A cryptocurrency exchange is a platform where you can buy and sell cryptocurrencies in exchange for fiat money or other cryptocurrencies.
In simple words, cryptocurrency exchanges provide services for buying, selling, and exchanging cryptocurrencies.
The world of crypto exchanges is extremely exciting, million of transitions are happening each day. people buying, selling, and exchanging cryptocurrencies either for fiat money or for other cryptocurrencies.
If you are interested to invest in cryptos, you should have some information about exchanges so you will not waste your time on the wrong exchange.
What You Should Know About Cryptocurrency Exchanges
- Fiat to Crypto: This type of exchange service helps you to buy cryptocurrencies in exchange for Fiat money ex: Dollars, Euros, Pounds, Yen etc. You can use your credit card, debit card, online banking system or any other method of payment to buy crypto on this type of exchanges. Coinbase is one example of this type of exchange. You can buy BTC, BCH, LTC and ETH and many more currencies in Coinbase exchange.
- Crypto to Crypto: This type of exchange service helps you to exchange cryptocurrencies like BTC, ETH, BCH with other cryptocurrencies. This service is for the people who already have one type of cryptocurrency and want exchange to another type ex: bitcoin to ethereum. Biannace is one of the famous examples of crypto-to-crypto exchange.
- Methods of Payment: Not all the cryptocurrencies exchanges accept all type of payment methods. you should check on the exchange website what type payment methods they are accepting. payment methods may include credit cards, debit cards, cash, PayPal etc.
- Crypto Pairs: As all the exchange don’t accept all type of payment methods, the same way all the exchange don’t list all type of cryptocurrencies in their exchanges. You should check if the crypto you are wishing to buy has listed in the exchange.
Type of Cryptocurrency Exchanges
1. Centralized Cryptocurrency Exchange (CEX)
This type of crypto exchange plays the role of middleman between buyer and seller. It runs by a central organization, which provides services to buy and sell cryptocurrency either fiat-to-crypto or crypto-to-crypto. The exchange will charge you a certain amount of fees on any transaction you make. If you want to know the step-by-step process of how to use the centralized exchange to buy crypto you can check How to Buy Cryptocurrency Through Exchange.
How a Centralized Crypto Exchange Works?
- You deposit some amount in your crypto exchange account.
- The exchange holds your money like a bank or trusted middleman.
- Search and watch the prices of the available cryptocurrencies.
- Select the cryptocurrency you want to buy.
- Put the amount how much you want to buy.
- Place the order.
- And that’s! The cryptocurrency will be transferred to your crypto wallet
2. Decentralized Cryptocurrency Exchange (DEX)
It is also called P2P (Peer-To-Peer) exchange. This type of exchange provides a platform for crypto buyers and sellers to directly do the trade. It simply matches buyers with sellers and leaves it on them how they want to close the deal. For example: If you want to sell your crypto you have to list it on the exchange, The interested buyer will see the listing on the P2P exchange and will contact you regarding it. You can mention the price and your terms and condition along with the listing. if you are interested to know the complete process you can read How to Buy Crypto Directly From Users on P2P Exchange.
3. Hybrid Exchange
This type of crypto exchange aims to provide the benefits of both centralized and decentralized exchanges. To be more specific, hybrid trying to provide the functionality of and liquidity of centralized exchange and privacy and security of the decentralized exchange. Many believe that hybrid exchanges are the real future of the cryptocurrency trading experience.