Steemit Crypto Academy Contest / S1W2 – Reviewing Centralized Exchanges by @whitestallion.

• Discuss briefly centralized exchanges and their benefits to crypto users?

It is noteworthy that decentralized exchanges charge lower fees for transactions when compared to centralized however, the latter has proven to be easy to use and it is more secure. We all know how stock exchanges operate in the traditional finance space in that regard, centralized exchanges known as CEX are bodies of organizations that orchestrate, monitor, and coordinate the trading of crypto assets. Exchanges operate like traditional marketplaces.

These projects have proven to be useful when a large number of people may be simultaneously desiring to sell or buy assets.

The relatable experience sources include the New York Stock Exchange furthermore, popular exchange platforms such as Binance and Coinbase are a perfect example of CEX. In addition, CEX offers some features that make trading in the marketplace easy; a compendium of open and sell orders, price, and volumes, buyers and sellers, etc. Factually, current market prices are listed and announcements are made as prices also fall.

In like manner, they also make provisions for custodial operations such that users can make deposits of their assets before they actively trade. Based on my research, as of February 2022, they were more numbers of centralized exchanges than decentralized exchanges. Although Binance launched its decentralized exchange, we have knowledge of her being the largest crypto exchange in the world. For your information, the centralized Binance exchange platform processes about $20 billion in transactions daily. That is a lot!

Centralized exchange platforms are available for online investors to buy and sell digital assets. The concept of crypto centralized exchange works in a way that there always is a middle man. The sellers and buyers on the platform trust the middleman to conduct the transactions legitimately. Let us assume that you have $50,000 and you need to keep it safe. The first option that will come to your mind is to visit the traditional bank and stash it there. The bank serves as a medium that will ensure your money is watched and managed. This, you cannot do for yourself. This analogy explains how centralized exchanges operate.

CEX is important to crypto users in a variety of ways. They could be used to carry out trades from crypto to fiat or from fiat to crypto. Furthermore, this enables traders to pair two crypto assets. I love centralized exchanges as they provide users with the opportunity to pair Cryptocurrency and fiat. Whether you are an investor or an amateur looking to step into the crypto space, centralized exchanges are the best option for you. Centralized crypto exchange platforms are user-friendly and have a good user experience. You can log in to your account and see information such as your current holdings, your balance, and so on. In like manner, these CEX platforms make provisions for extra security layers and reliability.

• What do you look out for when choosing an exchange to trade your crypto asset?

Trading Cryptocurrency has its risk. It is not just the risk involved in trading these tokens but, their volatile nature and security factors can make you lose your portfolio. The first thing I keep in mind in my search for an exchange platform is that scams and fraud are out there. Exchanges stand a great chance to fold up. In response to this, I search for an address that is related to the exchange to make it more trustworthy. I also take into cognizance the level of difficulty I face while creating the account. This means it won’t be easy for the platform to overcome malicious attacks.

Furthermore, I ensure I consider the fees and the currency pairs available on the platform. Almost all networks will demand some fee for your transactions; the fee size may vary concerning trading volume. So I ensure I check the amount of transaction fee I have to pay for using the platform. Platforms such as Coinbase may not be able to offer some altcoins for users thus, I check the available tokens and assets. In summary, I look out for the pricing of assets, how I can deposit and withdraw assets, the security of the platform, and the kinds of assets supported in the platform.

• Review Your Favorite Centralized Exchange and Explain Its Features

For the record, Binance is the largest centralized exchange platform globally. Binance is a compound word for 'Binary Finance', and it serves the duality of purposes; a Cryptocurrency and exchange platform. Binance attempts to serve the purposes of crypto geeks, it has done justice in researching gaps in the services offered by other platforms and has filled them. In retrospect, I stated that a centralized exchange platform is a neutral third-party exchange that aims to assist operations such as crypto trade and transfers.

Binance was created sometime in 2017 and it has become a monster amongst crypto exchange platforms. Changpeng Zhao utilized his expertise in the creation of financial software to orchestrate the leading crypto exchange platform currently. Although it has faced a few challenges in dealing with regulatory laws with the government, its flag is still flying. Binance has relocated its headquarters several times now. It initially moved from China to Japan, and Taiwan however, Binance currently has no headquarters just like Bitcoin.

