Centralized exchanges are very popular among people who want to sell or trade cryptos. They enable traders to use a secure and intimidating interface to perform their trades. The trading platforms operate similarly to traditional stock markets or brokerage markets.
In a centralized exchange, the company that owns it will have total control over the transactions. CCE users don’t have access to their exchange account wallet private keys. Therefore, the exchange operators are the ones in control of everything, and users have to trust them with their funds. But centralized exchanges have a physical location, and they are regulated, meaning that users will be able to sue the company when something bad happens. They can also hire lawyers for centralized exchanges to help them with the case.
Centralized exchanges have their pros and cons. So, before using one or choosing a centralized exchange instead of a decentralized one, you should know the advantages and disadvantages. Keep on reading to find out what to expect.
Centralized cryptocurrency exchanges are private companies offering crypto trading. Thanks to them, investors are able to buy cryptocurrency with fiat currency and sell it. Of course, they also have the chance to exchange a cryptocurrency for another.
Trading can occur smoothly, on a platform with an organized interface. The companies hosting the exchanges are licensed and have their own employees. But this is only the surface: centralized crypto exchanges have many benefits.
Without a centralized agency, the transactions can be quite risky. Many scandals had to be endured by crypto investors, so conservative investors want to make sure that they work with a reputable company to protect them from such scandals. Therefore, centralized exchanges are the saviors in this situation because they are regulated by the government and have a physical location.
As you can imagine, centralized exchanges also have their fair share of downsides. Here is what you need to know:
Decentralized exchanges use peer-to-peer transactions, which can be done anonymously. Therefore, you can send money to anyone for any reason, something that is not possible with centralized exchanges.
Centralized exchanges have more rules, and they are easier to use for beginners. On top of that, their transactions are quite fast too. But they have some downsides as well, such as having less variety, less privacy, and being at risk of bankruptcy. It is up to you to analyze the pros and cons and decide if you want to go with a centralized exchange.