A centralized exchange (CEX) is a cryptocurrency exchange run by a central authority. This implies that the exchange controls and administers all transactions, and users must rely on the exchange to properly handle their funds and perform deals. To establish an account, customers must go through a KYC (know your customer) process, which entails supplying personal information and identity papers.
Users deposit their digital assets into the exchange’s wallets on a centralized exchange. The exchange then connects buyers and sellers to complete deals. Centralized exchanges often have more enormous trading volumes and more trading pairs than decentralized exchanges, and they frequently include more complex trading tools like margin trading and stop-loss orders.
Furthermore, centralized exchanges are frequently more regulated and provide more security precautions than decentralized exchanges.
Centralized Exchanges’ Drawbacks
However, the concentration of these exchanges has several drawbacks. Users are exposed to hacking and other sorts of theft since they commit their possessions to the exchange. Furthermore, centralized exchanges are regulated and may be vulnerable to government interference or even confiscation.
Overall, centralized exchanges are a popular alternative for people seeking a more conventional trading experience, as they provide a more comprehensive range of currencies, better trading capabilities, and enhanced security. However, before selecting an exchange, you should always research and evaluate aspects like security, fees, and available currencies.
7 Best Centralized Exchanges (CEX) In 2023 With Pros & Cons
Please keep in mind that this is not an exhaustive list. Before deciding on an exchange, conducting your research and evaluating issues such as security, fees, and available currencies is vital.
Also, restrictions and exchange availability may differ depending on the region. Remember that the crypto market is very volatile, so today’s best exchange may not be the best tomorrow.