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Difference between Centralized vs. Decentralized Cryptocurrency

To trade cryptocurrencies, you’d have to use a cryptocurrency exchange. But did you know there are two kinds of crypto exchanges? They are namely, centralized and decentralized cryptocurrency.

What is a Cryptocurrency Exchange?

Cryptocurrency is a digital or virtual currency that is secured by cryptography. Since it is secured under the cryptographic system, it is nearly impossible to counterfeit or double-spend.

A Cryptocurrency Exchange is a platform that allows users to exchange or trade different cryptocurrencies like Bitcoin, Ether, and the like.


These exchanges are mainly of two kinds:

  • Centralized
  • Decentralized


What is a Centralized Cryptocurrency Exchange? 

A centralized cryptocurrency exchange is a platform where you can buy or sell digital assets. Here, you have to trust a third party to monitor the transaction and secure the assets on behalf of the buyer and the seller. Their deals aren’t tracked on the blockchain. Such exchanges require you to submit your personal information for verification. On the other hand, if you’re a company, then you’d have to provide your corporate information to the exchange so it can verify your account.

The more details you provide to these exchanges, the higher your withdrawal quota will increase. Verified users of these platforms can contact the support team of the exchange in case of any technical error or if they lose their password.

In most cases, centralized crypto exchanges provide their users with flat pairs at stable prices. These exchanges are widely popular among cryptocurrency users, and you can easily find one of these platforms online. Some examples of centralized cryptocurrency exchanges include Binance, Coinbase, LocalBitcoins, and others.

What is a Decentralized Cryptocurrency Exchange?

A DEx or a decentralized cryptocurrency exchange is similar to a centralized one, except it doesn’t have a third party on which you can rely. All of the funds in this exchange remain stored on the blockchain.

These platforms allow peer-to-peer (P2P) trading for which it uses assets, proxy tokens, or an escrow system, unlike the IOU-based system a centralized crypto exchange uses.

Choosing either the best-decentralized exchange or centralized exchange is going to completely depend on you and your destination of success! If you are with a decentralized exchange, a higher level of responsibility is always needed to safeguard your own assets!

For more information, contactCodezeros.

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