#CEXvsDEX101 In the world of cryptocurrency, understanding the difference between a Centralized Exchange (CEX) and a Decentralized Exchange (DEX) is fundamental. Here's a "101" breakdown:

**Centralized Exchanges (CEX)**

Imagine a traditional bank or stock exchange, but for crypto.

* **Definition:** CEXs are platforms operated by a single, central company that acts as a middleman for all trades.

* **How they work:** When you deposit crypto on a CEX, you essentially give them control over your funds. They hold your private keys in their wallets, and you trade using an internal ledger on their system.

* **Pros:**

* **User-Friendly:** Generally have intuitive interfaces, easy onboarding processes, and familiar trading features.

* **Liquidity:** Often have very high trading volumes, meaning it's easier and faster to buy or sell assets at stable prices.

* **Fiat On/Off-Ramps:** Most CEXs allow you to directly convert traditional currency (like USD, EUR) to crypto and vice-versa.

* **Customer Support:** Provide dedicated customer service to help with issues.

* **Advanced Features:** Offer features like stop-loss orders, margin trading, and staking.

* **Cons:**

* **Custodial Risk:** You don't truly own your crypto because the exchange holds your private keys. This means your funds are vulnerable if the exchange is hacked, goes bankrupt, or faces regulatory issues. (e.g., "Not your keys, not your crypto").

* **Security Concerns:** Centralized honeypots are attractive targets for hackers.

* **KYC/AML:** Require Know Your Customer (KYC) and Anti-Money Laundering (AML) checks, meaning you have to provide personal identification. This impacts privacy.

* **Censorship Risk:** Transactions can potentially be frozen or accounts blocked by the exchange.

**Decentralized Exchanges (DEX)**

Think of a peer-to-peer marketplace where you control your own assets.

* **Definition:** DEXs are peer-to-peer marketplaces where cryptocurrency transactions occur directly between traders without an intermediary. They are built on blockchain technology.