How does a centralized exchanger work?
Exchangers are essentially marketplaces. They are useful when a large number of people are trying to buy and sell the same type of asset at the same time. In the traditional economy, famous exchanges include the New York Stock Exchange and the London Metal Exchange. A centralized exchange (CEX) is a platform that allows users to buy and sell cryptocurrencies within an infrastructure managed by the exchange company. In the crypto industry, some well-known CEXs include Binance, Coinbase, Gemini and Kraken.
CEXs act as an intermediary between a buyer and a seller. They make money through commissions and transaction fees. You can think of a CEX as being like an exchange, but for digital assets. On the other hand, decentralized exchanges allow traders to trade directly from self-custodial wallets. This, without relinquishing control of their assets.
Most new investors often wonder whether they should use a centralized exchange or a decentralized exchanger. In this article, we will explain in detail everything you need to know about centralized exchangers. Let's go!!
Table of contents
🥀 What is a centralized exchanger?
CEXs participate directly in the markets by “ compensating » transactions. They typically maintain digital order books, which are lists of open buy and sell orders, consisting of volumes and prices. They match buyers and sellers and announce current market prices based on the last price an asset sold for. CEXs operate using an order book system. This means that buy and sell orders are listed and sorted based on the expected buy or sell price.
The exchanger’s matching engine then matches buyers and sellers based on the best executable price given the desired lot size. Therefore, the price of a digital asset will depend on the supply and demand of that asset relative to another. Whether it is a fiat currency or a cryptocurrency.
CEXs decide which digital assets they will allow to be traded. This provides some reassurance that unscrupulous digital assets can be excluded from the CEX.
🥀 The main centralized exchanges
Here are the top centralized cryptocurrency exchanges, based on traffic, liquidity, and trading volumes.
#Binance
Binance is a digital currency wallet and cryptocurrency exchange platform. It allows you to buy, sell, and store around 1000 cryptocurrencies. It offers several services to its users.
#Coinbase Exchange
Coinbase is a secure online platform for buying, selling, transferring, and storing digital currencies. Coinbase is an online digital currency wallet and cryptocurrency exchange. It allows you to buy, sell, and store cryptocurrencies.
#The FTX exchanger
FTX is a cryptocurrency exchange from the Bahamas. FTX is incorporated in Antigua and Barbuda and is headquartered in the Bahamas. As of February 2022, the exchange has over XNUMX million users. FTX operates FTX.US, a separate exchange available to US residents.
#KuCoin
Create a KuCoin account is easy. It is a centralized cryptocurrency exchange located in Seychelles. It has a trust score of 10. More than 2M traders trade on this exchange. It currently has a 24-hour trading volume around ₿44 from 141.47 coins and 726 trading pairs. The most active trading pair on KuCoin exchange is BTC/USDT (₿1224).
#Gate.io interchange
Gate.io is KuCoin's competitor in centralized exchanges (CEX) that do not allow the deposit of fiat currency. It is therefore 100% crypto! A platform that does not accept fiat currencies, Gate.io is not intended for beginners and its interface reflects this. You must therefore have learned the ropes elsewhere before landing on Gate.io. Its referral system allows the referrer and the referred to share 40% of the referred's transaction fees, up to 30% for the referrer and 10% for the referred.
#Huobi Global
Huobi is a cryptocurrency exchanger based in Seychelles. Founded in China, the company now has offices in Hong Kong, South Korea, Japan and the United States. In August 2018, it became a listed company in Hong Kong.
Launched in 2013, Huobi Global is an exchange platform specializing in crypto-asset trading and trading. Moreover, the Chinese platform offers many interesting features, such as Staking, Primepool, Huobi Earn or ETH 2.0 which, for the most part, allow you to earn passive income with your cryptocurrencies.
#Kraken
Creak is a cryptocurrency exchange site : an exchanger. It was launched in 2011 by Jesse Powell, one of the pioneers in the crypto world. On this platform it is possible to buy and sell digital assets (Bitcoin, Ethereum, etc.) directly in euros and dollars.
The strong point of this interchange is cryptographic security. The company has an impeccable track record and conducts regular audits to prove that it holds the exact amount of user funds that it is supposed to hold. You can create your account on Kraken in just a few clicks.
