Cryptocurrency exchanges are platforms that make it possible to trade cryptocurrencies for other assets. Discover what is a crypto exchange and how they work.
2. Introduction
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If you are a newcomer to the crypto space looking to start investing in crypto, ‘what is
a crypto exchange?’ is a question you might have. As you may gather from the title,
what are crypto exchanges are platforms that allow users to buy, sell, and store
cryptocurrency.
If you’re still confused as to what is a crypto exchange, in this post we try to answer
your query in detail, and also go over how do crypto exchanges work.
3. What are Cryptocurrency Exchanges?
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A cryptocurrency exchange is a bridge between fiat currency and crypto assets. The medium lets
users purchase or sell crypto assets using their fiat currency, or they can also exchange one
cryptocurrency for another.
A cryptocurrency exchange works to provide smooth operations in terms of investing and trading in
cryptocurrency, along with high levels of accessibility and security. Different types of crypto
exchanges may offer helpful features like price discovery, moving average charts, and other tools to
help with crypto trades.
4. Different Types of Crypto Exchanges
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Depending on the types of crypto exchanges, the platforms may offer buying and selling of crypto
only, or some may even offer other products and services related to blockchain and the crypto world.
Users must understand the functioning of different crypto exchanges to choose the right one for their
purpose.
Based on their functionalities, these are the types of crypto exchanges:
Centralized Exchanges
Centralized crypto exchanges are platforms that are administered by a central authority. These
exchanges usually charge higher transaction fees than decentralized exchanges to carry out smooth
transactions and proper trading activities.
5. Decentralized Exchanges
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Decentralized exchanges are not controlled by any authority. These platforms are open source and
thus allow complete transparency to the users regarding trades carried out.
Traders sometimes lock funds on decentralized exchanges to provide a liquidity pool for others to
exchange crypto through.
Global Crypto Exchanges
Several exchanges have grown in size and are now being used globally. They provide advanced
trading options to the users and have nearly every important cryptocurrency listed. Binance is a good
example of global crypto exchanges.
