Cryptocurrency exchanges operate on a similar principle to traditional stock exchanges.
The difference lies only in the types of funds used: on the crypto exchange, these are digital coins and tokens (BTC, ETH, LTC, etc.), not stocks, commodities and other securities markets. As a result, trading on a crypto exchange is more dynamic and risky due to the high volatility of coins, http://steroid.one/.
The platforms can offer their own users various additional functions that increase the convenience of trading, reduce risks, etc. So, there are different types of orders, from a simple market order to professional risk control tools. The functionality of some sites is so large that it is suitable for experienced traders, others, on the contrary, are the most simple and are aimed at a quick exchange of crypto for fiat or vice versa. Platforms also differ in the level of commission fees for trades, bank deposits and withdrawals.
During trading on the exchange, the exchange rate of coins and tokens is formed. It depends mainly on the actions of consumers and managers, although there are other factors.
Cryptocurrency exchanges are the most active and important service category in the crypto economy. They come in a variety of formats and types to meet the requirements of all users, whether you are a beginner buying their first cryptocurrency, or a specialist who has been trading for many years. The process does not stop — we will continue to see the emergence of more and more new models. Below is an overview of the most popular types of trading platforms and their main differences.
Decentralized or centralized exchanges
Centralized cryptocurrency exchanges (CEX) are characterized by the fact that the central governing body has full control over the functions and operations of the site; all transactions do not take place directly between individual users, but through the mediation of a third party. This approach has its own drawbacks, and yet, thanks to its convenience, they are still very popular platforms.
Centralized exchange options:
- Binance. Industry leader in terms of trading volume and popularity. More than $ 4.5 billion in transactions take place on it every day. Supports work with fiat funds, leverage, futures contracts and many others. Many functions require account verification (KYC). It is developing well and working with new areas, such as DeFi.
- EXMO. The site is very popular in Russian-speaking countries. Supports a number of popular fiat currencies, and also provides an excellent opportunity to create «vouchers» for cryptographic currency for quick transfer from one account to another without commission. You cannot create vouchers for fiat, but it is quite possible to activate them by purchasing them in exchangers. Since 2020, verification is mandatory on the resource.
- Huobi Global. It is also a large platform with almost 2 billion in daily turnover. It works with cryptocurrencies and stablecoins, while fiat is supported exclusively in OTC. It is not necessary to verify your account for trading. Huobi supports 777 trading pairs, one of the largest indicators on the market.
- Decentralized cryptocurrency exchanges (DEX) are controlled by users — they exchange assets directly with each other, while only matching orders remains centralized. A very modern version of DEX involves the use of an automated market maker, where there is no order book, but there are trading pools, within which an instant exchange is performed.
Decentralized exchange options:
- Binance Dex. To work with the site, the user must create a specialized wallet, while the data from him (keys, seed phrase) he stores specifically at himself and is responsible for his own funds. Binance Dex supports tokens located on the Binance Chain blockchain.
- Uniswap. The most common exchange with AMM. Works on the Ethereum blockchain with a wide variety of tokens of the same blockchain. Users contribute their solvency to the pool and receive a reward for this, expressed in commissions for the trading of other users in the same pool.
- Balancer. The working principle is generally similar to Uniswap, but there are differences in how tokens are allocated in a pool and how different kinds of pools are managed. To work with Balancer, you don’t need to create a separate wallet, but just connect using an existing web3 wallet.
- Regulated and unregulated exchanges
- Regulated cryptocurrency exchanges are licensed to perform financial activities in specific states. They fully comply with the requirements of the law, verify the identity of each user, as well as check each transaction for correctness and legal origin.