Binance offers a variety of cryptocurrencies that are viable to be traded and exchanged. It offers about 5000 cryptocurrencies and more than 1000 trading pairs. One other juicy thing about this centralized exchange platform is the fact that it offers low trading fees for transactions. You could access the services provided by the site by downloading the app or accessing the site. I will proceed to give a highlight of its features

The screenshot above is the homepage of Binance’s site. It contains icons that will enable you to log in to your account and register a new account if you don't have one already. You can also change your language from English to whatnot. Furthermore, you can see written on the page, certain information about the exchange platform; $76 billion trading volume, 600 cryptocurrencies listed, 90 million active users, and so on.

Going forward, you can choose gateways you would love to use to fund your Binance account. The first on the list is the Bank Deposit option, Debit/ Credit card option and what have you.

Up next is our Market icon. This gives us an overview of cryptocurrencies with their prices. You can make inquiries about projects here, their market capitalization, and whether it is in bearish or bullish motions in the market. Furthermore, you could ascertain about NFT projects, spot and features market, new projects, metaverse, Defi, and so on.

The trading feature grants you the opportunity to carry out spot trading, margin profit trading, peer-to-peer operations, swap farming, fan token, and so on. This is basically where traders can concurrently carry out trading operations.

Let me not bore you with the tinny-tiny details of how the CEX operates however, the screenshot above displays a newly registered Binance account tailored towards permitting the average user to carry out financial operations encompassing the Cryptocurrency and Non-fungible ecosystem.

• Is there anything about your favorite exchange you will like to be changed? Discuss

Yes, just like a coin has a head and tail face, there is always a con to a pro. Instead of that, it is common knowledge in society that people live in strata of financial ability. We have the rich, poor, and middle class. The poor may in a bid to escape poverty, desire to invest the little they have in their custody. In regards to this, Binance has a little hiccup.

There is a minimum amount stipulated for users to make investments. This may be good and bad at the same time. We deal with USDT but, folks globally have to convert their currency or whatnot to be able to invest in projects. For instance, in Nigeria, $ is almost #600. Converting the minimum amount needed to invest a dollar may be uncomfortable for some users.

The $10 minimum investment amount sounds okay for some while it doesn't for others. If this is looked upon it would be good. Furthermore, there are cases when fake merchants find their way into the platform and users lost money or get blocked. In recent times, there was legislation to end the trade and exchange of digital assets in Nigeria. This NEWS bounced around and along with the territory of Nigeria so much so, platforms that were designed to suit the prior mentioned operation backed out, bank accounts were frozen, and cases of police brutality were recorded, just to mention a few.

So certain individuals working with the government that was masquerading as peer-to-peer agents on the Binance ecosystem seized the opportunity to do damage to citizens of this country by ensuring their funds get seized, accounts blocked among other actions. I suggest that Binance designs a more effective way of running its KYC operations.

• What shortcomings do you see on centralized exchanges and how do you think user funds can be protected since we don’t have access to our wallet private keys?

I would love to address this traditionally. Using Binance as a metric, there are ways users can keep their accounts (funds) safe. Several security options were solely designed to keep your account safe. First of all, the phone number verification model ensures SMS is sent to your phone number in your attempt to log in to your account. In addition to this, another verification message/code will be sent to the email you provided during registration. These dual verification methods will ensure nobody remotely gains access to your account. So you will need your password, SMS verification, and the email verification as 2FA to allow you access to your account.

Users can keep their funds safe by backing up their signup password in cloud spaces or can even decide to store the keys in offline storage such as hard drives or write them on paper.

One of the limitations of CEX is the existence of intermediaries. This affects the smooth operation of finance transactions. P2P operations on Binance are populated with a myriad of vendors with vast rates of exchange from USDT to Nigerian Naira for instance.

Furthermore, the centralized nature of these platforms makes it such that users have minimal control and custody of their assets. Furthermore, some of these CEOs have terrible KYC steps. This may frustrate the experiences users have in this space.

Conclusion

In conclusion to all I've discussed, both centralized and decentralized exchanges are designed to make financial operations easier. We can always vacillate between the two platforms to perform our enterprise. The end of the story is, we can use DEX and CEX to carry out our transactions.

All the images used in this post were extracted from binance unless otherwise stated.