The platform that you will need to use to buy, sell, and exchange cryptocurrencies is known as a crypto exchange and there have been many that have been established. Some of these are for specific types of crypto or NFT, while others will trade in multiple cryptocurrencies and may be known as a whole of the crypto market exchange platform. Here are the basics of the crypto exchange that you need to understand.
The Different Types of Crypto Exchange
The two main types or genres of crypto exchange are centralized and decentralized exchanges.
A centralized crypto exchange is one where there is a central body or organization/intermediary that manages the crypto during the transaction and governs the rules of exchange. This functions essentially like a normal currency or stock exchange, where you can also buy and sell crypto.
This is somewhat truer to the heart of crypto, in that it is strictly peer-to-peer. They are harder to hack, but present no safety net should you lose your key code for entry or proof. The decentralized exchange is the truest form of crypto exchange, and being able to manage your transactions without any restrictive and unnecessary site-specific regulations or excessive fees is what crypto should be all about.
Then, there are crypto exchanges that present as a mix of the two, as mentioned above. They offer a level of decentralization and peer-to-peer transactions, while also giving certain protections and guidelines, as provided by a centralized crypto exchange.
Regardless of which exchange you choose, you need to ensure the following:
Proof of Reserve
These exchanges, like OKX.com, must provide proof of reserve to ensure that any failures are covered and can be managed by the exchange. A proof of reserve is a form of guarantee that shows that the exchange has the same value in fiat or real currency as you have in crypto/in action on their exchange platform.
It’s in the name, and there needs to be a high level of cryptographic protection associated with any exchange that you choose
The Latest Exchange Rates and Values
A crypto exchange need to be current, and there will be no success found in trading on sites that have last week’s or even last hour’s rates and values. Make sure you do some research before singing up.
A Full Range of Products
The best crypto and fintech exchanges will offer all the latest cryptos and may very well also have other blockchain services on offer as well.
Crypto has come a long way since its inception and the fact that you have so many more altcoins that have begun to challenge the dominance of Bitcoin and Tether has also seen the sire of a range of crypto exchanges – some good and some not so good. If you know what you’re looking for, and some of the basics as discussed herein, then you’re in good stead to make the right type of cryptocurrency investment decisions.