Definition
A crypto exchange is an online platform that allows users to buy, sell and trade cryptocurrencies such as Bitcoin and Ethereum.
🤔 Understanding a crypto exchange
A crypto exchange acts as a marketplace where buyers and sellers can trade digital assets.
Similar to how a stock exchange facilitates the buying and selling of shares, a crypto exchange enables the trading of cryptocurrencies. Users can place orders to buy or sell assets at current market prices or set specific price levels.
There are generally two types of crypto exchanges:
- Centralized exchanges (CEX) — Operated by a company that manages trading infrastructure, security and user accounts.
- Decentralized exchanges (DEX) — Platforms that allow peer-to-peer trading through smart contracts without a central intermediary.
Most beginners start with centralized exchanges because they typically offer easier onboarding, customer support and regulatory compliance.
How does a crypto exchange work?
When you create an account on a crypto exchange, you may need to complete identity verification depending on regulatory requirements.
Once verified, you can:
- Deposit funds (such as fiat currency or crypto)
- Place buy or sell orders
- Monitor market prices
- Withdraw assets to an external wallet
The exchange matches buyers and sellers and processes transactions on the blockchain.
Example
If you want to buy Bitcoin, you can log into a crypto exchange, deposit funds and place an order. The exchange will match your order with someone willing to sell Bitcoin at your selected price.
Once completed, the Bitcoin will appear in your account balance.
Takeaway
A crypto exchange is a platform that facilitates the buying and selling of digital assets.
It provides market access, trading tools and infrastructure to help users manage their cryptocurrency transactions.
As with any financial platform, it is important to understand the fees, security measures and regulatory framework before using one.
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