#CEXvsDEX101

CEX vs. DEX in Crypto: Key Differences*

In the cryptocurrency world, exchanges are primarily categorized as Centralized Exchanges (CEX) or Decentralized Exchanges (DEX).

**Centralized Exchanges (CEX)**, like Binance or Coinbase, are run by a specific company. They act as intermediaries, holding users' funds and facilitating trades through an order book system. CEXs generally offer user-friendly interfaces, higher liquidity, faster transaction speeds, and customer support. However, users entrust their assets to the exchange, introducing counterparty risk and potential vulnerability to hacks if the exchange's security is compromised. They also often require KYC (Know Your Customer) verification.

**Decentralized Exchanges (DEX)**, such as Uniswap or PancakeSwap, operate without a central authority. Trades occur directly between users (peer-to-peer) via smart contracts on a blockchain. Users maintain custody of their own private keys and funds. DEXs offer greater anonymity, censorship resistance, and access to a wider range of new tokens. However, they can be less intuitive for beginners, may have lower liquidity for some pairs, and transaction speeds and costs are dependent on the underlying blockchain.