#CEXvsDEX101

A Beginner's Guide to Crypto Exchanges

Centralized Exchanges (CEX)

**What they are:** Traditional exchange platforms operated by companies (e.g., Binance, Coinbase)

**Key characteristics:**

- Custodial (they hold your crypto keys)

- Require KYC/identity verification

- Offer fiat on/off ramps (USD, EUR deposits)

- Higher liquidity for trading pairs

- Advanced trading features (margin, futures)

- Customer support available

**Pros:**

- Easier for beginners

- Faster transactions

- Better liquidity

- Fiat currency support

**Cons:**

- Vulnerable to hacks

- Subject to regulations

- Can freeze accounts

- Higher fees

## Decentralized Exchanges (DEX)

**What they are:** Peer-to-peer platforms running on blockchains (e.g., Uniswap, PancakeSwap)

**Key characteristics:**

- Non-custodial (you control your keys)

- No KYC requirements

- Crypto-to-crypto only

- Automated market makers (AMMs)

- Smart contract-based

- Community governed

**Pros:**

- No middleman

- More private

- Access to new tokens early

- Resistant to censorship

- Lower risk of exchange hacks

**Cons:**

- Steeper learning curve

- Lower liquidity for some pairs

- No fiat support

- Irreversible mistakes

- Smart contract risks

Which Should You Use?

**Choose CEX if:**

- You're new to crypto

- You want to use fiat currency

- You need high liquidity

- You want advanced trading tools

**Choose DEX if:**

- You value privacy

- You want full control of assets

- You're trading smaller altcoins

- You're comfortable with crypto wallets

Many experienced traders use both - CEX for fiat on/off ramps and DEX for actual trading.