An exchange is a platform for trading financial products such as cryptocurrency, commodities and securities. Trading markets can exist in a physical or digital environment. Exchanges help provide liquidity in a safe and organized trading environment. where investors can trade without financial risk. These platforms charge commission fees on trading transactions.
Exchanges can transfer units of cryptocurrency to a consumer's wallet address. Different cryptocurrencies are available and these money can be traded for commodities such as gold. There are different types of exchanges and these are platforms for spot trading, futures and derivatives trading.
Exchanges can also be diversified according to the financial products traded. There are different platforms such as cryptocurrency exchange, stock exchange, securities exchange, commodity exchange and foreign exchange market. Exchanges that are important in certain countries are called "primary exchanges" and include the New York, Tokyo and London exchange.
Cryptocurrency trading platforms are divided into "Centralized" (CEX - Centralized Exchange) and "Decentralized" (DEX - Decentralized Exchange).
What Is a Centralized Exchange (CEX)?
Centralized trading platforms host an order book and facilitate trading transactions between users and execute buy and sell orders provided by users. Buy or sell orders entered set a specific quantity of the digital asset in question and the level at which to buy or sell. CEX platforms map buy and sell orders by aggregating user orders on the order book and utilize specialized software to do so.
When users provide investments to the centralized exchange (CEX), another user takes custody of these assets and is deemed to have issued an IOU for the amount. The cryptocurrency used on CEX are decentralized. This means that CEX-based platforms cannot control transactions on the network for any cryptocurrency.
How Does a Centralized Exchange Work?
CEXs are a centralized, easy-to-use third tool platform that facilitates transactions between buyers and sellers. CEXs offer security and efficiency for transactions. Users can choose to transfer assets to a digital wallet on the platform instead of exchanging between themselves. Once custody of the funds is established, users are issued an equal amount of IOU (I Owe You) or credit. These transactions are tracked by CEX as they are made and are converted into real fiat currency when withdrawals are made.
What Are the Advantages of Centralized Exchanges?
Centralized Exchanges are easy to use and therefore highly preferred. The high liquidity of CEXs ensures that users do not have any problems in trading. High liquidity makes trading faster and easier for users. CEXs have higher trading volumes compared to DEXs. This allows users to execute their trades quickly.
What Are the Disadvantages of Centralized Exchanges?
Although it is not common, there have been cases where CEXs have suffered major losses as a result of a cyber-attack. Compared to DEXs, CEXs can control people's private keys, which is why they are attacked. CEXs operate with a KYC procedure, and obtaining user information may be contrary to how cryptocurrencies are generated. In the cryptocurrency ecosystem, anonymity is a priority for the majority of users.
What Is a Decentralized Exchange?
A Decentralized Exchange (DEX) is a peer-to-peer platform that enables transactions between buyers and sellers of cryptocurrency. Unlike CEXs, decentralized platforms are not monitored. When users trade on DEX platforms, they do so with a private key. Since there is no central authority, each transaction uses smart contracts that allow it to be hosted on the blockchain.
Decentralized platforms offer anonymity and the ability to trade directly. DEX platforms operate in such a way that generated private keys and cryptocurrency funds can provide controls. DEXs do not work with user verifications such as KYC.
How Does a Decentralized Exchange Work?
In decentralized trading platforms, maintaining smart contracts on the blockchain and not losing custody of funds are important features.
What Are the Advantages of a Decentralized Exchange?
Decentralized Trading Platforms (DEX) offer some advantages to their users, such as transaction security, transaction costs and anonymity.
Surveillance: DEXs are not monitored, which means that users need to control their private keys to make transactions. External wallets interact with DEXs, enabling transactions with smart contracts.
Diversity: Altcoins can only be accessed by DEXs without high volumes of peer-to-peer (P2P) transactions. This is effective in increasing financial inclusion.
Transaction Security: DEXs maintain trading transactions through smart contracts, which are secured on the blockchain network.
Lower Fees: Transaction fees on DEX platforms may vary depending on the density of the network, but are still considered affordable.
Privacy: On DEX, users are not required to reveal their private keys. Wallets on DEXs are stored externally and DEX funds are not kept.
What Are the Disadvantages of Decentralized Exchange?
There are some disadvantages of DEX platforms and these shortcomings are critical issues such as scalability, experience and liquidity.
Scalability: Scalability depends on the number of transactions that any network can process. DEXs operate through smart contracts stored on the blockchain and hence the capacity of DEXs works within the limits of the underlying network structures.
User Experience: Users need to be familiar with external wallets in order to use a DEX platform. They need to transfer funds into the wallet by transferring cryptocurrency or fiat money. This wallet must be connected to the DEX in order to trade.
Liquidity: The fact that DEX platforms provide a limited number of trading pairs has a negative impact on market liquidity.
Open and Closed Ramps: DEXs do not simplify the buying of cryptocurrency through fiat currencies. Individuals cannot trade with fiat money or request withdrawals to their bank accounts.
What Are the Differences Between Centralized and Decentralized Exchanges?
Centralized exchange platforms (CEX) allow you to trade fiat money for cryptocurrency and vice versa. CEXs are also suitable for providing transactions between two different cryptocurrencies.
Decentralized platforms (DEX) eliminate intermediaries and enable peer-to-peer (P2P) transactions. Decentralized platforms are less common than centralized platforms.
How Do Crypto Exchanges Work?
Crypto trading platforms establish a connection between buyers and sellers. After the KYC process is completed, a user account is opened and money can be transferred to the relevant platform for trading.
What Is MetaExchange?
MetaExchange is a cryptocurrency trading platform within the Metatime ecosystem. Designed from the ground up specifically for people who trade cryptocurrency, MetaExchange is modularized for different users.
MetaExhange is available in three different versions, Lite, Pro and Meta. With MetaExchange's built-in tools, there is no need for third-party applications and all the user's needs are met from a single place.
With MetaExchange, trading on the chart, setting built-in alarms, custom portfolio management, screen recording tools, portfolio-specific instant news tracking, reminders at the desired profit-loss ratios with the smart assistant, the ability to view all desired charts in the same window with a single button, and many operations can be provided without changing tabs with the spotlight feature.
With the Lite version, all users can trade in a simple way. With the Pro version, advanced charts are available and with the Meta version, multiple charts and tabs can be designed according to the user's wishes. MetaExchange has all cryptocurrency pairs.
One of MetaExchange's global firsts is that it does not charge commission fees on trades closed at a loss. Metatime has proven that it cares about its users and guarantees that there will be no manipulative movements in trading pairs it has realized a world first by giving up its own dividend.
