How does a centralized exchanger work?

How does a centralized exchanger work

Exchangers are essentially marketplaces. They are useful when a large number of people are simultaneously trying to buy and sell the same type of asset. In traditional economics, famous stock 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 get paid through commissions and transaction fees. You can imagine that a CEX is 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 if 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!!

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🥀 What is a centralized exchanger?

CEXs participate directly in the markets by “ compensating " the transactions. They typically maintain digital order books, which are lists of open buy and sell orders, consisting of volumes and prices. They compare buyers and sellers and announce current market prices based on the last price an asset sold for. CEXs operate using an order book system. Which means that buy and sell orders are listed and sorted based on the expected buy or sell price.

centralized exchanger

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 fiat currency or cryptocurrency.

CEXs decide which digital asset they will allow to be traded. Which is slightly reassuring that unscrupulous digital assets can be excluded from CEX.

🥀 The main centralized exchanges

Here are the top centralized cryptocurrency exchanges, based on traffic, liquidity, and trading volumes.

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#Binance

Binance is a digital currency wallet and cryptocurrency exchange. It allows you to buy, sell and store around 1000 cryptocurrencies. It offers several services to its users. Here's how you can create an account on Binance.

#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 platform. It allows you to buy, sell and store cryptocurrencies. Here's how you can create your easily on Coinbase.

#The FTX exchanger

FTX is a cryptocurrency exchange from the Bahamas. FTX is incorporated in Antigua and Barbuda and is headquartered in the Bahamas. In February 2022, the exchanger had more than one 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 suffers from this. You must therefore have learned elsewhere before landing on Gate.io.

Its sponsorship system allows the sponsor and the sponsored person to share 40% of the sponsored transaction costs, up to 30% for the sponsor and 10% for the sponsored person. VSre-register a Gate.io account easily.

#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 started 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 record and conducts regular audits to prove that it holds the correct amount of user funds that it is supposed to hold. You can create your account on Kraken in just a few clicks. Here is how to do it in a few clicks.

#Binance US

Binance.US is the crypto exchange of choice for millions of US residents! Buy or trade over 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 procedure is the same in both changers.

#bitfinex

Bitfinex is a cryptocurrency exchange owned and operated by iFinex Inc registered in the British Virgin Islands. Their clients' money was stolen or lost in several incidents, and they were unable to establish normal banking relationships.

Bitfinex is aimed at professional cryptocurrency traders. You need 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.

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#Crypto.com Exchange

Crypto.com is a Singapore-based cryptocurrency exchange, best known by 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

1. Friendly

Centralized exchanges provide newbie investors with 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 transact via apps and Web sites.

centralized exchanger

2. Reliable

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.

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3. Leverage

Another benefit of some CEXs is the ability to leverage your investments using money borrowed from the stock exchange, called margin trading. This allows investors to reap higher returns, but losses can also be magnified.

🥀 Disadvantages of centralized cryptocurrency exchanges

1. Hacking risk

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 of such an incident is Mt.Gox, which was once the world's largest cryptocurrency exchange company before reporting the theft of 850 bitcoins, leading to its collapse.

2. Transaction fees

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.

3. Custody of digital assets

Last but not least, most CEXs will 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 trade, there are disadvantages, 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:

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  • 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. Lhe availability of efficient customer support services to meet the needs of a customer is a very essential service that is required in all cryptocurrency exchanges today.
  • User Reviews. It is necessary to visit various exhibition websites to collect user reviews.
  • Years of experience. One should only choose brokers who have a proven track record and a proven track record throughout their long years of providing excellent services.
  • Worldwide presence: The current top crypto exchanges 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 exchange is a platform that allows crypto investors to buy and sell their digital assets. Therefore, a centralized crypto exchange 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 exchange, traders deposit their funds in an intermediary account for a specified period to ensure transaction security.

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 starting to use the platform and trading tools provided. Verified traders on centralized exchanges benefit from higher withdrawal quotas, as well as customer support, especially when they encounter technical errors.

This type of exchanger offers flat pairs at stable prices. Centralized exchangers 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.

If you have any experience, leave us a comment

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