In cryptocurrency exchanges, just like on stock markets, traders can purchase, sell, and convert cryptocurrencies. Currently, there are three different types of cryptocurrency exchanges: hybrid exchanges, decentralized exchanges, and centralized exchanges (HEX).
The popularity of cryptocurrency trading is growing, and practically everyone wants to get on board. But it’s important to keep a few things in mind before plunging your toes into the complicated world of cryptocurrency trading. For instance, it’s crucial to pick the best cryptocurrency exchange for your needs in terms of convenience, transaction costs, etc.
Currently, there are three different types of cryptocurrency exchanges: hybrid exchanges, decentralized exchanges, and centralized exchanges (HEX).
The growth of DEXs has been fueled by the advent of decentralized finance (DeFi) and related apps (dApps) on blockchains like Ethereum, even if the majority of trade now takes place on CEXs like WazirX, Binance, and Coinbase, among others. A number of well-known DEXs, like Uniswap, Pancakeswap, and Compound, also have high transaction volumes.
The creation of HEXs, which were designed to address the shortcomings of CEXs and DEXs, is still in its early stages. The best elements of both CEX and DEX are intended to be combined. Some of the hybrid exchanges include Qurrex, Eidoo, and Legalos.
Let’s examine the main variations between these exchanges.
Centralized exchanges: What are they?
The most prevalent kind of bitcoin exchanges are centralized exchanges, which often have straightforward procedures and a user-friendly interface. They are governed by a central body, usually the exchange’s owner. Every order in CEX is noted and verified by the business to ensure security and accuracy. These exchanges typically permit trading of one cryptocurrency for another as well as the use of funds from your bank account or credit card.
Customer assistance is one of the main services that the majority of CEXs offer. This is quite helpful for those who are just starting out in cryptocurrency trading.
However, the CEX will continue to control the wallet where your money is stored. The enrollment process may also include a know-your-customer (KYC) approach that calls for the provision of some personal data.
What distinguishes Decentralized exchanges?
A decentralized exchange is exactly what its name implies—decentralized. This indicates that there is no centralized oversight and no organization or firm overseeing these trades. The trades on DEXs are automated and carried out using decentralized applications and smart contracts based on predefined metrics. The majority of DEXs now run on the Ethereum blockchain.
Your private information is secure because there is no KYC requirement. DEXs are also more secure if the relevant security checks are taken into consideration when writing the smart contracts.
The interface, however, might not be as slick as CEXs, which could affect transaction volumes and speeds. And since DEXs like Poocoin lack any kind of customer service, experienced traders may find them more helpful than newcomers.
Why are Hybrid exchanges necessary?
As was already mentioned, hybrid exchanges combine the best aspects of both centralized and decentralized exchanges. Users in DEX totally control their money. For instance, they can decide whether to trade using smart contracts or to keep a wallet.
The goal of a hybrid crypto exchange is to address the scalability problems of decentralized exchanges by giving consumers access to their private keys. Another of the HEXs’ primary goals was to address the outrageous trading fees charged by the DEX. There are no taker fees or gas expenses in HEX trading.
Binocs is one such platform which makes your crypto exchanges like Mexc, a cakewalk, additionally it helps with the management of your taxes and makes it easy to track your crypto investments.