#CEXvsDEX101

Crypto exchanges are categorized into two types, centralized exertns (CEXs) and decentralized exchanges (DEXs). A centralized exchange is similar to traditional exchanges, where one entity (a centralized exchange) serves as a middleman for your trade (i.e. Binance, Coinbase, etc.). The middleman is usually fast and easy to use, and provides liquidity, but you have to trust the exchange with you assets and data.

A decentralized exchange uses smart contracts to facilitate trades (i.e. Uniswap, PancakeSwap, etc.). You trade directly from your own wallet. You don't have to sign up or give custody to a middleman. These exchanges provide greater privacy and control from a central authority, although they can also be slower and not as beginner-friendly as a centralized exchange.

Normally, exchanges have advantages and disadvantages. Centralized exchanges are great for trading quickly and executing high volume trades, while decentralized exchanges give preference to privacy and decentralized ideals. Centralized and decentralized exchanges each have opportunity costs: convenience vs. control, speed vs. sovereignty. The choice for users ultimately comes down to which is more important: trusting the system or being your own bank.

Before purchasing a token always do your own research.