#CEXvsDEX101 Centralized Exchanges (CEX)

These are traditional crypto exchanges that most people know: Binance, Coinbase, Kraken, OKX — large platforms operated by companies.

How they work:

The company manages the platform, holds users' funds, and facilitates trading through its internal order books.

You deposit your cryptocurrency or fiat into your exchange account, trade on their platform, and they handle the storage and security of your funds.

Advantages:

• Easier for beginners

• High liquidity (many buyers and sellers)

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

• Fast execution of trades

• Customer support

Disadvantages:

• You do not fully control your coins (they hold your private keys)

• They can freeze withdrawals or accounts

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

Decentralized Exchanges (DEX)

These are peer-to-peer trading platforms that operate on blockchain networks, such as Uniswap, PancakeSwap, SushiSwap, dYdX.

How they work:

There is no central authority controlling them. Users trade directly from their wallets using smart contracts, without transferring the storage of their assets to anyone.