The main difference between centralized and decentralized trading platforms lies in the structure of operations and control over assets. Here are the main differences:
1. Centralized Trading Platforms (CEX - Centralized Exchange)
- *Structure*: Rely on centralized servers managed by a specific company or organization.
- *Control*: Users do not have full control over their assets, as they are stored in the company’s wallets.
- *Security*: Depend on the security of the central servers and may be susceptible to hacks.
- *Fees*: Often charge fees on transactions and trades.
- *Speed and Performance*: Typically faster in executing trades due to the centralized architecture.
- *Examples*: Binance, Coinbase.
2. Decentralized Trading Platforms (DEX - Decentralized Exchange)
- *Structure*: Operate on blockchain networks and use smart contracts to execute trades.
- *Control*: Users maintain full control over their assets, as trading is done directly from their wallets.
- *Security*: Depend on the security of the blockchain network and smart contracts, reducing the risks of central hacks.
- *Fees*: Fees may be lower compared to centralized platforms, but depend on blockchain network fees.
- *Speed and Performance*: May be slower in executing trades due to the nature of the networks.