What Are Crypto Exchange Platforms? Explained For Beginners

Learning from scratch is the key when it comes to dealing with cryptocurrencies. In this domain, the concepts can be quite complex and even impossible to tackle at times. However, this is not rocket science. Cryptocurrencies and the marketplace are meant for everyone to buy, sell, and trade the assets and get into the art of moneymaking.

What is a Crypto Exchange?

Crypto Exchange Platforms are nothing but an online virtual setup where you get the opportunity to transact with cryptocurrencies on your own, by exchanging them with other cryptocurrency/ cryptocurrencies of different value. If you are looking for liquidity and monetization, this is also possible through these cryptocurrency exchanges through conventional fiat currencies. Some of them include USD and EUR.

Types of Crypto Exchanges 

Now that you have earned a clear picture of the basics of a cryptocurrency exchange. In the entire list of cryptocurrency exchanges, there are mainly two types. One of them is a centralized exchange, and the other one is a decentralized exchange.

This classification is primarily done on the basis of governance and execution carried out by these exchanges. We will learn more about each one in detail in the following sections. 

Centralized Exchange (CEX)

As the name of the exchange suggests, all the governance and managerial decisions will be taken by a centralized team in the case of CEX. They will be the ones vested with the responsibilities of transactions and security within the exchange platform.

Even if you are a beginner, it would be easy for you to deal with the interface of Centralized Exchanges, and it is one of their top priority when compared to the other categories.

Most of the older and already established cryptocurrency exchange platforms would be functioning under this class. Binance, Kraken, and Coinbase can be cited as some of the popular examples here. 

Decentralized Exchanges (DEX)

This class of cryptocurrency exchange will not have a centralized authority to supervise and manage the transactions and ensure safety. They are known for keeping the intermediaries at bay. These types of exchanges are part of the novel innovations brought into the industry.

This provides a freer and flexible atmosphere for exchanges. Better autonomy and control over assets make this class highly sought after by many. Apart from these, custody of the private keys is also solely vested with the users.

However, it is important that you have a sound knowledge of how blockchain technologies and crypto exchange platforms work to utilise DEXs in their full swing. Moreover, the liquidity of some asset classes will not be as high as that of the CEX. Uniswap and SushiSwap are some of the popular DEX platforms. 

Which is the Right Exchange for You?

See, choosing an exchange for your cryptocurrency transactions is as subjective as your investment goals and risk tolerance. However, there are some common things that you need to look for while choosing one. You will be able to see an overwhelming list of cryptocurrency exchanges online. 

Security 

While shortlisting from this long list, security should be your priority. Research well about the latest audits that have been completed here and look for the reports. It is also important to make sure whether the exchange has enabled features like two-factor authentication and end-to-end encryption for additional security. Moreover, look for cold storage facilities, where your digital assets can lie safely, with a relatively lower risk. 

User Interface

Now comes the second priority, usability. Especially if you are a beginner to cryptocurrency exchanges, make sure the interface sparks your interest, and you do not find it quite overwhelming or complex. You may be required to interact with it quite often, so if you are feeling that the interface is messed up, you are highly likely to mess up with your transactions too.

Once you are proficient with an easy interface as a beginner, you will be prepared to move on to other platforms with a complex UI, if you wish to experience the features of another exchange later. 

Token Listing 

Listing is another criterion to check in the selection of your cryptocurrencies. Double-check whether the cryptocurrency tokens that you wish to sell have been listed on the exchange. This is quite a technical requirement, and can be easily verified. 

Affordability 

Affordability is another concern that you might have. From the entire list of shortlisted exchanges, you can now look for the fees they charge for various cryptocurrency-related services like trading, withdrawals, and deposits. Analyse and compare, and you will be all sorted to filter down some of the better options from the list for sure. 

Regulatory Concerns 

The exchanges’ terms with the regulatory authorities of the country are also something that you must check out. KYC and AML are two of such concerns that these exchanges should abide by. This will help you keep safe and secure from any possible legal hurdles and challenges that may follow. 

Are Crypto Exchanges Safe?

Well, as a beginner, we need you to be fully aware of the fact that none of the exchanges can be completely safe and secure. Financial security risks are involved in various platforms to different degrees. However, if you are willing to do some background research before choosing your platform, you would be able to minimize the risk to a greater extent, and that is for sure.

In this era of highly sophisticated thefts and hacks, none of the exchanges would be able to promise you a 100% guarantee on your funds, and that is for real. 

You can also go for a wiser approach by investing your funds in different exchanges, so that even if one exchange faces any security risks, you are not risking your total investment capital in its entirety. We have already told you to look for exchanges with a cold storage facility.

These types of storage facilities make it a point to store all your assets offline, making them less vulnerable to online scams and hacks, which are quite widespread these days. You must also verify the authenticity of the communicators who try to connect with you by phone; there are a lot of impersonation scams, relentlessly attempting to steal your data sets.