Trading in cryptocurrency such as Bitcoin offers the change of higher returns since there is volatility, especially in this coin. Price fluctuations occur at regular intervals and, if you are savvy enough, you can earn quite a lot. The question for those who are starting to trade is whether to opt for decentralized exchanges (DEX) or opt for centralized exchange? Centralized exchanges may be better for beginners as the changelly review shows.
The fee pain
Centralized exchanges or trading platforms are usually owned by an individual or a company. There are many examples of this such as Binance, Changelly (read changelly review here) and others. Such exchanges allow you to trade anonymously without submitting KYC documents but with the proviso that your trades are limited. Some may even permit demo trades so you learn the ropes. Some work as aggregators, presenting information on a host of exchanges and letting you pick the best price offering. You can buy and sell immediately, taking your pick from over 140 cryptocurrencies. Such exchanges make life easy for traders, especially new and low volume traders. However, trusted platforms always charge a fee for their service. This fee covers transaction fee and also another fee for fiat conversion. This means that if your trade is small you will end up with meagre profits, if at all.
The decentralized exchange (DEX)
The decentralized exchange is an open marketplace. It is not owned by any individual or company. You are in complete control. You do not pay fees. Your funds are secure because you own the funds, not the exchange or trading platform. You do not pay any fee for transactions since these are direct transactions with no intermediary involved.
Operation is pretty simple if you know how. You bring the crypto the gate and receive proxy tokens that can be used within the blockchain. The tokens have actual cryptocurrrency as collateral. You sell the token for another token on the exchange or you buy and the process is stored in the blockchain and when you have a token it can be converted into real cryptocurrency. There is inherent security in this method.
Pros
- Your account information remains private and funds remain in your account.
- You enjoy higher level of privacy and total anonymity.
- Less chances of hacking since operation is through nodes, not a centralized server
- Decentralized exchanges cannot be shut down by governments
- Trade is fast since it is between two parties directly and is not routed through the platform. Bitcoin is decentralized and you can pair it with Cloakcoin if you wish or simply trade in Bitcoins. There is no limit. Availability and your funds are the limits.
- You pay no fees or very minimal fees since there is less of direct intervention.
Cons
Decentralized platforms are not without disadvantages:
- You must be thoroughly familiar with cryptocurrencies and how such exchanges work. If not you will be puzzled as to how to proceed or carry out procedures. This does involve a learning curve.
- You can only trade with the amount of money in your account. There are no options like leverage and margins.
- Choices are few and it is likely you will not find the variety and volume available on centralized exchanges where you can access over 140 crypto currencies as can be seen in the changelly review.
Ease of use and popularity
Centralized exchanges and platforms win hands down because they have people and technology to make life easier for users. They make money out of you by charging fees on transactions and on currency conversions. Besides, you get to access high volumes of trades and large number of currency pairs. Some make it easy for you to get the best deal by aggregating offers from several exchanges. Many exchanges are registered and are regulated by local laws and this also engenders trust in traders. These platforms also enjoy better liquidity. It is no surprise that exchanges and platforms are more popular.
Should you go the Dex way or opt for centralized platforms?
If you are quite experienced and have in-depth knowledge of cryptocurrencies and blockchains then you may find it is better to go the decentralized route. If you are a newbie and are willing to learn, this challenging area will give you knowledge as well since you have to learn and know to trade well.
On the other hand, for newbies who simply desire to accumulate bitcoins and sell at a better price or for casual traders or even for serious traders who do not wish to go into details of blockchains and tokens, it is better to pick centralized platforms. It is just like trading in stocks or currency or commodity on these platforms. A look at changelly review shows just how easy it is to use centralized exchanges and aggregators that access such exchanges and present deals from which you can make your selection.