#CEXvsDEX101 Centralized vs. decentralized crypto exchanges—which should you choose?
Understanding CEX and DEX.
Are you buying, selling, or trading cryptocurrencies? You’re probably using a cryptocurrency exchange to complete your transactions. These exchanges are either centralized or decentralized—a core design choice that affects almost every part of your trading experience.
Decentralized exchanges—like the blockchain technology on which they’re built—rely on consensus mechanisms, with data distributed across users. But centralized exchanges are undeniably more accessible. Which should you choose? The decision is about trade-offs—and priorities.
Crypto exchange types: Summary table
Before deciding which type of exchange you would like to use, you’ll need to assess not only your needs, but also your personal “crypto philosophy.” For example, do you trust your crypto assets with a single entity, or are you fully on board with the distributed nature of blockchain technology? Do you plan to trade a few of the top cryptocurrencies, or would you like access to thousands? And what about privacy, security, and platform transparency?
The following table summarizes the many criteria to consider. Take a look, then keep reading for a deeper explanation of each factor to help you decide.
Controlling entity or system
A centralized exchange (CEX) is controlled by a singular group or entity, such as a privately held company or publicly traded corporation. The controlling entity is fully responsible for all aspects of the platform’s business.
A decentralized exchange (DEX) is governed by a technology protocol that enables a large group of people to participate in cryptocurrency exchange on a peer-to-peer basis. DEXs rely heavily on smart contracts as the “controlling entities” that determine how the decentralized exchange operates.
Range of crypto offerings
If you’re looking for the biggest selection of cryptocurrencies, then you’ll likely find it on a decentralized exchange. Users can buy nearly any digital token on decentralized exchanges