7,"slug":"what-is-a-perpetual-contract","title":"Perpetual Contracts: Futures Contracts Without an Expiration 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Mining?","status":"published","modified_content":null},{"chapter_id":9,"order":3,"slug":"what-is-staking-crypto","title":"An Advanced Look into What is Staking Crypto","status":"published","modified_content":null},{"chapter_id":9,"order":4,"slug":"what-is-proof-of-stake-vs-proof-of-work","title":"Proof-of-Work VS Proof-of-Stake: The Differences That Matter","status":"published","modified_content":null},{"chapter_id":9,"order":5,"slug":"what-is-crypto-mining-rig","title":"Crypto Mining Rig: What It is and How to Build One?","status":"published","modified_content":null}]},{"id":10,"title":"Crypto Terms","updated":false,"chapter":"crypto\/assets\/crypto-book\/chapters\/crypto-101-glossary.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-glossary-101.jpg","rating":100,"sections":["A","B","C","D","E","F","G","H","I","J","K","L","M","N","O","P","Q","R","S","T","U","V","W","X","Y","Z"]}]" current-chapter="crypto-exchanges" current-section="dex-vs-cex">