The question of cryptocurrency acceptance by governments and businesses is extremely significant nowadays. Fortunately, centralized crypto exchanges have been regulating the matter since they appeared. In this modern age, Centralized Exchange (CEX) remains one of the principal and powerful means for digital currency investors to do transacting effectively. It really stands out as an online platform, the main aim of which is to purchase and sell cryptocurrencies along with keeping cryptocurrency holdings niche.
Beyond that, CEX crypto exchange has had a significant role in enlarging public and organization trust in distributed ledger technologies and their fundamental cryptocurrency benefits. Dealing with regulators, enhancing the UX and products, as well as strengthening security permanently focus on achieving these aims.
Opportunities of a Centralized Exchange
Centralized Exchange (CEX) allows users to purchase as well as sell cryptocurrency in different ways. For instance, they have a possibility to make a market order and purchase or sell cryptocurrency at the market price at once. As a matter of choice, users can put a limit order that allows them to state a definite price at which they prefer buying or selling an asset. The order will be carried out as the price of the asset achieves the set price.
Moreover, centralized cryptocurrency also provides users with digital wallets to keep cryptocurrency. In case they prefer to store their cryptocurrency on an exchange, they trust the exchange to hold their private keys and keep their funds safe. Neither wallet nor private key can be lost in this case. It is highly important to do your own research to make sure that the exchange has safe measures in place to protect your funds. Some exchanges offer custody services for financial institutions and investment firms who put money into cryptocurrency, but have no wish to manage their own private keys. They are usually hold in cold storage.
Advantages of CEX exchange
It should be pointed out, that as cryptocurrencies are generally kept in digital wallets, and people can lose big sums of money in digital currency if they forget their key to the wallets. A marvelous point is that centralized crypto exchanges will not allow this to occur.
The question is how people can begin trading on a centralized exchange. Many CEXs will verify a person’s identity and ask to fill in Know Your Customer, Counter Terrorism Financing and Anti-Money Laundering checks. The actions will help avoid criminal activity from occurring on their platforms. As a person’s identity got verified without any problem, deposit funds onto the exchange per wire transfer, ACH transfer, a debit or credit card or by depositing cryptocurrency (bitcoin or ether) become possible. Trading can begin after funding an account.
Obviously, not only advantages but also some disadvantages of CEX should be noted. The thing is that no user can discover the inner operations of centralized exchanges. Thus, it can lead to a lack of transparency and appearing of malicious actions such as wash trading or price manipulation.
Moreover, attackers from various organizations (for instance, inner and outside ones) can make centralized cryptocurrency a lucrative target due to holding custody over users’ assets. Another disadvantage is being a target for censorship made by government. In this case, regulators are able to freeze and even stop user funds and make customers’ give out personal data.
Differences between CEX and DEX exchanges
With this in mind, let’s have a quick look at some differences between centralized exchange and decentralized exchange so as to compare them. Firstly, centralized exchange is generally necessary to manage trades from fiat to cryptocurrency, on the one hand, or from cryptocurrency to fiat, on the other hand. Secondly, they can be used to control trades between two various cryptocurrencies.
By contrast, decentralized exchange is completely another option. Such kinds of exchanges work as a peer-to-peer exchange. An escrow service does not keep assets and transactions are fulfilled wholly with smart contracts as well as atomic swaps. Decentralized exchanges do not keep people’s funds, which means that people are constantly in control of their private keys. Having said that, centralized crypto exchanges hold people’s private keys on their behalf.
Overall, it is clear that the matter of cryptocurrency acceptance is not irrelevant at present. The analyses of the market has shown that cex exchange keeps on managing the necessity of purchasing and selling cryptocurrencies. Besides, Centralized Exchange (CEX) allows digital currency investors to do transacting in a beneficial way. It has let new users get into connection with cryptocurrency, and will clearly keep the position of a great onramp to crypto.