Dex Vs Cex Today…
One of the most emblematic phrases that cryptocurrency users should take very seriously is “not your keys, not your Coins”. This simple phrase encompasses many concepts, which can be simplified into two words: decentralization and freedom.
The exchanges have a very important role in this entire ecosystem, after all the exchanges are the basis of the cryptocurrency market, these exchanges can be carried out in two ways, in the DEX (decentralized exchanges) or the CEX (centralized exchanges) basically comply with the same function that is to exchange one currency for another but fundamentally they are very different.
The CEX are companies which provide the service to carry out exchanges, both buyers and sellers trust this intermediary to store and manage their assets such as ethereum, bitcoin, cardano etc. and they charge commissions for the service they provide, users basically only have a reflection of the funds and trust the exchange that their money will always be available when they need it.
On the other hand, DEXs are a peer-to-peer market that connects buyers and sellers of cryptocurrencies. Unlike centralized exchanges, decentralized platforms have no custody, which means that a user maintains control of their funds and private keys when transacting on a decentralized platform. All of this is possible through smart contracts that are automatically executed under set conditions and record each transaction on the blockchain. This enables better exchange rates in a transparent manner.
Among the main differences we have that centralized exchanges are backed by a company, the user must create an account and provide various information such as address, name and surname. In order for the consumer to operate, they must deposit funds. On the other hand, this type of exchange may be covered by AML, KYC regulations, among others.
In the well-known DEX or decentralized exchanges the consumer does not have to provide personal data if he does not want to, and neither should he deposit funds, he can operate directly from his wallet with the funds available in it. DEXs are open to the public and are not met or regulated by KYC or AML. They are part of the DeFi or Decentralized Finance ecosystem,
In both exchanges, liquidity is one of the most important elements, since without liquidity, no exchange can be made. In traditional exchanges, the level of liquidity permanently depends on the number of buy and sell orders, while in decentralized exchanges it depends on liquidity pools, which are basically the funds that the same users block within the smart contract in exchange for the commissions generated in said process.
In general, it will be up to each user to determine which one best suits their needs, but when it comes to cryptocurrencies, definitely having the private keys of your wallet is one of the best decisions that can be made in that regard.
That’s just another step on our journey . Stay tuned!
The HestiaExchange.com Team
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