What Exactly Are CEX And DEX Exchanges?

Jump to page contents

What Exactly Are CEX And DEX Exchanges?

Centralised Exchanges (CEXs) and De-centralised Exchanges (DEXs) represent the majority of cryptocurrency exchanges available today. They both carry out the same basic function; that of offering cryptocurrency in exchange of either fiat currency or other cryptocurrency. However, what distinguishes them is the way in which they carry out this function.

When Bitcoin was created, its primary mission was to facilitate the transfer of currency without any intermediaries. It was to create the path towards a decentralised economy, however, CEXs go against this principle. As their name suggests, CEXs, such as Coinbase or Kraken, are managed by a single entity, which very much acts as the middle entity between two parties.

Pros and Cons of CEXs

In order for cryptocurrency to have any possibility of becoming mainstream, it needs millions of people to use it. Most of these millions do not have the necessary technical skills to manage DEXs transaction, so using CEXs is the only way for them to become part of the crypto community.

CEXs are best compared to brokerages, holding and transferring funds between buyers and sellers. The majority of exchanges suitable for beginners offer a simple, user-friendly design, allowing anyone to trade Bitcoin with little effort.

Another key aspect of CEXs is that since they are managed by a single entity, this entity has the ability to offer safety to users and funds, especially in the cases of disputes. These exchanges are also practical, offering multiple payment methods to buy crypto.

However, CEXs do have certain risks, beginning with trust. If people lose trust in an exchange it will eventually collapse, potentially losing user’s funds in the process. User data, stored at a central location, is vulnerable to attack, as has happened countless times already. As the CEX grows, there can be issues with its infrastructure, as an increase in trade requires an increase in capacity.

Pros and Cons of DEXs

The characteristics of DEXs are practically mirror opposites of CEXs. Since these exchanges do not rely on a central controlling entity, with transactions happening directly between two users, the process is much safer. There are no servers holding funds, instead, funds leave one address and are deposited into another, virtually instantly.

DEXs also allow for practically full anonymity, as DEXs do not require extensive KYC to protect their users. By their very nature, DEXs cannot be shut down by any government or agency, since they are not physically based in any jurisdiction.

The risk of fraudulent transactions in DEXs is much higher due to virtually no checks. Those prone to losing passwords and keys should also beware, as DEXs cannot assist in the recovery of these credentials.

Aimed mostly at experienced crypto users, DEXs require buyer and seller to handle entire transaction themselves, which can be time-consuming. Payment methods are also often limited, as people would not tend to want to share sensitive card or bank information with third parties.

Recently Similar Guides

casinoin-promotion etoro-promotion

Latest Guides


What are Stablecoins Used for?

If you’re following what’s been happening in the bitcoin trading scene for the last couple of years, you’ve probably heard about the term ‘stablecoins’. It seems that the trend of creating this type of cryptocurrency has been on the rise lately, as many analysts agree, they indeed seem like a step forward in crypto research. […]

4 February, 2020

Is Cryptocurrency Changing The Online Gambling Industry?

The gambling industry is just one of many that the internet has radically transformed. Gambling is no longer just for the elites in exclusive clubs, it’s something the everyman can do on his phone from the comfort of his own home. Nowadays, gambling is in the midst of another transition, brought on by the rise […]

14 January, 2020

Top 5 Cryptocurrencies To Invest In 2020

It has been another eventful year for cryptocurrency, with significant price movements amongst the top 10 tokens and plenty of heated discussion on the future of the technology. One of the year’s biggest news was Facebook’s Project Libra, which promised to bring about mainstream adoption of digital currencies. Notwithstanding all good intentions, this and other […]

24 December, 2019

Trading Crypto On eToro

Set up in 2007, eToro became a leading trading platform across the world. Offering investors access to several markets and asset classes, the platform attracts a mix of novice and experienced users, eager to generate a return from their individual strategies. Cryptocurrencies are one of the latest tradeable markets to be added to the platform. […]

23 December, 2019

Trading Bitcoin On eToro

Bitcoin is the world’s leading cryptocurrency, with a market cap of over $134 billion and a daily trading volume averaging $21 billion. Millions of people around the world want to get their hands on the first and largest cryptographic currency, but choosing the right place can be tricky. The web has thousands of cryptocurrency exchanges […]

22 December, 2019

Trading Ethereum On eToro

eToro is one of the largest online trading platforms in the world, supporting a variety of markets and financial instruments. Along with a useful trading app and one of the most comprehensive lists of payment methods, the platform gives you access to buy and trade numerous cryptocurrencies, amongst which Ether, more commonly known as Ethereum. […]

17 December, 2019

Reasons Why Bitcoin Gambling is on the Rise

Online casinos have been pioneers of innovation and technology. Therefore it’s not surprising that a good number of online casinos are offering bitcoin gambling games. The main reasons for adopting bitcoins in the gambling industry hang on the multitude of possibilities that bitcoin affords both online casinos and gamblers. Below are the reasons for the […]

16 December, 2019
Beginner,eToro,Margin Trading

eToro Fees Explained In Detail

eToro is an online trading platform which has gained popularity across the globe. Known for keeping up with the latest investment developments, eToro offers investors access to a wide range of instruments and markets. This guide will focus primarily on eToro’s fees, often considered to be some of the most advantageous in the industry. A […]

11 December, 2019