2. Introduction
If you are new to the crypto space or want to hone your
skills at trading cryptocurrency, it’s important to know
the working “parts” of cryptocurrency. For example,
there are different types of cryptocurrencies, digital
wallets, and blockchains. There are also
cryptocurrency exchanges.
3. The term “exchange” can be misleading since you can
buy, sell or trade on the exchanges. The name comes
into play when you want to exchange your
cryptocurrency for an asset (e.g. fiat money).
Cryptocurrency exchanges can be traced back to
almost 9 years ago when they were created in 2010 for
trading cryptocurrency.
A Cryptocurrency Exchange
4. The Definition
A cryptocurrency exchange is a website where customers
can buy, sell, monitor and trade cryptocurrencies instantly
as well as cash in their cryptocurrencies for fiat money.
Depending on its size and liquidity, an exchange can support
as much as 20 cryptocurrencies for trading.
5. The Parts
There are four parts to a cryptocurrency exchange: capital
deposits, order matching, order books, and asset exchange.
Of the four parts, only the asset exchange is decentralized,
since the transactions are done on the blockchain.
According to Blockgeeks, the other three parts are
regulated because the exchanges require users’ identities
to make capital deposits.
6. Exchange Models
To break exchanges down further, there two
exchange models: currency centric and currency
neutral. A currency centric exchange can only use
one currency ecosystem (e.g. Ethereum), whereas
a currency neutral exchange can use any
currency ecosystem. Both can be decentralized or
centralized.
7. online
A Centralized Cryptocurrency Exchange
In essence, a centralized cryptocurrency exchange
needs a third party to control the account (monitor and
secure assets) on behalf of the buyer and seller. Thus,
the transactions are not tracked on the blockchain.
8. A Decentralized
Cryptocurrency Exchange
A decentralized cryptocurrency exchange does
not need a third party. Transactions are peer-to-
peer and trading is automated.
9. THANK YOU FOR
YOUR TIME
To read the blog,
please visit ducatusglobal.com.