Centralized Exchange (CEX): A centralized exchange (CEX) is an online platform that serves as an intermediary for cryptocurrency trading, allowing users to buy and sell various cryptocurrencies. These exchanges are characterized by their centralized control and management, where a single entity or organization oversees the exchange’s operations and facilitates transactions between buyers and sellers.
Centralized exchanges are known for their reliability and ease of use, making them a popular choice for cryptocurrency trading activities. Some well-known centralized cryptocurrency exchanges include Coinbase, GDAX, Kraken, and Gemini, among others. Users on these platforms create accounts, deposit their cryptocurrencies, and execute trades with the assurance of liquidity and efficient order matching.
While centralized exchanges offer convenience and liquidity, they also come with certain drawbacks, such as the need for users to trust the exchange with their funds and private keys. Additionally, the centralized nature of these platforms can make them vulnerable to security breaches and regulatory scrutiny. Nevertheless, centralized exchanges play a significant role in the cryptocurrency ecosystem by providing accessible and user-friendly avenues for trading digital assets.