Cryptocurrencies have redefined the economic’s digital system to its core. The dependence of such a big amount of companies on this digital asset has become a consistent scenario nowadays. And as the popularity of these systems grows, so does their viability and processes of updating technology and information to better their tasks. One of the most useful features related to these systems is the crypto-exchange features. These tend to be an alternative for the digital token platforms, making their users work with the constant fluctuation of token values. But what is exactly a crypto-exchanging process, and how does it work exactly?
What is Crypto Exchange?
A crypto exchange process is a business alternative that helps customers trade cryptocurrencies for other types of assets. These exchanges can be received in the user’s cryptocurrency wallet, allowing them to operate with different token options. This methodology is mostly used by systems that help traders buy a cryptocurrency and trade it with others.
Types of Crypto Exchange
Let's see what types of crypto exchanges are available:
Centralized exchanges (CEX)
This type of crypto exchange often offers its customers efficient options like crypto-to-crypto trading and fiat-to-crypto gateway. It's also one of the easiest exchange platforms to use, confirming quick responses for customers' transactions. One of the biggest advantages of this type of crypto exchange is its great reliability. Which helps it manipulate high trade volumes and liquidity in transactions.
However, a great disadvantage is the unexistence of private keys owned by the user, which can lead to hacking issues. The most famous platforms for Centralized Crypto Exchange are Binance, Coinbase, and Huobi.
Decentralized Exchanges (DEX)
This crypto exchange method is based on the lacking of companies in charge of the assets. This means that transactions and exchanges run through decentralized applications and intelligent contacts. Therefore, this method of crypto exchange is directly related to operations in Ethereum, being this one the most advanced blockchain.
Still, a known disadvantage for DEX systems is its low trading volume, small liquidity, and lower transaction speed, mostly given by the inexistence of the ownership of the private keys by big entities. Thus, the decentralized exchange method is mostly used by experienced customers. The most popular DEX platforms are currently Binance Dex and Uniswap.
Hybrid cryptocurrency exchanges:
Lastly, we have this alternative for crypto exchange activities. This one is based on the combination of CEX and DEX advantages on one single platform. It compromised to combine the fast transaction speed encountered on CEX processes, plus the assurances of the private keys owned by the customers. It's a practical crypto exchange alternative that’s still under development, and its most known platforms are Nash Exchange and Qurrex Exchange.
Crypto Exchange Features
Classic Exchange Process
A way to use this exchanging task is by applying a method very alike to a stock exchange. In this case, the user can set transaction limits in an order book. After this, it stays there until it matches with another asset, or gets to place itself inside market orders that match instantly.
Peer to Peer Exchanges
This crypto exchange method will let you trade in between digital tokens with other individuals or companies, in a confidential status. There’s no order book and no direct effect on the asset’s price.
Under this method, there’s the applicability of a middle person, known as the Broker. Like so, it’s a transaction in which the Broker takes a per of the trade’s fee, but brings both sides a secure state.
Crypto exchanging processes suggest, that its advantage could help their users learn about these movements in an efficient way. However, it’s necessary to maintain a certain level of expertise when elaborating tasks involving digital-token exchange. Still, it’s never too late to learn about its functioning process, and these exchanging methods are there for anybody who wants to join in.