What is a Centralized Cryptocurrency Exchange?
A centralized exchange is a cryptocurrency exchange with a trusted middleman to handle whatever asset may be in a trade. This online marketplace for cryptocurrencies is owned and operated by a company that maintains total control over all transactions. Users of these exchanges do not have access to the private keys of their exchange account’s wallets. This puts all of users’ trust in the hands of the exchange operators, as transactions can only be made through the mechanisms provided and approved by a central authority.
What are the synonyms of Centralized Cryptocurrency Exchanges?
Centralized digital exchange
Centralized Digital asset exchange
Centralized crypto assets exchange
What is the difference between centralized and decentralized cryptocurrency exchanges?
The common feature of a centralized exchange is both the buyer and the seller of a digital asset trusts the middleman and the assets are held in escrow by the central servers.
Decentralized exchanges create a trustless environment where they cut out the middleman. Assets are never held by an escrow service and transactions are done entirely based on smart contracts and atomic swaps.
Examples of Centralized Cryptocurrency Exchanges:
Why is it important?
Since privacy is limited in a decentralized cryptocurrency exchange, the regulators and the government have a control over the funds being put to trade and this avoids any suspicion of money laundering.
Because of the popularity of the centralized exchanges, the volumes of trade are much higher in comparison to the decentralized exchanges. As a result of this, this is usually designed to be much more user-friendly than the p2p exchanges.
Related articles :
NeuronEx, an introduction
What are p2p exchanges?