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Crypto Terms:  Letter C

What is Centralized Exchange (CEX)?

Meaning:
Centralized Exchange (CEX) - a cryptocurrency exchange platform that is operated by a centralized owner.
medium
2 minutes

Let's find out Centralized Exchange (CEX) meaning, definition in crypto, what is Centralized Exchange (CEX), and all other detailed facts.

A centralized exchange (CEX) is a type of cryptocurrency exchange platform. CEX platforms maintain an order book for buy and sell orders between traders.

All orders are trade requests for a certain amount of a cryptocurrency set at a specified price. CEX platforms use special software to analyze the trade orders submitted by the users, and then automatically match and execute them accordingly.

Users of centralized exchanges do not trade cryptocurrencies or fiat money with each other directly. Rather than that, the exchange has custody of the funds deposited onto it. The traders get IOUs that match the amount of funds deposited. The IOUs are tracked internally throughout the trading platform and are not converted into actual currency until the withdrawal.

Centralized exchanges remain the most widely used method of crypto exchange. It is one of the fastest and most cost-efficient methods of processing financial operations. CEXs are preferred by day traders and crypto investors for their convenience.

CEX platforms have received some backlash for their lack of transparency, as the users do not have access to the internal operations. This allows for malicious exchange practices, price manipulation, and, in some cases, money laundering.

Centralized exchanges have been a frequent target for cyberattacks due to the amount of user funds they hold custody over. Exchange services have been attacked both from within and outside the organizational boundaries.

In 2020, the exchange service KuCoin was targeted as hackers obtained the keys to several wallets on the platform, leading to $281 million worth of crypto assets being stolen. In 2021, the CEX platform ​​BitMart was breached, losing nearly $200 million in various cryptocurrencies.

Furthermore, increased activity or coordinated attacks can impact the downtime of CEX platforms, which can cost the traders valuable opportunities. Centralized exchanges are more susceptible to government regulations and censorship, thus, regulators may be able to seize the funds held by the exchange platforms, as well as reveal customer data.

 

