Well it took me a while to understand the difference between this two exchanges, and I know there are still a lot of people that do not understand what exactly each one stands for, well I am going to do my best to help you understand.
WHAT IS AN EXCHANGE:- An exchange is a platform where crypto or digital currencies can be traded for other cryptocurrencies or fiat on some exchanges.
WHAT IS A CENTRALIZED EXCHANGE? This is a type of exchange that is owned and controlled by its owners,users have little control of how the exchange runs its activities. On centralized exchanges data and your assets are stored in a centralized manner of storage. Centralized manner of storage when it comes to security means details and passwords are saved on the platform. When you sign up on a centralized exhange you get to choose a username and password which every other person will choose as well .Examples of centralized exchanges are your well known Binance, kucoin.
WHAT IS A DECENTRALIZED EXCHANGE?:- This is also an exchange, but this time almost opposite in operation when compared to centralized exchanges, on decentralized exchanges, it is all about the user and his assets and trades. On decentralized exchanges users have lesser barriers that is experienced on centralized exchanges due to administration control. On decentralized exchanges data and assets are stored in a decentralized manner of storage, when i mean decentralized, your data is not in any system or mass storage system . Everyone possess a private key or group of scrambled words known as memoric phrase.Examples are wavesdex,forkdelta,idex
BENEFITS OF A CENTRALIZED EXCHANGE
- Centralized exchanges currently have been known to posses much more liquidity than decentralized exchanges
- When one is a swing trader and in search of profits,its better to do so on a centralized exchange currently.
- Users friendly interface
- Good technical advancements
DISADVANTAGES OF CENTRALIZED EXCHANGES
- Expensive listing fees:- Listing on a huge centralized exchange can really be a pain
- Huge transaction charges:- Because this exchanges are administered, and the owners love profits, they make transaction fees huge and make life uneasy for traders.
- Security :- When a centralized exchange is hacked, hackers can make do with details of so many users, and steal assets with lots of worth.
- Downtime and maintenance:- when centralized exchanges feel like, they run scheduled maintenance at times without the consent of their users. This can be so frustrating as it leads to panic on the users and also leaves them handicapped as they cannot trade their assets .
BENEFITS OF DECENTRALIZED EXCHANGES
- lowered cost of transaction
- Huge security as you and you alone hold the key to your wallet
- More flexibility
- Listing most times is free
- Gets rid of the middleman function
DISADVANTAGES OF DECENTRALIZED EXCHANGES
- Poor liquidity:- At times when you keep a sell order, it may take hours if not days to get filled . Which makes people dump on already available buy orders .Listing on current decentralized exchanges can kill a project based on how the market is currently .
- Poor or confusing interface
- Little or lesser technological advancements when compared to centralized exchanges
- Not good for professional trading
I hope you now understand both exchanges?,well personally I love both exchanges, but when it comes to the cryptocurrencies and its mode of operation, I feel decentralized exchanges are the future, only needs a few advancements and some time to outshine these greedy centralized exchanges. What is your take? What do you think is the exchange for the future? Decentralized or centralized exchanges?
Topic: Centralized and Decentralized exchanges. (Read 73 times)
Jump to: