If you peek into the trade market, you will mainly find two types of exchanges. One is with decentralized network, while the other one is with centralized nooks. In simple words, if you were one of those believers who thought that the entire crypto market works on a decentralized platform then you are in a misconception as that is not the case. There exist both centralized as well as decentralized platform for different cryptos in the market such as this platform.
If you want more updates on the same then follow the below content right away.
Here are two types of trading platforms operating globally:
- Centralized exchanges
- Decentralized exchanges
Most people prefer to trade the cryptos of centralized exchanges as the platforms are safer and more secure. But you can’t decide without knowing much about the exchange. Continue reading to learn more about centralized cryptocurrency exchanges.
What are Centralized Exchanges?
CEXs or Centralized Exchanges are the organizations responsible for the coordination of large-scale cryptocurrency trading. These platforms use a business model equivalent to the traditional platforms of asset exchange, like stock exchanges.
The exchanges are more like marketplaces.
- It will be a reliable platform when many people are trying to trade the same cryptos at the same time.
- These will participate directly through “clearing” trades in the crypto market.
- The centralized platforms maintain digital order books. These books contain the list of all buying and selling orders along with the volumes and prices.
- The exchange platform does match up the sellers and buyers to declare the current market prices depending on the last price at which a trader sells the particular asset.
The top CEXs include Binance, Gemini, Kraken, and Coinbase.
There are plenty of advantages of the centralized platform that you should understand well before planning the investment or selecting the platform.
Advantages of centralized crypto exchanges:
It is essential to know in detail the advantages of using CEXs for crypto trading.
Advantage #1: protection against scandals:
The world of cryptocurrency is never offline. Transactions may involve the possible use of complex jargon. It can add to the discomfort if you are a noise investor.
Also, the very lack of a centralized agency for legitimacy adds to the risk factors associated with each transaction. It’s not new for crypto traders to face scandals.
Therefore, if you are a conservative investor, you should choose the centralized exchange.
- The corporations have physical existence
- You can avoid scandals with the help of the services of the exchanges.
Thus, reliable CEXs can act as the intermediary to protect your dignity.
Advantage #2: insurance factor
Chances of digital attacks are high even when cryptocurrency exchanges have impregnable technical security. It is the reason why the centralized exchange will insure the funds.
However, in such circumstances, you might have to pay extra insurance fees. But that will be petty in terms of security against possible digital hacking.
Advantage #3: Efficient tools
If you are new to the website, you may find it difficult to make the right investment calls. Surprisingly, the centralized exchanges have for you some of the most intelligent and smart tools to provide necessary information about market trends. It will definitely help in decision-making.
Advantage #4: Services
Do you know the list of services that a centralized exchange is going to offer?
- There will be a call center where you can directly place your queries to the well-trained staff.
- Custodian services help in storing digital currencies in a special infrastructure.
- You can also get digital vaults with a high level of security.
New centralized exchanges come into existence frequently. However, all of them are not successful. There are a few prime factors that influence the success of a platform. The top element on this list is the trading volume.
If the trading volume is high, then the platform will exhibit lower volatility and a low level of market manipulation too. as volatility is a critical consideration for investors, you should prefer the centralized platforms.
When the trade volume is high, the time for the completion of a transaction will be short. This reduces the scope of changes in price owing to the time necessary for the transaction to complete. Fluctuations may not be a major problem if you have chosen the centralized exchange.
Secure the investment
If you want to increase the security of the investment, the centralized exchange is the right destination. Although it cannot alter the impact of your investment decisions, it will offer an intuitive interface and helpful customer support.