fiat currencies, the prices of which seldom fluctuate significantly.<\/p>\n<p>REX is one of the most popular CD tokens. It is the <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//goon//binance/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>Binance<\/strong><\/a> Smart Chain token, or a <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-bep-20/">BEP-20 token, which indicated that it can be utilized in a lot of different decentralized finance applications that are built on BSC. The development of REX was the very first attempt to mix traditional finance interest structure with blockchain technology.<\/p>\n<p>HEX is another example that has stepped into the ecosystem. The main difference is that HEX is <a href=https://www.bitdegree.org/"//crypto//buy-ethereum-eth/">Ethereum-based, meaning that it might have higher gas fees for users.<\/p>\n<p>The terms and conditions of the certificates of deposit tend to change depending on the issuing institution, and the amount the user wants to deposit. Besides, CDs are one of the most efficient ways to earn a passive income.<\/p>\n<p>A few of the CD terms:<\/p>\n<ul>\n<li><strong>The principal.<\/strong> The amount of savings you allow to deposit.<\/li>\n<li>The interest rate. Delivers a systematic and standardized return on your deposit over a certain period of time.<\/li>\n<li>The term. The length of time you leave your funds deposited to avoid any penalty.<\/li>\n<li>The institution. The credit union or a bank where you open your CD. It will determine aspects of the agreement.<\/li>\n<\/ul>\n<p>Certificates of deposit are one of the safest savings or investment instruments available. Also, they often offer higher interest rates paid by many bank accounts, unlike most other investments.<\/p>","definition":"is a savings account that keeps a fixed amount of money for a set period of time and allows users to earn an interest rate premium after making a deposit.","status":"published","meta_title":"What is Certificate of Deposit (CD)? Definition & Meaning | Crypto Wiki","meta_description":"Certificate of Deposit (CD) meaning: Certificate of Deposit (CD) - is a savings account that keeps a fixed amount of money for a set period of time and allows users to earn an interest rate premium after making a deposit.","meta_keywords":null}" :prev-section="{"id":154,"wikipedia_url":"https:\/\/en.wikipedia.org\/wiki\/Centralized","level":"easy","author_id":1,"created_at":"2023-06-19T06:58:59.000000Z","updated_at":"2023-12-26T16:35:28.000000Z","slug":"what-is-centralized","title":"What is Centralized?","section":"C","keyword":"Centralized","content":"<p>Centralized cryptocurrency exchange refers to the employment of a third party to assist in completing transactions. In addition, buyers and sellers depend on a third party to manage their assets. It might be similar to a bank setting, where the bank holds the customer's money.<\/p>\n<p>The two main types of organizational structures are - <strong><a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-centralized/">centralized and decentralized<\/strong>.<\/p>\n<p>For instance, a decentralized organization is an organization that <strong>is entirely managed by one CEO or a few top executives<\/strong>. Even a mobile app can be centralized if it enables users to transfer money to one another while maintaining full authority over transaction processing.<\/p>\n<p>If there was a scenario where a bank&rsquo;s payment system shuts down for some time, the customers can&rsquo;t do any transactions until the system is functioning properly again. While decentralized networks such as <a href=https://www.bitdegree.org/"//crypto//buy-ethereum-eth/">Ethereum and <a href=https://www.bitdegree.org/"//crypto//buy-bitcoin-btc/">Bitcoin would continue to function even if the nodes were not operational.<\/p>\n<p>Centralized organizations have <strong>a clear purpose <\/strong>that is their main focus, which is what helps to make fast and effective decisions and fewer mistakes along the way. They are also often less expensive due to the obvious division of tasks among many participants.<\/p>\n<p>Nonetheless, centralized systems have <strong>drawbacks.<\/strong> The disadvantages arise from dependence on a single point of jurisdiction, which can occasionally show to be the single point of <strong>failure.<\/strong><\/p>\n<p>Speaking of decentralized systems, these are overly vulnerable to any <strong>malfunctions<\/strong> in their governing authority. It doesn&rsquo;t matter if the malfunctions were caused by accident, viciousness, or inexperience.<\/p>","definition":"services are governed by a authority that makes decisions and manages the system's operation.","status":"published","meta_title":"What is Centralized? Definition & Meaning | Crypto Wiki","meta_description":"Centralized meaning: Centralized - services are governed by a authority that makes decisions and manages the system's operation.","meta_keywords":null}" :model="{"id":157,"wikipedia_url":"https:\/\/en.wikipedia.org\/wiki\/Decentralized_finance#Decentralized_exchanges","level":"medium","author_id":1,"created_at":"2023-06-19T06:58:59.000000Z","updated_at":"2023-12-26T16:38:16.000000Z","slug":"what-is-centralized-exchange-cex","title":"What is Centralized Exchange (CEX)?","section":"C","keyword":"Centralized Exchange (CEX)","content":"<p><strong>A centralized exchange (CEX)<\/strong> is a type of cryptocurrency exchange platform. CEX platforms maintain an <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-order-book/">order book<\/strong><\/a> for buy and sell orders between traders.