Unlike a fiat currency, cryptocurrency has exchanges where investors can trade digital coins. A cryptocurrency exchange refers to the online platform where various types of cryptocurrency conversions take place. It is the most popular way of buying digital assets nowadays.
This article provides you with the basic variations that will help you choose a suitable exchange and the detailed pros and cons of each service.
Cryptocurrency Exchange Definition
Cryptocurrency exchanges are the prime sources of digital assets where cryptos are traded for other crypto or traditional currencies. There are two types of cryptocurrency exchanges:
- Centralized cryptocurrency exchange (CEX)
- Decentralized cryptocurrency exchange (DEX)
What Is a CEX?
A CEX is a type of platform where cryptocurrency trading is done by a third party. This is one of the most popular ways to exchange coins.
Advantages
- A CEX is User-Friendly: Rookie traders find this platform quite comfortable for trading.
- A CEX is Highly Reliable: It performs fast transitioning, stores your assets, and also allows you to recover funds if you forget your password.
Disadvantages
- Risk of Hacking: Exchanges store your private keys. As a result, hacking risks are high.
- Higher Fees: It is quite expensive to both withdraw and deposit currencies.
Below is a sample of such a platform.
Coinbase
Coinbase is one of the most popular platforms in the CEX category. It makes money by charging fees on every purchase and sale.
Pros
- You can choose from a fine variety of altcoins.
- It offers a highly simplistic user interface.
- It provides a higher level of liquidity.
Cons
- The fee structure is quite expensive unless you use Coinbase Pro.
- Wallet keys are beyond the user’s control.
- Other exchanges have more altcoin options.
What is a DEX?
A DEX allows for direct interaction between online currency sellers and buyers. Hence, the need for a third party comes to naught for a decentralized currency converter.
Advantages
- Hacking: The hacking risks are quite low.
- Market Manipulation: Since the transactions take place directly, market manipulation is not possible.
- Privacy: It allows you to keep your identity a secret. For instance, Godex provides 100% privacy.
Disadvantages
- Liquidity: There are lower liquidity issues.
- No Fiat: A DEX does not allow fiat payments.
- Wallet Keys: The keys of the crypto wallets are difficult to remember.
Below you can familiarize yourself with one of these exchanges.
Godex
Godex.io is an online currency exchange platform that allows you to swiftly and privately swap between cryptocurrencies. It does not require registration, so starting to trade is very easy.
Pros
- It offers the largest variety of cryptocurrencies to start trading.
- You can place as many orders as you want to.
- The speed of transactions is very high.
- Since the transactions are between buyers and sellers, they have full control over their crypto wallets.
Cons
- Currently, Godex does not support fiat currencies.
Conclusion
So, the choice is yours. If you want a third party to monitor the transaction and secure the assets, then your best option would be CEX platforms like Coinbase. But, if you feel uncomfortable with a third party, we recommend a DEX. Godex.io is a DEX crypto converter that allows P2P online exchange in a better way with privacy and without any third parties.
