What Are Cryptocurrency Exchanges: Top 10 Crypto Exchanges In The World

To begin crypto trading, you must sign up for a cryptocurrency exchange. A crypto exchange is an online marketplace where you can buy, sell and trade your cryptocurrencies and digital assets. Here are two significant types of crypto exchanges:

Centralized Cryptocurrency Exchange (CEX)

In Centralized cryptocurrency exchanges, buyers and sellers trust an intermediary, a third party, to conduct their cryptocurrency transactions. It is like the banking setup, where users send and receive money and trust banks to verify their transactions and keep their money safe. These centralized crypto exchanges charge a minimal amount of transaction fees.

Before signing up on a CEX, you will need to go through several security checks to verify your identity and KYC (Know Your Customer), Anti Money Laundering (AML) and Counter-Terrorism Financing). These procedures are fundamental to preventing fraud and criminal activities. Once you have verified your identity, you can deposit your fund to the centralized crypto exchange via credit card or debit card, wire transfer, or Account Credit Facility (ACH) transfer, or you can deposit your cryptocurrency, such as Bitcoin and Ethereum, to begin the trading. Exchanges keep their users’ funds in a wallet, either offline in hardware, called “cold storage” wallets, or online in “hot wallets.” Some exchanges also keep multi-signature wallets, which require signing several entities to access your funds.

Advantages of CEX

• Easy to Operate

Centralized Cryptocurrency Exchanges are easy to use. They offer a simple way of trading and investing, which is very convenient for a beginner to understand. CEX users must log in to their accounts, check their balance sheets and facilitate transactions through websites and applications. Furthermore, they offer excellent transaction speed.

• Authentic

Centralized exchanges are very secure and reliable. Once you have logged into your account and done the verification process, making the transactions much more effortless. In addition, as the funds are in the custody of the exchange, you do not have to worry about the safety of your funds.

Disadvantages of CEX

• Bankruptcy or Financial Crisis

As the users’ funds are in the custody of the centralized exchange, which is a loan from the investor that the exchange has taken, it is at risk of bankruptcy. So there is a risk of losing all your money in such a situation.

• Less Privacy

To sign up for a centralized exchange, users must have to do the identity verification process in which they have to reveal some of their information.

Decentralized Cryptocurrency Exchange (DEX)

Decentralized Cryptocurrency Exchanges or DEX do not involve intermediaries or third parties to verify transactions. Instead, DEX facilitates transactions through a self-executing arrangement written in codes called “Smart Contracts”. The concept behind the decentralized exchange is to build a “trustless environment” and entirely rely on Blockchain Technology.

Unlike centralized crypto exchanges, DEX does not allow exchanges between fiat currency and cryptocurrency — instead, you can trade your crypto tokens in exchange for other crypto tokens. Centralized exchanges decide the value of the tokens and maintain it in an “order book”. In contrast, decentralized exchanges determine the prices of the crypto token based on smart contracts which algorithmically lay out the cryptocurrency prices and use a liquidity pool in which investors can lock their cryptocurrencies to get interest-like rewards to smooth the trades.

Advantages of DEX

• Ownership

In decentralized exchanges, users do not need to provide custody of their funds to a third party. Instead, they directly have access to their funds. Therefore, there is no risk of hacking, fraud or bankruptcy.

• Variety

DEX offers more cryptocurrency than centralized exchanges as they focus on security and do not list other tokens on their exchanges. At the same time, you can get a lot more tokens on decentralized exchanges.

Disadvantages of DEX

• Complex to Use

Decentralized cryptocurrency exchanges are more complex to use than centralized exchanges as the user has to remember the keys and passwords to their crypto wallets; otherwise, they will lose their crypto funds permanently. Also, it takes time for the user to understand the working process of the exchanges.

• No Fiat Payments

Decentalized exchanges are suitable for people who want to switch their cryptocurrencies, as it only allows the trading of cryptos. Unfortunately, buying and selling cryptos in exchange for fiat is not permitted on DEX, which makes it inaccessible for the beginners.

TOP 10 CRYPTOCURRENCY EXCHANGES — CENTRALIZED

1. Binance
2. Coinbase Exchange
3. Kraken
4. KuCoin
5. Binnace.US
6. Bitfinex
7. Coincheck
8. Bitstamp
9. bitFlyer
10. Gemini

TOP 10 CRYPTOCURRENCY EXCHANGES — DECENTRALIZED

1. Uniswap (V3)
2. dYdX
3. Curve Finance
4. Kine Protocol
5. DODO (Ethereum)
6. PancakeSwap (V2)
7. ApolloX DeX
8. Uniswap (V2)
9. Uniswap (V3) (Polygon)
10. Perpetual Protocol

The above-given rankings are from CoinMarketCap.