<\/p>\n<p>All orders are trade requests for a certain amount of a cryptocurrency set at a specified price. CEX platforms use special software to analyze the trade orders submitted by the users, and then automatically match and execute them accordingly.<\/p>\n<p><strong>Users of centralized exchanges<\/strong> <strong>do not trade cryptocurrencies or<\/strong> <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-fiat/">fiat money<\/strong><\/a> <strong>with each other directly<\/strong>. Rather than that, the exchange has custody of the funds deposited onto it. The traders get IOUs that match the amount of funds deposited. The IOUs are tracked internally throughout the trading platform and are not converted into actual currency until the withdrawal.<\/p>\n<p>Centralized exchanges remain <strong>the most widely used method of crypto exchange<\/strong>. It is one of the fastest and most cost-efficient methods of processing financial operations. CEXs are preferred by day traders and crypto investors for their convenience.<\/p>\n<p>CEX platforms have received some backlash for their <strong>lack of transparency<\/strong>, as the users do not have access to the internal operations. This allows for malicious exchange practices, price manipulation, and, in some cases, <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-money-laundering/">money laundering<\/strong><\/a>.<\/p>\n<p>Centralized exchanges have been a <strong>frequent target for cyberattacks<\/strong> due to the amount of user funds they hold custody over. Exchange services have been attacked both from within and outside the organizational boundaries.<\/p>\n<p>In 2020, the exchange service <a href=https://www.bitdegree.org/"//crypto//goon//kucoin/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>KuCoin<\/strong><\/a> was targeted as hackers obtained the keys to several wallets on the platform, leading to $281 million worth of crypto assets being stolen. In 2021, the CEX platform \u200b\u200b<a href=https://www.bitdegree.org/"//crypto//goon//bitmart/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>BitMart<\/strong><\/a> was breached, losing nearly $200 million in various cryptocurrencies.<\/p>\n<p>Furthermore, increased activity or coordinated attacks can impact the downtime of CEX platforms, which can cost the traders valuable opportunities. <strong>Centralized exchanges are more susceptible to government regulations and<\/strong> <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-censorship/">censorship, thus, regulators may be able to seize the funds held by the exchange platforms, as well as reveal customer data.<\/p>\n<p>&nbsp;<\/p>","definition":"a cryptocurrency exchange platform that is operated by a centralized owner.","status":"published","meta_title":"What is Centralized Exchange (CEX)? Definition & Meaning | Crypto Wiki","meta_description":"Centralized Exchange (CEX) meaning: Centralized Exchange (CEX) - a cryptocurrency exchange platform that is operated by a centralized owner.","meta_keywords":null,"author":{"id":1,"user_id":1,"created_at":"2023-05-03T14:30:55.000000Z","updated_at":"2023-05-11T07:18:20.000000Z","title":"Editor-In-Chief","slug":"aaron-s-editor-in-chief","description":"<p>Having completed a Master&rsquo;s degree on Economics, Politics &amp; Culture for the East Asia region, Aaron has written scientific papers with a comparative analysis of the differences between US&rsquo; Western and Japan&rsquo;s Collective forms of capitalism, 1945-2020.<\/p>\n<p>With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He&rsquo;s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.<\/p>\n<p>Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain &amp; Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.<\/p>\n<p>Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.<\/p>","user":{"id":1,"first_name":"Aaron","last_name":"S.","email":"aaron@bitdegree.org","email_sanitized":"aaron@bitdegree.org","email_verified_at":"2023-12-01T09:40:20.000000Z","must_verify_email":false,"is_registered_with_wallet":false,"status":"active","country":"LT","last_connected_ip":"88.119.132.125","image_id":2641,"referral_token":"05TMu2NysXOCn525","referred_by":null,"created_at":"2023-05-03T14:30:55.000000Z","updated_at":"2024-01-09T15:22:21.000000Z","full_name":"Aaron S."}}}" :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 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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 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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 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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 Date","status":"published","modified_content":null},{"chapter_id":7,"order":8,"slug":"what-is-fud","title":"What is FUD: How to Use It to Your Advantage While Investing in Crypto?","status":"published","modified_content":null},{"chapter_id":7,"order":9,"slug":"investing-in-cryptocurrency","title":"Investing in Cryptocurrency: How to Manage Your Risks?","status":"published","modified_content":null},{"chapter_id":7,"order":10,"slug":"what-is-a-rug-pull-in-crypto","title":"What is a Rug Pull in Crypto?","status":"published","modified_content":null},{"chapter_id":7,"order":11,"slug":"how-to-avoid-rug-pulls-in-crypto","title":"How to Spot and Avoid Rug Pulls?","status":"published","modified_content":null},{"chapter_id":7,"order":12,"slug":"how-to-avoid-crypto-taxes","title":"The Key Legal Techniques of Avoiding Crypto Taxes","status":"published","modified_content":null}]},{"id":8,"title":"Crypto 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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="C" current-section="what-is-centralized-exchange-cex">