Dex, Cex, Popular Exchanges and Trading Cryptos - Steemit Crypto Academy Season 4 - Homework Post for Task 7

syedhuzaifa123 (59)Beginner[1,2,3,4,5,6,7,8,9,10]in SteemitCryptoAcademy • 3 years ago (edited)

HELLO EVERYONE,
Hope you all are doing well. My name is Syed Huzaifa and I intend to write about Dex, Cex, Popular Exchanges, and Trading Cryptos today. I'll be particularly focusing on Exchanges. This is Crypto Academy Season 4 Beginners' course - Task 7 homework post assigned by @imagen. Let's move on to the topic.

Homework post Task-7

Explain in your own words what an Exchange is. Differences between a Wallet and an Exchange. Mention the advantages and disadvantages of DEX and CEX. Have you used an Exchange before? tell us about your experience.

What Is An Exchange:

Starting with the literal definition of exchange used in the domain of finance.

"An exchange rate is a rate at which one currency will be exchanged for another currency."
source

In cryptocurrency, the meaning of exchange is the same as in finance/banking. In cryptocurrency exchange can be referred to as digital currency exchange(DCE) which is a digital platform where a user can exchange its assets or tokens with any other fiat currency or any other cryptocurrency. (Image source) Cryptos are being exchanged at the current rate of supply and demand. The value of cryptocurrency can fluctuate, so people use graphical data to determine whether to invest or to hold.

Increasingly in today's world, a user can buy crypto with his credit or debit card using the services offered by Crypto Exchange. Income is also generated by the user by staking their currencies. It's been on a click that exchanges can be sent to a user's cryptocurrency wallet.

There is a huge rise seen in the usage of exchanges in a couple of years, as the hype of cryptocurrencies is increasing day by day. The operation offered by the exchanges made it easy for a person to convert their funds into another cryptocurrency that is being sent to their cryptocurrency wallet through the exchange.

What Is Wallet:

A crypto wallet is a place where a user can save their private key and public keys, and also their funds which can be easily accessible. A wallet has prominent importance as it plays a key role in keeping your cryptos safe.(Image source)

Both the keys are very crucial and have to be kept safe to secure your holdings. A private key is used to make all the transactions and if you misplace your keys, there is no way back to get ownership of your tokens.

Differences between a Wallet and an Exchange

When it comes to the trading of a cryptocurrency, Crypto wallet and exchange both plays a vital role while dealing with the cryptocurrencies. Whether someone is buying or selling cryptocurrency, speculation will require both wallets and exchanges to succeed.

source

Cryptocurrency Wallet	Cryptocurrency Exchange
A cryptocurrency wallet is a program that allows a user to store all his funds secured by private keys	Cryptocurrency exchange is a website or service where a user can sell or buy cryptos or convert fiat currency into digital currency
A crypto wallet is a very sensitive program as it stores all your cryptocurrency	A crypto exchange is a less sensitive website as it only offers you the buying and selling of your tokens
A crypto wallet is referred to a software or program to store the cryptocurrency	A crypto exchange is referred to a website providing its services to exchange in currencies.

Mention the advantages and disadvantages of DEX and CEX:

Centralised Exchange(CEX):

A Centralised exchange (CEX) is a service provided for exchanging currencies that functions in an old-fashioned way. CCE is a type of exchange that is governed by a single authority or company. A centralized exchange keeps full control over the transactions. Here are some example of centralized exchange: (Image source).

Coinbase
GDAX
Kraken
Gemini

Decentralized Exchange(DEX):

Conversely, a Decentralized Exchange(DEX) is not being controlled by a single authority or company, instead, they operate by using blockchain technology. Some examples of decentralized exchanges are given below:(Image source)

Uniswap (V2)
Tokenlon
Protocol
Venus

Advantages of DEX:

The most notable advantage of DEX is that decentralized exchange offers its user high security. The risk of being hacked is approximately zero as compared to the centralized exchange.
No data is shared with the third party in the decentralized exchange during the transactions.
In a decentralized system, data is store in various servers across the world.

Disadvantages of DEX:

Decentralized exchange bound a user by limiting them to make transactions only in cryptocurrency.
The speed of transaction is much better in a centralized exchange.
The liquidity and transaction volume are great in a centralized exchange.

Advantages of CEX:

CEX allows buying and selling of cryptocurrency by fiat currencies.
Centralized offer a great speed in transactions.
Liquidity is consistently high in a centralized exchange.

disadvantages of CEX:

The risk of hacking is much higher in a centralized system.
Centralized exchange offers a high fee for transactions from the users.

Have you used an Exchange before? tell us about your experience

No, I haven't used any exchange till now.

Conclusion:

This homework explains the difference between a crypto wallet and a crypto exchange. This depicts that a wallet is used for storing cryptos and exchanges are services that provide its user buying and selling of cryptocurrency. Furthermore, today's post also contains the advantages and disadvantages of DEX and CEX. Unfortunately, I don't have any experience overusing the exchanges so I was unable to elaborate on how to use exchanges.

I hope you like today's post and learn something new. Take care, Goodbye.

Regards,
@syedhuzaifa123.

Cc:
@imagen

#academys4-intro07 #cryptoacademy #exchanges #dex #cex #blockchain #crypto