It’s Invest Diva’s Kiana Danial with NewsBTC and here is your cryptocurrency update. Today, instead of looking how the markets are doing, I wanted to cover a question I get asked a lot: different types of cryptocurrency exchanges. A cryptocurrency exchange is a web-service that can help people exchange their cash money into cryptocurrencies and vice versa. Most exchanges are more focused on providing services to help you exchange a cryptocurrency such as Bitcoin, into other digital currencies like Ethereum, Litecoin, etc. There are currently three types of exchanges out there: centralized or CEX, decentralized or DEX, and hybrid. Centralized cryptocurrency exchanges are similar to traditional stock exchanges. The buyers and sellers come together and the exchange plays the role of a middle-man. In the crypto-world, “centralized” means to trust somebody else to handle your money. One of the main issues with centralized cryptocurrency exchanges is their vulnerability to hacks. Next we’ve got Decentralized cryptocurrency exchanges who aim to stay true to the pure philosophy behind the cryptocurrency industry. A DEX does not rely on a middle-man to hold your funds. It is a marketplace where buyers and seller come together and process the transactions directly between one another. In other words, DEXs facilitate peer-to-peer trades. Decentralized cryptocurrency exchanges are harder to hack. However, on the flip side, you are more vulnerable to locking yourself out of your money.Other problems with DEXs may include low volumes and low liquidity due to lack of popularity at the moment. Finally, we’ve got Hybrid cryptocurrency exchanges, which are know to be the next generation crypto trading marketplace. They aim to merge the benefits from both centralized and decentralized exchanges. More specifically, hybrids seek to provide the functionality and liquidity of a CEX with the privacy and security of a DEX. Many believe such exchanges are the real future of cryptocurrency trading experience. In the comments below, let us know what type of an exchange you prefer and why. Thanks for watching, invest responsibly, and I’ll see you with more updates next time.
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