If you’re interested in cryptocurrencies, it’s important to understand the key differences between centralized (CEX) and decentralized (DEX) exchanges.
We’ve prepared a detailed guide to help you grasp the concepts of CEX and DEX, and choose the right exchange for your needs.
Centralized Exchanges (CEX)
Centralized exchanges (CEX) are platforms that act as intermediaries between buyers and sellers of cryptocurrencies. They manage user accounts, match orders, and control private keys.
CEX platforms are popular among beginners due to their ease of use and fast transactions.
How do CEX work?
• Sign up on the platform.
• Deposit funds into the exchange’s wallet.
• Place a buy or sell order for cryptocurrency.
• The CEX matches your order.
• The transaction is executed.
• Withdraw your funds to a personal wallet.
Advantages of CEX:
+ Convenience: Simple interfaces and the ability to buy with fiat currency make CEX accessible to beginners.
+ Liquidity: High trading volumes allow for quick buying and selling of tokens.
+ Regulation: CEX platforms follow rules designed to prevent fraud.
+ Margin trading: The ability to trade with borrowed funds.
Disadvantages of CEX:
- Counterparty risk: Users entrust their assets to the exchange, which can lead to losses if the platform is hacked.
- Limited coin selection: Not all cryptocurrencies are available on every exchange.
- Fees: Various transaction fees can reduce your profits.
Decentralized Exchanges (DEX)
Decentralized exchanges (DEX) are platforms for trading cryptocurrencies, where users can exchange assets directly with each other, bypassing intermediaries.
The key difference between DEX and CEX:
DEX does not hold user funds or private keys. Trading is carried out directly between users through smart contracts.
How does DEX work?
• Users connect their crypto wallet to the platform.
• They add funds to a liquidity pool.
• They place a buy or sell order.
• The order is automatically matched with another user’s.
• A smart contract completes the transaction.
Advantages of DEX:
+ Security: Users control their private keys, reducing the risk of hacks.
+ Transparency: All transactions are public and verifiable on the blockchain.
+ Variety of assets: A wide selection of cryptocurrencies, including new tokens that may not be available on CEX.
+ Accessibility: No registration or identity verification required.
Disadvantages of DEX:
- Complexity: It can be difficult for beginners to navigate without intermediaries.
- Low liquidity: Slower transaction execution.
- Limited functionality: No margin trading, order placement, or fiat-to-crypto purchases.
Spintria on DEX and CEX
The $SP token is available on the centralized exchange xRocket and the decentralized platform Ston.fi.
Choosing between exchanges depends on your priorities, experience level, and preferences. Consider all factors before selecting the platform that works best for you.
Stay tuned for updates in our channel — Spintria will soon be available on two major CEXs.
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