What is the difference between centralized and decentralized cryptocurrency exchange? If you are working on cryptocurrency business processes or are working hard to enter this industry, then you are likely to hear the two professional terms of "centralization" and "decentralization". Cryptocurrency exchanges are divided into two types: centralized exchanges and decentralized exchanges. Before buying and selling, please ensure that you have the service of various service platforms.

The decentralized exchange (DEX) has emerged endlessly in the past five years to test the existing centralized exchanges (CEX). In simple terms, DEX is committed to giving lower trading fees to allow consumers to immediately have their own property and avoid some control pressure. Let's take a look at the differences between centralized and decentralized cryptocurrency exchanges.

What does centralization mean?

Centralized exchanges are operated by a central institution of the Internet for a management method. Responsible companies are responsible for having account books, implementing buying and selling, maintaining user information, and management methods for financial system responsibilities. A very good case is most people, traditional banks used daily. Is there a savings card in your wallet? The opening bank is a central state organs.

What is a centralized cryptocurrency exchange?

The centralized cryptocurrency exchange is a channel for everyone to buy and sell cryptocurrencies. Here, you must trust third parties to mean that the two parties in the transaction are supervised and traded and maintained their property. His trading was not tracked in the blockchain technology. This type of exchange stipulates that you submit your private information for certification. On the other hand, if you are a company, then you should give your corporate information to the trading center so that it can certify your account.

The larger the detailed information you provided by this trading center, the higher your withdrawal credit limit. If any technical incorrect or lost login password, such a platform that passes the inspection of such a platform can contact the exchanges to vigorously support the elite team.

In most cases, centralized cryptocurrency transactions are provided with fixed foreign currency to their customers at a smooth price. This trading center is popular among cryptocurrency customers, and everyone can quickly find one of such platforms on the line. Some instances of centralized cryptocurrency exchanges include Binance, Coinbase, LocalBitcoins, etc.

What does decentralization mean?

The decentralized exchange is a creature of blockchain technology and was first used to BTC. They do not rely on all financial institutions, enterprises or other centralized organizations, but instead the staggered system software of applications and machines. Based on the Internet, it provides a fair market share for each customer and avoids the reliance on any third party.

What is a decentralized cryptocurrency exchange?

DEX or decentralized cryptocurrency exchanges are similar to centralized exchanges, and they have no third parties that everyone can rely on. All assets of the trading center are still stored on cryptocurrencies.

Such a platform allows the application of property, agent currency or custody system to carry out point -to -point (P2P) trading, which is different from the software used by the centralized data encryption trading center.

How to run the decentralized cryptocurrency exchange?

In DEX, the customer (you) send its cryptocurrency to the gate, and store the same specific content at the gate and give a dynamic password to the mobile client agent at his part. Customers can now apply this currency in the blockchain technology of this trading center. The real cryptocurrency in the door pledged these currencies.

You can order your current currency to get another currency. Your order, the entire process of pairing, and all the entire process are stored on the cryptocurrency of the trading center, which is the first flash point in this place. When you receive all currencies based on buying and selling, you can also convert them into cryptocurrencies in a true sense.

Why is decentralized cryptocurrency?

The necessity of decentralized cryptocurrencies depends on it to allow a value exchange system software that trusts trust. This is also completed based on the importance of removing the value transfer of third -party certification. This avoids the necessary for the intermediary and allows the two to exchange value immediately. It also makes the system software safer, without the server down. Similarly, because a single organization does not operate loan currency, it allows a more democratized software. It also provides a more efficient system software because central institutions do not manage assets.

What are the risks of decentralized data cryptocurrencies?

Cryptocurrencies are decentralized, which means that they will not be supervised or controlled by a single supervision agency or authoritative department. It also means that if there is a problem with the virtual currency transaction or some people lose money, no one can seek help. Cryptocurrencies are also vulnerable to cyber fraud and hackers because it is an English letter rather than physics. They are not too stable, the price is high a day, and the use value is low the next day. Similarly, the world's worldwide things such as flood disasters or political and economic instability will also affect the value of data cryptocurrencies.

Comparison of centralized and decentralized exchange

1. Safety

Although the centralized exchange has a strict security procedure process, the decentralized encryption exchange has brought a lot of maintenance. The key to centralized exchanges is threatened by online hackers.

In the past, the experience of hacking invasion for centralized exchanges made them have a lot of security updates. Under the situation of decentralized exchanges, there will be no risk of capital as a result of personal behavior.

