{"id":416866,"date":"2023-07-13T15:57:36","date_gmt":"2023-07-13T15:57:36","guid":{"rendered":"https:\/\/insidebitcoins.com\/?page_id=416866"},"modified":"2024-12-12T15:31:05","modified_gmt":"2024-12-12T15:31:05","slug":"what-is-a-cex","status":"publish","type":"page","link":"https:\/\/insidebitcoins.com\/buy-cryptocurrency\/what-is-a-cex","title":{"rendered":"What is a CEX – Centralized Exchanges Explained"},"content":{"rendered":"

A centralized exchange is an organization that facilitates the exchange of assets between two entities. In financial terms, it refers to a body that enables monetary transactions between parties.<\/p>\n

While the current regulatory issues have prompted questions about the viability of such entities within the cryptocurrency space, there are still merits to centralized exchanges. In this guide, we provide a clear definition of what a centralized exchange is, as well as its benefits and drawbacks. Additionally, we conclude this review by offering a step-by-step guide on how to start trading on a centralized exchange.<\/p>\n

What is a Centralized Exchange (CEX)?<\/strong><\/h2>\n

Investors can trade crypto cryptocurrencies on a centralized exchange, which is a centralized body that facilitates transactions between two parties. These bodies work in the same way as banks and traditional stock exchanges, acting as intermediaries where users can deposit their funds and buy or sell different digital assets.<\/p>\n

\"What<\/p>\n

In a centralized exchange, all the operations are handled by a central authority. Thus, in addition to facilitating the exchange of digital assets, centralized exchanges also act as custodians of digital assets – providing a place for users to store their cryptocurrencies.<\/p>\n

Here are the listed key characteristics of a centralized exchange:<\/p>\n

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  1. They are centrally controlled –<\/strong> A single authority oversees the complete operation of a CEX, including infrastructure, security, and transactions.<\/li>\n
  2. They offer order books – <\/strong>Centralized exchanges offer order books that match buyers and sellers to create a liquid market. It also allows users to place a limit on their buy\/sell order and provide them with additional features, such as insurance.<\/li>\n
  3. They are regulated – <\/strong>Since most cryptocurrency exchanges deal with real money, they have to be regulated according to the Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations. That means users need to provide their KYC details to the CEX before using its services.<\/li>\n
  4. They offer custodial wallets –\u00a0<\/strong>Since the onus of securing an investor’s assets falls on a centralized exchange, it also offers custodial wallets. Crypto brokers such as eToro, for instance, provide mobile wallets that secure an investor’s assets and help them buy and sell crypto.<\/li>\n
  5. Trading Fee –\u00a0<\/strong>A Centralized Exchange charges a transaction fee. The transaction fee is charged per trade, but it varies depending on factors like order type and trading volume.<\/li>\n<\/ol>\n

    What Are The Pros and Cons of a CEX – At A Glance<\/strong><\/h2>\n

    Listed below are the pros and cons of a centralized exchange at a glance:<\/p>\n

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    \nPros:<\/strong>
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