What is a cryptocurrency exchange?
Cryptocurrency exchanges are online platforms where you can exchange one type of digital asset for another based on the market value of the given assets.
How a cryptocurrency exchange is working
Each exchange hosts a list of Launchpad development company and tokens and generates a call for these assets for their clients. Then the client can send (deposit) various coins to their generated address.
This way you can open a sell order with the desired price either in Bitcoin or any other currency with which the exchange provides a trading pair. Typically, most exchanges offer trading pairs, including at least BTC, some other popular cryptos like Ethereum or Litecoin.
An example of trading on a cryptocurrency exchange
For example, the customer is depositing 1000 digibyte coins and wants to buy BitcoinZ coins with them. You can create a sell order, directly purchasing BTCZ if the exchange offers a DGB/BTCZ pair with the exchange's DGB/BTCZ exchange rate. Otherwise, you have to sell the DGB for Bitcoin and then set a BUY order. , using your Bitcoin to get the desired BitcoinZ coin from our example.
Request a withdrawal
After an exchange, the user can retrieve the coins in their personal wallet for the specific currency type or in their multi-wallet, requesting a withdrawal. There are some exchanges that offer cryptocurrency trading pairs, especially the most popular ones like BTC and ETH, with FIAT currencies like euros and dollars. In this way the user can sell any cryptocurrency and get euros, dollars and other printed currencies.
We have to add that clients should always be careful not to forget the funds in the exchanges' addresses . They should always use their own wallets to store them. More information about this in the article. “ How to avoid pitfalls in the crypto space .”
Additionally, potential customers should always be very careful when choosing which exchanges they are going to trust for their transactions because exchanges are not always trustworthy. You can learn more about this in the “Choosing a Trustworthy Exchange” guide that will be available soon.
Finally it is important not to confuse cryptocurrency exchanges with Launchpad development company brokerages. Brokerages are platforms that offer leverage for trading cryptocurrencies without necessarily owning the underlying assets. Like forex brokerages with CFD (Contracts for Difference) for stocks and FIAT currency pairs
What is a DEX or decentralized exchange?
We described what a cryptocurrency exchange is above. This is how most cryptocurrency exchanges work and is the “Centralized” model for an exchange.
During the last few years, another exchange model appears: The decentralized one.
But what do we mean by this definition?
We have two types of DEX
1) Platforms that offer swaps between two different assets by using associated centralized exchanges to obtain liquidity.
The user in this scenario obtains the desired currency and pays with another. You avoid any difficult registration procedures on a centralized exchange and do not have to monitor any order books. Just “exchange” one asset into another. In reality, the platform is just an intermediary between the user and the associated centralized exchanges that provide the necessary assets. The values depend on the order books of the assets on the associated exchanges.
For example, platforms like Changelly, Shapeshift or Multiwallet apps like Coinomi and Vidulum offer this type of services.
2) Platforms that offer real P2P (peer to peer) transactions between two users. These are actually the true decentralized exchanges. Here, the users themselves are actually the liquid suppliers *and* the buyers. The platform simply carries out the exchange between its own assets, based on your orders.
