Steemit crypto academy is really a platform where one can also gain more knowledge about cryptocurrencies and other Blockchain involved.
I really want to thank professor @imagen for this wonderful lecture. The lecture was self explanatory and well understood. I also want to thank professor @dilchamo for her ceaseless work on supporting and correcting errors to make sure things are done the right way here on steemit crypto academy.
Without wasting much time, am going to do justices to the following questions below with intensive research and it must be free from plagiarism.
- Explain in your own words what an Exchange is?
- Differences between wallet and Exchange.
- Mention the advantages and disadvantages of DEX and CEX.
- Have you used an exchange before?, Tell us about your experience.
WHAT IS AN EXCHANGE?
The word Exchange conates an action. An Exchange involves the action of giving something to get another thing in return that is similar or equivalent to the value of what was given. In Exchange process, both individual involved agrees to accept the progress of the said action.
In everyday activities people do engage in exchange of one goods or services for another. For example, someone that is in need of a bicycle but has a phone meets another person who needs a phone but has a bicycle agrees to hand over the phone to such a person and receives the bicycle whose value is similar to that of the phone given.
This is also applied to the case of provision of service where the other party doesn't the liquidity but have the assets whose worth is equivalent to the work executed and both agrees to do the said action.
Now coming to the case of cryptocurrency, it is the the process of taking fiat money and giving it in order to receive a cryptocurrency whose worth is equivalent in the market to the FIAT money that is to be Exchanged. Exchange can also be done in the reverse whereby an individual gives he's/her cryptocurrencies for an amount of FIAT money with which they agree to exchange them for other cryptocurrencies.
At this point, we refer it as an action between two persons or group of person's. It can also be referred to the use of platforms that provides financial service which is either centralized or decentralized.
DIFFERENCES BETWEEN WALLET AND EXCHANGE
Before I state the differences, let's see the meaning of the word Exchange and wallet.
Wallet is described as a digital container where all the assets are kept. It is know as digital wallet, thereby serving as a link between our stored assets and the Exchange platform. While the exchange is simply an established platform that enables the possibility of exchange between interested individuals.
Let's consider their differences;
|It serves as a storage place, where all our digital assets are stored and controlled.||Exchange permits buying and the selling of crypto assets.|
|Wallet doesn't lose functionality even if there is no internet connection.||Exchange is a platform that beshields our online assets and permits us on how or what to do with them.|
|When access is lost, the assets stored cannot be recovered.||When access is lost, password reset is available and money remains safe.|
|Individuals has full control of their crypto assets without any outside authorization.||In Exchange, funds that are in our name are managed. Example, depositing $2000 controls those resources.|
|Cold wallet can be created for greater security (public and private key is created offline).||It makes use of internet connection to permit exchange.|
MENTION THE ADVANTAGES AND DISADVANTAGES OF DECENTRALIZED AND CENTRALIZED EXCHANGE
USER FRIENDLINESS:- Centralized exchange offers a beginner a friendly and acquainted way of trading and investing in cryptocurrencies. With the use of Centralized Exchange, a user can be able to log into their account, view it and likewise perform some transactions through the available application or websites.
RELIABILITY:- Centralized exchange offers high level security and reliability when it come stop transaction performance and trading. Centralized exchange provides greater level of comfort as it makes transaction easier through a developed centralized platform.
TRANSACTION FEE:- Centralized exchange charges high amount of fees for their services especially when trading in huge amount compared to that of peer-to-peer Transaction.
HACKING RISK:- Some centralized exchange platform that are operated by companies and are responsible for the holdings of their customers are sometimes big target for hackers and theft.
PREVENTS MARKET MANIPULATION:- Decentralized Exchange protects the user from market manipulation and also secure user from front fake trading, Due to their nature of permitting peer-to-peer exchange of cryptocurrencies.
ANONYMITY:- There is no need for participant to go through KYC (know your customer) form process thereby providing privacy and anonymity to the user.
REDUCES HACKING RISK:- There is no requirement for third party in transfer of assets in Decentralized exchange, since there is assurance of greater safety from hacking and theft.
COMPLEXITY:- It makes the whole process complex to the user whereby the user has to recall the keys and password to their crypto wallet and if there is any loss of key or password to their crypto wallet tht means it is forever lost and cannot be retrieved unlike the centralized exchange that provides the user with reset password to recover it back.
LACK OF FIAT PAYMENT:- Decentralized exchange do not permit the trading of fiat currencies for digital ones, making most of them less convenient for users that do not hold cryptocurrencies.
LIQUIDITY STRUGGLES:- Decentralized exchange lacks liquidity due to lack of volume making it difficult to locate buyers or sellers when the trading volume are low.
HAVE YOU USED AN EXCHANGE BEFORE?, TELL US ABOUT YOUR EXPERIENCE.
Yes, I have used an exchange platform and the one I used was Binance which is a centralized platform(CEX). During the registration, I had to provide all the necessary things needed like my ID, some documents for KYC verification and also I did a face scan. As I was verified I had access to many functions. I had the opportunity bto exchange tokens such as TRX and STEEM to the cryptocurrency of BNB network and I didn't encounter any problem in sending cryptocurrencies to and from Binance.
With the increase of NFT games, it was necessary to have tokens like BNB to send to matemask and then exchange them for the game token. I was able to perform those exchanges without any problem.
Exchange is what people do often and on. As it is an established platform that enables the possibility of exchange between interested individual and wallet being a digital container that holds our assets in a safe place.
I want to thank professor @imagen once again for this wonderful lecture. Have learnt something new concerning centralized and Decentralized exchange platform.
I won't forget professor @dilchamo for her support, love and suggestion in helping people to move forward on steemit crypto academy.
May God bless you all.
My warmest regards.