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Centralized Digit Asset Exchanges and Advantages
A digital asset exchange or cryptocurrency exchange is a trading platform where you can deposit, withdraw and trade fiat currency (e.g. USD, EUR, AUS) and cryptocurrency coins or tokens for one-another. In essence there are two types of digital asset exchanges; they are either centralized (CEX) or decentralized (DEX).
What is Centralized Exchanges?
A centralized exchange is a professional entity that provides users with a trading platform, while monitoring trades, checking the order books and making sure they are compliant with local regulations. Dealing with a centralized exchange you will have interactions with a third party, the company running the exchange.
Advantages to centralized exchanges:
When analyzing the trading volume on digital asset exchanges, you immediately notice the absence of decentralized exchanges on the list of highest ranking exchanges. Without good liquidity an exchange cannot function properly as the discrepancy between buys and sells needs to be limited. Centralized exchanges tend to have a better liquidity rate, making top rated exchanges ideal platforms to execute high-quantity trades.
Because of the extensive development resources after the initial funding and the high daily earnings, centralized exchanges have the capital to develop and update their trading platform to adapt to their customer’s needs, making it easier to use.
In light of recent regulatory upgrades, centralized exchanges have to adapt to government regulations. Most centralized exchanges have recently updated their terms and the majority that hasn’t, is already implementing know-your-customer (KYC) and anti-money-laundering (AML) user requirements.
Centralized exchange trades can usually be executed in a fraction of a second, because of the internal optimized trading system. Margin trading and stop-loss functions can be added in contrary to decentralized exchanges that cannot implement these trading features at the moment.
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