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Cryptocurrency exchange platforms are a great way to start trading cryptocurrency.

The number of cryptocurrencies available is increasing and most cryptocurrency exchanges are now able to offer a wide range of coins, tokens or altcoins. These digital assets can be traded for other cryptocurrencies such as Bitcoin and Ethereum.

It can be difficult to choose the right exchange for you, given all of the options available.

How centralized crypto exchanges work

It is very easy to purchase your cryptocurrency once your money has been deposited on a CeX. The CeX usually comes with a built-in crypto wallet that you can use to store your cryptocurrencies. You can also withdraw your crypto assets to another wallet.

Each centralized exchange has a unique internal architecture. However, most exchanges have order books that match the buy and sell orders.

The order book of A CeX lists all orders (buy or sell) made by users who want to trade cryptocurrencies on the exchange. Prices range from the lowest, best bid, highest, and most expensive.

Once an order is matched by a counter-party (i.e., a buyer or seller), the order will be taken by the platform operators, who match the orders and provide liquidity, thus enabling an efficient and fast trade execution at the best price.

How Decentralized Crypto Exchanges Work

Although decentralized exchanges can be very easy to use, there are some learning curves. These types of exchanges allow you to buy cryptocurrencies from other users with nothing but the blockchain as the intermediary.

People who wish to exchange cryptocurrency without the need to use a third party or trust a central entity for safety and security are well-suited to DeXs.

There are two types of decentralized changes: automated market-making DeXs and order-book-based Decentralized Exchanges.

Decentralized, order-book-based exchanges work in the same manner as centralized exchanges. They list all orders on an online order book and price range from the lowest asking prices to the highest bids. They use a decentralized framework for matching and settling transactions. Order books are not used by automated market-making DeXs. Smart contracts are used to match and settle orders between users’ wallets and smart contracts. AMM DeXs also outsource liquidity from platform users.

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