#CEXvsDEX101

The Difference Between Centralized and Decentralized Exchanges

When talking about cryptocurrency trading, there are two main types of platforms: centralized exchanges (CEX) and decentralized exchanges (DEX). A centralized exchange like Binance or Coinbase is managed by a single entity that controls trading operations and holds funds. Users are required to create an account and verify their identity (KYC), which gives it a more organized and secure nature, but it places trust in a third party. On the other hand, decentralized exchanges like Uniswap and PancakeSwap operate without intermediaries, relying on smart contracts to enable users to trade directly from their own wallets, without the need to hand over assets to a third party.

CEXs provide higher liquidity and faster execution, but they may be susceptible to hacks or freezing of funds. DEXs, on the other hand, give users full control over their money and privacy, but they may suffer from lack of liquidity or difficulty of use for beginners. Choosing a platform depends on the user's preferences between security, privacy, and ease of use.