#Binance US
Binance.US is the crypto exchange of choice for millions of US residents! Buy or exchange 120+ cryptocurrencies with ridiculously low fees, including Bitcoin, Ethereum, BNB, Cardano, Solana, Avalanche, Polkadot and more, directly with your bank account or debit card. Unlike Binance, Binance US is only available in the United States. The account creation process is the same for both exchanges.
#bitfinex
Bitfinex is a cryptocurrency exchange owned and operated by iFinex Inc registered in the British Virgin Islands. Their customers' money has been stolen or lost in several incidents, and they have not been able to establish normal banking relationships. Bitfinex is aimed at professional cryptocurrency traders. It requires a minimum balance of US$10 to start making transactions. In addition to allowing transactions of fiat currencies, for example, US dollars for Bitcoins, it also allows many other more specialized transaction options.
#Crypto.com Exchange
Crypto.com is a Singapore-based cryptocurrency exchange platform, best known for its app. It currently has 10 million users and 3000 employees. Crypto.com is operated by Foris DAX Asia, a subsidiary of Foris DAX MT Limited.
It was created in 2016 with the aim of giving everyone the ability to control their money and data. For this, Crypto.com allows you to buy, sell and exchange more than 150 cryptocurrencies. With a presence in 90 countries and more than 10 million userss around the world, Crypto.com is now a must-have.
🥀 Advantages of centralized exchangers
Centralized exchanges offer beginner investors a familiar and user-friendly way to trade and invest in cryptocurrencies. Unlike using crypto wallets and peer-to-peer transactions, which can be complex, users of centralized exchanges can log into their accounts, view their account balances, and make transactions through apps and websites.
Centralized exchanges provide an extra layer of security and reliability when it comes to transactions and trading. By facilitating the transaction through a developed and centralized platform, centralized exchangers provide higher levels of convenience.
One of the other benefits of some CEXs is the ability to leverage your investments using money borrowed from the exchange, called margin trading. This allows investors to reap higher returns, but losses can also be magnified.
🥀 Disadvantages of centralized exchangers
Centralized exchanges are managed by companies that are responsible for the assets of their clients. Large exchanges typically hold billions of dollars worth of bitcoins, making them a target for hackers and theft. An example One such incident is Mt. Gox, which was once the world's largest cryptocurrency exchange before reporting the theft of 850 bitcoins, leading to its collapse.
Unlike peer-to-peer transactions, centralized exchanges often charge high transaction fees for their services and convenience, which can be especially high when trading large amounts.
Last but not least, most CEXs hold your digital asset as a custodian in their own digital wallet rather than allowing you to store your private keys on your own digital wallet. Although more convenient when you want to exchange, there are drawbacks, namely the risk of failure and fraud of the centralized cryptocurrency exchanger.
🥀 Factors to Consider When Choosing an Exchangeur
There are ten main factors to consider when choosing a crypto exchange. The following factors are discussed:
- Several deposit and withdrawal options. The provision of several options for deposits and withdrawals such as bank transfer, Skrill, Neteller, etc. are to be considered.
- Commissions charged. LGood exchangers charge lower commissions for using their platforms.
- Customer Support Services. LThe availability of efficient customer support services to meet the needs of a customer is a very essential service that is required in every cryptocurrency exchange today.
- User reviews. It is necessary to visit various exhibition websites to collect user reviews.
- Years of experience. You should only choose those brokers who have proven themselves and have a proven track record of excellent service delivery throughout their many years.
- Worldwide presence: The best crypto exchanges today are known to have their branches and presence in other countries as well and are not limited to just one country.
🥀 Conclusion
First of all, a crypto exchanger is a platform that allows crypto investors to buy and sell their digital assets. Therefore, a centralized crypto exchanger is a platform that relies on a third-party or intermediary account to monitor and confirm that all transactions are secure. With a centralized crypto exchanger, traders deposit their funds into an intermediary account for a specified period of time to ensure the security of transactions.
A centralized exchange also requires traders to submit their personal information for verification before making a transaction. Even trading organizations must submit their business information for verification before they start using the platform and trading tools provided. Verified traders on centralized exchanges enjoy higher withdrawal quotas, as well as customer support, especially when they encounter technical errors.
This type of exchange offers flat pairs at stable prices. Centralized exchanges are easy to use, but they have very complex compliance principles that some users may not like. For example, Some users may have difficulty sharing their personal information during a transaction.
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