Decentralization exchanges are higher than the security coefficient of centralized exchanges because it is impossible to cause several asset damage for a single reasons.

2. Popularity

Unquestionally, centralized cryptocurrency exchanges are more attractive than DEX because it is a trading center that was initially invested in the market. The centralized exchange has more liquidity and stronger infrastructure.

However, over time, a large number of decentralized cryptocurrency exchanges operate over time, which will definitely cause great harm to these audiences.

3. Features

At the functional level, centralized cryptocurrency exchanges are definitely more advantages than decentralized cryptocurrency transactions. Centralized exchanges are given the role of guarantee deposit transactions, spot markets, and investment portfolio management equipment.

DEX did not provide guarantee deposit transactions, and there was no way to apply when involving an order type.

4. Circus

Centralized cryptocurrency exchanges can provide better liquidity. Consumers in this trading center will issue special order information after the market prospects are harmed. Therefore, several customers bought a very large amount of property and sold it. This trading center also has a city to further enhance the liquidity on the platform.

The decentralized exchanges are relatively low, so the ordering of these trading centers will take a while. The lack of popularity is the other reason for lowly.

5. rate

Centralized data encryption exchange is faster than decentralized data encryption exchange. It is reported that the average order information for the centralized cryptocurrency exchange must be 10ms, and DEX needs at least 15 seconds to match and execute the order information.

6. Policies and regulations

Compared with decentralized exchanges, centralized data encryption exchanges are easier to control. The centralized exchanges are under control and must be permitted to operate, and the needs of the regulatory authorities are in line with the needs of the regulatory authorities.

On the other hand, decentralized exchanges are very complicated. This DEX cannot be controlled because of the blockchain technology of a relatively high -level distribution system. Therefore, even during the restriction period, decentralized exchanges can run in this region.

7.Control

The management and control of the centralized exchange depends on the service platform. In the case of decentralized data encryption exchange, customers are the control platform. This is also one of the important reasons for the reflection of the decentralized exchange.

8. Spending

Consumers at the centralized encryption exchange shall pay a certain number of trading fees to the trading center to carry out his service items. DEX does not use this type of transaction fee.

9. Management and non -hosting

The other part of the intermediate DEX and CEX summarizes the customer is preferred to have their own cryptocurrencies or to hand over it to the trading center. CEX generally stipulates that customers will host assets in his hands before buying and selling.

If you have your property, you will follow the ideal of self -consciousness in the field of data encryption. You have the right to control these and possessive control. But on the other hand, if there is no attention, the public key may be lost or damaged, which may cause the relevant property to not be found. The Welsh Jameshowells was inconsistently thrown away a disk drive in 2013 and lost the right to browsing 7,500 bitcoin. As of February 2022, these Bitcoin value exceeded $ 330 million. He repeatedly called on the regional House to allow him to discover his garbage disposal field, but he has not succeeded.

FAQs

What is the decentralization of cryptocurrencies?

Cryptocurrencies are essentially decentralized currency forms. Mainly because the work required for certification trading centers is implemented by the Internet in the world from all over the world. It is difficult to impact the Internet alone on the Internet, which means that all the Internet has no leadership interviews. Decentralization is the other end of the centralized coin, such as Australian dollars or US dollars, and government departments have maintained monopoly.

What is the difference between centralization and decentralized cryptocurrencies?

Some cryptocurrencies are more decentralized than other cryptocurrencies. Centralized cryptocurrencies are likely to lack decentralized rectification, which means that only a few people can manipulate the future development of the currency. Centralized stablecoin, such as USDC or USDT, maintains a lot of cash quasi -currency storage under the chain to ensure that its coins are worth 1 US dollar from beginning to end.

What is a centralized cryptocurrency exchange?

The centralized cryptocurrency exchange is a website that maintains a maintenance order book and stores and stores in its own fresh -keeping library. Examples on the centralized platform include Coinbase, Binance and Kraken. Decentralized cryptocurrency exchanges (DEX) are an agreement for exchange coins that will not control your funds. DEX is completely operated in script production and decentralized rectification in computers. Management decision -making is not made by enterprises and management.

Before purchasing and transaction cryptocurrencies, the most important thing is to know the type of cryptocurrency trading center. The selection of cryptocurrency exchanges lies in the personal preferences of data crypto customers. Although many customers love centralized data encryption exchanges because of their audiences, speeds and functions, some data encrypted enthusiasts choose decentralized data encryption exchanges due to their reliability and zero transaction fees. Make a choice based on the application and functions you want.