What is a CEX (Centralized Exchange)?
A CEX is a company-run trading platform where users can buy, sell, or trade crypto.
✅ Examples:
Binance
Coinbase
Kraken
KuCoin
⚙️ How it works:
You create an account.
Deposit money or crypto.
The platform matches you with a buyer/seller.
The platform controls your funds until you withdraw.
🕸️ What is a DEX (Decentralized Exchange)?
A DEX is a blockchain-based platform that lets you trade crypto directly from your wallet, without a middleman.
⚙️ How it works:
Connect your crypto wallet (e.g., MetaMask).
Trade directly from your wallet.
Uses smart contracts (no middleman).
🥊 CEX vs DEX: Feature Comparison
Feature CEX DEX
Control of Funds Exchange holds your crypto You hold your crypto (non-custodial)
Ease of Use User-friendly (great for beginners) Can be confusing for beginners
Security Vulnerable to hacks, but usually insured Safer if you manage your wallet well
Speed Fast (central servers) Slower (depends on blockchain)
Fees May have trading & withdrawal fees Usually lower fees, but network gas
KYC/ID Required Yes (you must verify identity) No (just a wallet)
Supported Assets Limited to what the exchange lists Almost any token on that blockchain
Fiat Support Yes (buy with cash, credit cards) No direct fiat purchases
🧠 When to Use CEX vs DEX?
✅ Use a CEX if:
You're a beginner.
You want to buy crypto using fiat (USD, EUR).
You value convenience and support.
You want access to derivatives, margin trading, or advanced tools.
✅ Use a DEX if:
You want full control of your funds (DeFi mindset).
You’re trading newer or obscure tokens.
You want to stay anonymous (no KYC).
You’re comfortable using crypto wallets.
🚨 Risks to Know
CEX Risks:
Custody risk (you don't own your keys).
Possible regulatory freezes or restrictions.
Centralized hacks (e.g., FTX, Mt. Gox).
DEX Risks:
Scam tokens or fake listings.
Smart contract vulnerabilities.
Need to pay gas fees (sometimes high on Ethereum).
No support team to help you if something goes wrong.