Centralized Exchange and Decentralized Exchange

What is a Centralized Exchange?

Centralized exchanges can be used to conduct fiat-to-crypto trades (or vice versa). They can also be used to conduct trades between cryptocurrencies. While this appears to cover all possible transaction types, there is still room for another type of cryptocurrency exchange.Centralized cryptocurrency exchanges serve as a go-between for buyers and sellers. Centralized exchanges are user-friendly and reliable.

Examples of Centralized Exchanges

• Binance
• Huobi Global
• MEXC
• Bitfinex
• Kucoin
• Coinbase

What is a Decentralized Exchange?

Decentralized cryptocurrency exchanges (DEX) enable users to conduct peer-to-peer transactions without the involvement of a third party or intermediary. Some users prefer decentralized exchanges due to some of the issues associated with centralized exchanges. Decentralized exchanges provide anonymity, reduce the risk of hacking, and prevent market manipulation.

Examples of Decentralized Exchanges

• Uniswap
• PancakeSwap
• 1inch Exchange
• SushiSwap
• Curve Finance
• Ox Protocol

References

[1] Investopedia, 'What Are Centralized Cryptocurrency Exchanges?' (online, 2022) <https://www.investopedia.com/tech/what-are-centralized-cryptocurrency-exchanges/>

[2] Corporate Finance Institute, 'Cryptocurrency Exchanges' (online, 2022) <https://corporatefinanceinstitute.com/resources/knowledge/other/cryptocurrency-exchanges/>