In cryptocurrency trading, there are three main forms of exchange: centralized, decentralized, and hybrid. The details you need to know are covered here.
People can exchange cash into cryptocurrencies through a cryptocurrency exchange web-service. In most cases, exchanges are focused on providing services for converting cryptocurrencies such as Bitcoin. Store your cryptocurrency if you trade BTC. You’ll have to keep your money on the exchange to access it. Buying cryptocurrency to hold for the long haul, for example, requires a Bitcoin wallet.
Current exchanges come in three flavors: centralized or CEX, decentralized or DEX, and hybrid. Let’s take a look at each of them, their pros and cons.
Centralized exchanges
A centralized cryptocurrency exchange, or CEX, is kind of like a stock exchange. Buyers and sellers meet on the exchange and the exchange acts as a middleman. When it comes to crypto, “centralization” means trusting someone else with your money. One of the biggest issues with centralized cryptocurrency exchanges is their vulnerability to hackers.
It acts as a trusted middleman between buyers and sellers. In these exchanges, you place a buy order, and they find a seller to match it. The exchange also finds you a buyer if you’re selling.
Decentralized Cryptocurrency Exchanges (DEX)
It’s a decentralized exchange that fixes some of the flaws of CEXs. Bitcoin exchanges stay true to their original philosophy. A DEX doesn’t have a central authority, and there’s no middleman. Peer-to-peer (P2P) trading is what decentralized exchanges allow buyers and sellers to do. Using white-label exchange solutions, you can run your own DEX.
DEXs let you trade with people you know. Cryptocurrency exchanges are more difficult to hack. It’s also easier to lock yourself out of your money. Due to lack of popularity at the moment, DEXs may have low volumes and low liquidity.
Hybrids – Different Types of Cryptocurrency Exchanges
Our final option is hybrid cryptocurrency exchanges, the next generation of crypto trading. We want to combine centralized and decentralized exchanges. These hybrid exchanges combine the liquidity and functionality of CEXs with the privacy and security of DEXs. These are the exchanges of the future for cryptocurrency trading.
In the world of crypto, hybrid exchanges combine the best of centralized and decentralized exchanges. DEXs offer privacy assurance and fast transaction speed like CEXs, but with the speed of CEXs. Qurrex and Nash are popular hybrid exchanges.