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<h2 id="header-0"><strong>CEX vs. DEX</strong></h2><p>To start investing in digital currencies, you’ll have to pick an exchange to trade on. A cryptocurrency exchange – essentially an online platform for buying and selling crypto – is either centralized or decentralized. There is a huge variety to choose from, and it’s up to the user to find one that suits their particular needs.</p><h3 id="strong-centralized-exchanges-strong"><strong>Centralized Exchanges</strong></h3><p>A centralized exchange (CEX) is overseen by a third party that serves as an intermediary between buyers and sellers. Transactions are settled off of the blockchain, on a centralized server run by the exchange. Thanks to its seamless user experience, a CEX is fast and easy to use. Trades are settled almost instantly and it is very straightforward to sign up and link your bank account or debit card.</p><h3 id="strong-decentralized-exchanges-strong"><strong>Decentralized Exchanges</strong></h3><p>A decentralized exchange (DEX) eliminates third parties and instead relies on peer-to-peer (P2P) trading and smart contracts to carry out transactions. Users remain in complete control of their funds and all transactions are recorded on the blockchain. DEXes require more experience on the part of the user to navigate trades, which typically take longer to settle because they are processed on-chain.</p><h3 id="strong-which-exchange-is-right-for-me-strong"><strong>Which exchange is right for me?</strong></h3><p>To determine which exchange is right for you, there are a variety of factors to consider, including:</p><ul><li><strong>Control &amp; Regulation</strong></li></ul><p>When you sign up to a CEX, they take control over your assets and private key, meaning that you have to trust the exchange to honor their commitment to your assets. With decentralized exchanges, you are the only one that has access to your private key. Though this offers more control to the user, it also means that if you lose or forget your private key, there is no option to recover it – you will lose access to your funds.</p><p>Additionally, because centralized exchanges are regulated by financial authorities, users are required to complete a Know Your Customer (KYC) verification to start trading. On decentralized exchanges, customer verification isn’t required and users are assured complete anonymity.</p><ul><li><strong>Security &amp; Privacy</strong></li></ul><p>For several years, centralized exchanges have been the prime target of hacking groups. Decentralized exchanges are generally considered safer in this regard because they rely on an automated smart contract that puts the user in charge instead of a central authority.</p><ul><li><strong>Variety</strong></li></ul><p>While DEXes provide a wider variety of crypto-to-crypto trading pairs, only centralized exchanges offer the possibility to trade crypto against fiat currencies.</p><ul><li><strong>Fees</strong></li></ul><p>Decentralized exchanges have lower fees because unlike a CEX, there are no intermediaries that take a portion of transaction fees as profit.</p><p>While centralized exchanges are more widely used, it’s clear that each type comes with its own set of benefits and downsides. You’ll have to analyze which option is best for you, depending on what type of user you are and what you’re looking for in an exchange.</p>

CEX vs DEX - The main differences and which one is best for you

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