What are cryptocurrency exchanges and how are they used?
Cryptocurrency exchanges are online platforms that allow users to buy, sell and trade cryptocurrencies such as Bitcoin and Ethereum. You can use your existing cryptocurrencies to trade or purchase with traditional fiat currencies . Before you start playing and betting with cryptocurrencies on Stake , you need to understand how cryptocurrencies work and how to use exchanges.
What is a cryptocurrency exchange?
Simply put, a cryptocurrency exchange is like a “market” for digital assets, where buyers and sellers trade on the platform. You can trade cryptocurrencies like stocks , view real-time price charts, and trade through tools such as market orders and limit orders.
When you submit a buy or sell request on an exchange, there must be other users matching with you for the transaction to be completed. For example, if you want to buy 1 Ethereum (ETH), you only need to set the price you are willing to pay. If there is another user who sells at that price, the transaction is completed.
Before using the exchange, you need to register and complete identity verification, after which you can transfer coins from your wallet to the exchange, or buy directly with fiat currency.
Types of Cryptocurrency Exchanges
There are different types of cryptocurrency exchanges, but they fall into two main categories:
Centralized Exchanges (CEX)
Centralized exchanges are run by companies or organizations, similar to traditional financial institutions. They are responsible for managing user assets and matching trade orders between buyers and sellers.
When using a centralized exchange, you need to complete identity verification (KYC) first, and the platform must comply with laws and regulations before it can operate. After that, you can recharge fiat currency or cryptocurrencies through various payment methods .
Centralized exchanges cover a wide range of currencies . You can choose to trade quickly at the market price, or you can set the transaction price yourself.
Decentralized Exchange (DEX)
Decentralized exchanges are based on blockchain technology (including exchanges running on different blockchains ), use smart contracts to achieve peer-to-peer transactions, and are not controlled by any company or organization. Users can complete transactions without submitting personal information.
DEX usually provides liquidity through users and automatically sets prices through algorithms. Some DEX also retain the traditional order book model, allowing users to place orders for transactions.
Pros and Cons of Centralized Cryptocurrency Exchanges
advantage:
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High liquidity : 99% of cryptocurrency transactions are conducted on centralized exchanges, which means that these platforms have high liquidity, faster transactions, and faster order execution.
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Simple operation : The interface is simple and easy to use, suitable for novices, and transactions, recharges and withdrawals are very convenient.
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Leveraged trading : Some platforms offer leveraged trading, which allows you to trade with borrowed funds, which may yield higher returns (but also greater risks).
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Regulated : Centralized exchanges are subject to financial regulation and are more reliable and secure.
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Customer support : Regular platforms provide customer service. At Stake, we provide 24/7 customer service . If you encounter any problems in Stake casino and sports betting, you can contact our customer service team at any time, so that you can be more confident in betting with cryptocurrency.
shortcoming:
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Security risks : Centralized exchanges occasionally encounter hacker attacks or go bankrupt. For example, well-known exchanges such as Mt.Gox and FTX have experienced user asset losses.
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Transaction fees : Most centralized exchanges charge certain transaction fees and withdrawal fees.
Pros and Cons of Decentralized Cryptocurrency Exchanges
Some users prefer to use decentralized exchanges mainly because of the following advantages:
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Autonomous asset management : DEX does not require the custody of assets to exchanges. You only need to bind your wallet to the blockchain and trade directly on the blockchain through smart contracts. Therefore, assets are safer and there is no need to worry about exchanges going bankrupt or being hacked.
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Anonymous transactions : No identity authentication is required , and transactions are highly private.
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More niche currencies : Many cryptocurrencies can only be bought and sold on DEX, with more trading options.
However, most users still prefer to use centralized exchanges because DEX decentralized exchanges have the following shortcomings:
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Unable to trade with fiat currency : DEX generally only supports trading between cryptocurrencies, and cannot directly buy cryptocurrencies with fiat currencies (such as Japanese yen , Canadian dollars , or Indian rupees ). Although stablecoins are available, you cannot buy or sell assets with traditional currencies.
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Low liquidity : small transaction volumes and slow transaction speeds.
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Complex operation : Using DEX requires more blockchain knowledge and experience and is more suitable for experienced veterans.
How to choose the right cryptocurrency exchange?
When choosing a cryptocurrency exchange, you can pay attention to the following key points:
Security
Security is of utmost importance. Choose a reputable exchange that provides two-factor authentication (2FA). For example, at Stake.com, we attach great importance to the security of user assets and ensure that cryptocurrency transactions on the platform are safe and reliable at all times .
Compliance license
Cryptocurrency exchanges must be legal and compliant in the region where they operate. Before you join an exchange, check local laws to make sure the platform is legal and compliant in your country.
Available currencies
Confirm that the exchange supports the currencies and trading pairs you want to trade. Most major platforms offer hundreds of currency pairs, but to be safe, before choosing an exchange, please check whether the website supports the cryptocurrency you like.
Handling Fees
Centralized exchanges will charge fees, including transaction fees and deposit and withdrawal fees. Before choosing a platform, please make sure you understand the fee rates and choose a platform that suits you.
User interface convenience
Remember to choose a platform with an easy-to-understand interface and easy operation. You can also consider whether the platform provides mobile apps and advanced trading functions.
Popular Cryptocurrencies and Exchanges
Popular currencies that you can buy on major exchanges or services such as MoonPay and Swapped include:
Popular cryptocurrency exchanges include:
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Binance
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Coinbase
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Kraken
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KuCoin
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Binance.US
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Bitfinex
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Gemini
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Uniswap v3 (DEX)
Cryptocurrency Exchange Tips
Focus on safety
Choose a secure platform and keep your assets safe, such as using Stake’s vault function or an offline cold wallet.
Beware of scams
Be wary of phishing emails or unfamiliar links, do not click on unknown links easily, and protect your information.
Pay attention to transaction fees
Confirm the fees and total costs before trading to ensure it is a good deal.
Avoid unnecessary risks
Do not use leveraged trading rashly, especially when you have limited funds, and try to trade conservatively.
Learn more about encryption
The cryptocurrency market is complex and volatile. Spend more time learning and researching, and make use of Stake blogs and other resources so that you can become more familiar with the market and trade more confidently.
