Most serious crypto traders end up using centralized cryptocurrency exchanges due to the many benefits they offer. Centralized exchanges are trading platforms that functions as a traditional stock market. As such, centralized cryptocurrency exchanges are operated by firms that have the power and control over all transactions.
The popularity of the use of centralized exchange has continued to grow because of the advantages offered. The benefits stem from a formal structure and centralized nature in the digital currency platforms. One key benefit is the legality and regulation. Most centralized exchanges are licensed, thus regulated by the government. Hence, they are held accountable in case something goes wrong.
Also, in centralized cryptocurrency exchanges, transactions can only be made through mechanisms provided by the firm that is in control of the process. Mostly, purchases are made with available funds in a user’s account held by the exchange.
Additionally, there is a higher level of transparency; most centralized exchanges publish their location and addresses. Therefore, users can see who they are dealing with and where to find them. Also, most exchanges accept direct fiat currency payments and account holders can quickly convert fiat to crypto and promptly cash out digital coins when necessary.
Another key feature is the margin trading, discounts on trading higher volumes and forex style trading. Some centralized exchanges, such as bit stamp and Kraken, have started offering other financial services namely, banking, crypto-debit cards and digital wallets. Consequently, these will enable spending of digital currencies from accounts at online retailers and brick stores.
However, the main difference between centralized and decentralized exchanges is found in operations. In decentralized exchanges, the P2P (peer-to-peer) platform provides a connection between the sellers and buyers.
Do you think centralized exchanges are better, compared to decentralized exchanges? If so, what do you anticipate to be the future of centralized exchanges?
Contribute by replying in the comment section below.