#CEXvsDEX101
🔄 CEX vs DEX 101: Understanding the Basics
🏢 What is a CEX (Centralized Exchange)?
A Centralized Exchange (CEX) is a platform operated by a centralized company or organization that facilitates the trading of cryptocurrencies. Examples include Binance, Coinbase, Kraken, and KuCoin.
🔑 Key Features:
Custodial: The exchange holds your private keys and crypto assets.
Order Book Model: Uses an internal order book to match buyers and sellers.
Fiat Support: Allows trading between crypto and fiat (USD, EUR, etc.).
Regulation: Usually complies with local financial regulations, including KYC/AML.
✅ Pros:
User-Friendly: Great for beginners due to intuitive interfaces.
High Liquidity: CEXs usually have deeper liquidity pools.
Fast Transactions: Trades are quick because they happen off-chain.
Fiat On-Ramps: Easy to buy crypto using traditional banking methods.
Customer Support: Offers help desks and support services.
❌ Cons:
Custodial Risk: The exchange controls your funds — “Not your keys, not your coins.”
Hacking Risk: Centralized platforms are prime targets for cyberattacks.
Privacy Concerns: Users must go through identity verification (KYC).
Censorship: Can freeze accounts or deny service due to regulations or company policy.
🌐 What is a DEX (Decentralized Exchange)?
A Decentralized Exchange (DEX) is a platform that enables peer-to-peer crypto transactions without the need for a central authority. Examples include Uniswap, SushiSwap, PancakeSwap, dYdX, and Curve.
🔑 Key Features:
Non-Custodial: You retain control of your private keys.
Smart Contracts: Trades are executed via smart contracts on a blockchain.
No KYC: Generally doesn’t require identity verification.
Token Variety: Supports many tokens, including newly launched ones.
✅ Pros:
Full Control: You own your keys and your crypto.
Privacy: No need for KYC; you can trade anonymously.
Resistance to Censorship: Harder for governments or companies to block access.
Open Access: Anyone with a crypto wallet can participate.
