Exchange

What Is an Exchange?

An exchange is a digital marketplace that allows individuals to buy and sell cryptocurrencies or other digital assets using fiat money or other cryptocurrencies.

Acting as a middleman, the exchange facilitates transactions between buyers and sellers.

Similar to brokerages, exchanges accept various forms of electronic payment, including card payments, in exchange for cryptocurrencies.

Typically, a fee is charged by the cryptocurrency exchange for this service.

Exchanges can transfer digital assets to a user’s personal wallet, while some digital currencies are backed by commodities like gold.

There are two main types of cryptocurrency exchanges: centralized and decentralized.

A centralized exchange, which is the most popular method of trading cryptocurrencies, acts as an intermediary to facilitate transactions between parties.

Decentralized exchanges (DEX) enable peer-to-peer cryptocurrency trading and operate without a central authority.

Examples of decentralized exchanges include IDEX and Curve Finance.

The growth of cryptocurrencies has greatly benefited digital currency exchanges.

Some of the largest centralized exchanges include Binance, Coinbase, and Kraken.

The higher the trading volume on an exchange, the lower the volatility levels tend to be.