Decentralized vs Centralized Exchanges: Advantages and Disadvantages
According to Cambridge University’s Global Cryptocurrency Benchmarking Study, the current number of unique active cryptocurrency wallets is estimated to be between 2.9 million and 5.8 million. At least 1,876 people are working full-time in the cryptocurrency companies. Notably, the exchanges sector has the highest number of operating entities and employs more people than any other sector in the cryptocurrency marketplace. At present time, CoinMarketCap has 212 exchanges listed. One can only imagine how many individuals are engaged in the industry. Considering today’s hype around cryptocurrencies and the exchanges that list them, we at Hacken have decided to take on an educational role in the space, as we feel it incredibly important to know the difference between centralized and decentralized crypto exchanges.
Centralized Crypto Exchanges (CCE)
Centralized exchanges are trading platforms that function like traditional brokerage or stock markets. A CCE is owned and operated by a company that maintains total control over all transactions. Users of CCEs do not have access to the private keys of their exchange account’s wallets. This puts all of user’s trust in the hands of the exchange operators, as transactions can only be made through the mechanisms provided and approved by a central authority.
List of some famous CCE:
Decentralized Cryptocurrency Exchanges (DEX)
Much like cryptocurrencies, no companies operate DEX, as they are utilizing blockchain (distributed ledger) technology. In this way a DEX does not hold customers’ funds, positions, or information, and only serves as a matching and routing layer for trade orders.
List of some famous DEX:
So, which is better?
Comparison of features of CCE and DEXv
Hacken Content Manager. Travelling, surfing, writing, and blockchain loving.