Crypto Face is a popular online trader who has spoken extensively on various types of cryptocurrency exchanges.
Crypto exchanges allow traders to buy, sell and convert cryptocurrency-based instruments. They are necessary for digital assets to be traded at the scale they are today, offering many options to consumers. There are centralized exchanges (CEX) and decentralized exchanges (DEX), each with their own benefits and drawbacks.
“The main benefits of centralized exchanges such as Coinbase and Binance are that they tend to provide smoother user experiences, better regulation and compliance, better customer support, faster transactions and higher trading liquidity,” says Crypto Face.
“The benefits of decentralized exchanges such as Uniswap are that they allow peer-to-peer trading without the need for a centralized authority as well as better privacy and security at the cost of having a steeper learning curve, slower transaction speeds and lower trading liquidity.”
One main concern of crypto exchanges is the potential for hacking. Centralized exchanges are more at risk due to all the funds being held in one centralized place while decentralized exchanges are more hack-resistant.
Regulation is another large concern for crypto traders. Centralized exchanges are forced to adhere more closely to KYC (Know Your Customer) laws while decentralized exchanges have traditionally gotten away with allowing anonymous transactions.
Overall there are benefits and drawbacks to both types of exchange. Due to the uncertainty around the future of decentralized finance, this has been a hotly contended debate for many years in the cryptocurrency space. Crypto Face recommends that you do your own research into each exchange, view your country’s laws and regulations and formulate a decision for yourself.
“It’s up to you whether you want a more traditional, user-friendly experience or wish to delve into the realm of DeFi.”