Crypto 101: Exchanges and How they Work in Crypto

4 mins read

Crypto 101: Exchanges and How they Work in Crypto

Buy or Swap?

Buy or swap? These are the two most important options that most crypto users have to choose from before deciding on the kind of exchange to go with.

TL;DR

  • Centralized exchanges facilitate crypto to crypto and crypto to fiat exchanges
  • Swap is the most common trade function on decentralized exchanges
  • DEX and CEX have their advantages and disadvantages

 

Crypto or Fiat? The Choice is Yours

Centralized exchanges are notable for presenting their users with a platform where they can buy and sell crypto assets. This can be done in the form of a crypto-to-crypto exchange or crypto-to-fiat exchange.

The only thing about centralized exchanges is that users have to conform to some established criteria such as the mandatory Know-Your-Customer (KYC) and Anti-Money Laundering (AML) processes. Also, users have to use the custodial services provided by the platforms which include wallets for asset storage and escrow services during transactions.

In return for these services, centralized exchanges charge transaction fees which are usually a fractional percentage of the total transaction amount. 

For users who wish to buy the POP token, they can do so using centralized exchanges like MEXC exchange, Big,One, and Probit. They can directly exchange crypto and fiat for the POP token.

Swapping for Value

Decentralized exchanges are most notable for their swap functions. They exist to facilitate crypto-to-crypto asset swaps. Due to their decentralized mode of operation, users are able to access crypto for swaps through existing liquidity pools on the platforms. The pool is maintained by an Automated Market Maker function which balances the liquidity pair in the pool.

DEX, as they are often referred to, are non-custodial. This means that they do not have in-built wallet functions to hold users' assets. All users have to connect their wallets before they can swap on DEXes. No verification process is ever required and user personal data is never known to the platforms.

For those who wish to obtain their POP token using decentralized exchange platforms, you can do so on Uniswap and Pancakeswap.

The Two-Edged Sword

Both centralized and decentralized crypto exchange platforms have their relevance and limits. For users who wish to trade assets for fiat, centralized exchanges would be the preferred option. However, the user must be willing to submit their personal details, including email addresses, a valid means of identification, among other things. This in itself tends towards the very thing cryptocurrency is up against - regulation.

Decentralized exchanges support anonymity as they do not require KYC, and are fully non-custodial. Still, they are not the best options in emergency situations when a user needs to convert assets to fiat.

Conclusion

The weight is evenly balanced on crypto exchanges. Users are ultimately in control of their chosen platform; a decision that rests on what they intend to do and the best way to get it done.

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