#CEXvsDEX101

Centralized Exchanges (CEX)

These are the traditional crypto exchanges most people know: Binance, Coinbase, Kraken, OKX — big platforms run by companies.

How they work:

A company operates the platform, holds users’ funds, and facilitates trades through their internal order books.

You deposit your crypto or fiat into your exchange account, trade on their platform, and they manage custody and security for you.

Pros:

• Easier for beginners

• High liquidity (lots of buyers and sellers)

• Advanced trading tools, spot, futures, P2P, staking, etc.

• Fast trade execution

• Customer support

Cons:

• You don’t fully control your coins (they hold your private keys)

• Can freeze withdrawals or accounts

• More vulnerable to hacks (if the exchange is attacked)

Decentralized Exchanges (DEX)

These are peer-to-peer platforms that run on blockchain networks like Uniswap, PancakeSwap, SushiSwap, dYdX.

How they work:

No central authority controls them. Users trade directly from their wallets using smart contracts, without giving custody of their assets to anyone.

Pros:

• You control your funds at all times (your wallet, your keys)

• No KYC (usually)

• Transparent, open-source systems

• Resilient to censorship and government restrictions

Cons:

• Lower liquidity for some trading pairs

• Limited trading features (no futures, sometimes no limit orders)

• Higher fees at times (depending on network traffic)

• No centralized customer support if something goes wrong

Main Difference:

• CEX = managed by a company, easy and beginner-friendly, but you give up custody.

• DEX = fully peer-to-peer, you hold your keys, but need more knowledge to use safely.

If you value ease, liquidity, and customer support → CEX.

If you value privacy, control, and decentralization → DEX.