CEX vs DEX: What are the differences between cryptocurrency exchanges?

Centralized and decentralized exchanges are platforms for trading cryptocurrencies.

Perhaps the most basic way to participate in Web3 is to buy or exchange crypto tokens.

To do this, a user must go to a cryptocurrency exchange, which comes in one of two forms: a centralized exchange (CEX) or a decentralized exchange (DEX).

Although both CEXs and DEXs allow users to exchange cryptocurrencies, they differ significantly in how they operate. Anyone looking to trade crypto should be aware of these differences.

What is a Centralized Exchange (CEX)?

Centralized exchanges (CEX) are cryptocurrency exchanges that monitor and facilitate the trading of cryptocurrency assets between users with the help of a centralized intermediary. Just like traditional electronic stock exchanges, CEXs use an order book system to display and match buy and sell orders from users.

What is a Decentralized Exchange (DEX)?

Decentralized exchanges are cryptocurrency exchanges where users can exchange one cryptocurrency token for another in a decentralized and non-custodial manner without centralized intermediaries. DEXs are also permissionless, meaning that anyone can use a DEX without revealing their private information.