BlockchainBlockchain GuideBlockchain and Crypto: What is an exchange?

Blockchain and Crypto: What is an exchange?

The term exchange comes from English and could be translated into French by exchange site, even if we often use the untranslated name. These are in fact specialized platforms that allow you to buy or sell cryptocurrencies.

On some exchanges, it is possible to directly deposit fiat money (euros, dollars, etc.) to buy cryptoassets while on others, you must first have in your possession popular crypto-currencies such as Bitcoin or Ethereum which can then be exchanged for other digital assets.

Why use an exchange site to get cryptocurrency?

An exchange site facilitates transactions between people who wish to acquire cryptocurrencies and those who wish to part with them. It is an intermediary that connects individuals to each other.

It is possible to obtain crypto-assets directly from peer to peer without going through a trading platform, but this comes with risks. Indeed, you have to have great confidence in the person with whom you are going to have to deal and be sure that he will send you his cryptocurrency after you have sent him money or other digital assets.

Thanks to an exchange, this kind of scam cannot take place and each party can be sure of getting what they want at the agreed price. Of course, this requires going to a reliable exchange site to avoid falling into a scam. That is why we advise you to only use one of the trading platforms that we recommend on our site as they have all been tested and verified by us.

What are the different types of exchanges that exist?

Without going into too much detail, we can classify exchanges into two big categories. On the one hand, centralized exchanges (CEX) or centralized exchange sites, on the other, decentralized exchanges (DEX) or decentralized exchange sites.

To put it very simply, to use a CEX, a user must deposit their digital assets on a wallet address that belongs to that platform. It is then up to this exchange to take care of securing these digital assets and then return them to their respective owners by transferring them to their wallets when they request it.

On a DEX, users maintain permanent control over their cryptocurrencies by always keeping them in their possession. However, as of this writing (July 2021), DEXs do not offer as extensive functionality as some CEXs and it is not always possible to be able to obtain the digital assets of your choice on these decentralized platforms.

How many trading platforms are there?

It is difficult to say exactly how many trading platforms there are. However, we can estimate this number to be several thousand. But that doesn’t mean they are all trusted sites, far from it.

Indeed, due to the youth of the cryptocurrency industry and the lack of legislation in the sector, some platforms are only created with the aim of stealing money from somewhat naive crypto-investors. It is important not to register on just any exchange and to verify that these are serious sites where your money is safe.

As it is not possible to draw up an exhaustive list of all serious and fraudulent exchange sites, and as this will evolve over time anyway, we advise you to use only platforms that we use ourselves to carry out our buying and selling operations. These are exchanges that we constantly control and on which we have absolute confidence, so you can also use them without running any risk.

Conclusion on the exchange

An exchange is a great tool that allows you to get or get rid of your digital assets in a fairly convenient way. As we have seen, there are mainly two types, those called “centralized” where we must transfer our cryptocurrencies on the site and those called “decentralized” where we keep full control over our assets.

By using a reliable exchange site, you can be sure that transactions go smoothly. However, you have to be very careful and not deposit your money or digital assets on so-called “exotic” platforms, otherwise there is a huge risk of never seeing the color of your assets again.

Florent Malicehttps://www.newsalarms.com/
Malice is an Irish sports journalist and former amateur and part-time road bicycle racer, He wrote for The Sunday Times newspaper and others, and published a number of books.

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