#CEXvsDEX101 CEX vs DEX 101
Understanding the Basics of Centralized and Decentralized Exchanges
๐น What is a CEX (Centralized Exchange)?
A Centralized Exchange is a platform operated by a centralized company or entity that facilitates the buying, selling, and trading of cryptocurrencies.
Examples: Binance, Coinbase, Kraken
โ Pros:
User-Friendly: Easy to use, especially for beginners.
High Liquidity: More users means faster trades and tighter spreads.
Fiat On-Ramps: Supports deposits/withdrawals in traditional currencies (USD, EUR, etc.).
Advanced Tools: Charts, leverage, order types, etc.
โ Cons:
Custodial: You donโt control your private keys. โNot your keys, not your crypto.โ
Vulnerable to Hacks: Centralized databases can be targeted.
Regulatory Risk: Can freeze funds or delist tokens due to regulations.
๐ธ What is a DEX (Decentralized Exchange)?
A Decentralized Exchange is a peer-to-peer platform that allows users to trade crypto directly from their wallets using smart contracts.
Examples: Uniswap, PancakeSwap, dYdX
โ Pros:
Non-Custodial: You keep control of your funds.
Permissionless: Anyone can list a token or trade.
Privacy: No KYC/AML in most cases.
โ Cons:
Lower Liquidity: Especially for lesser-known tokens.
More Complex UI: Can be tricky for new users.
Gas Fees: Transactions on networks like Ethereum can be costly.
Limited Fiat Options: No direct access to bank accounts or cards.
๐ CEX vs DEX Comparison
Feature CEX DEX
Control of Funds Platform-controlled User-controlled (non-custodial)
Security Risk Higher (central point) Lower (distributed)
Speed & Convenience Faster, user-friendly Slower, may require more steps
Liquidity High Varies
Fiat Integration Yes Rare
Privacy Requires KYC Often anonymous
๐ง TL;DR
Use CEXs for convenience, fiat access, and professional trading tools.
Use DEXs for privacy, control, and true decentralization.
Many users use both depending on their needs.
Want a visual infographic, short video, or deeper dive (DeFi, regulation, arbitrage, etc.)? Just let me know.