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Exchanges
Updated 2025-11-01
Centralized cryptocurrency exchanges (CEXs) serve as digital marketplaces where users can buy, sell, and trade cryptocurrencies and digital assets. Operating similarly to traditional stock exchanges, CEXs act as trusted intermediaries that facilitate transactions between buyers and sellers while maintaining custody of users' funds. When you deposit cryptocurrency into a CEX, the exchange holds your assets in their wallets and credits your account balance. This custodial model allows for fast, efficient trading with high liquidity, as transactions occur within the exchange's internal ledger rather than on the blockchain itself. Popular exchanges like Binance, Coinbase, and Kraken process millions of trades daily, offering features such as advanced order types, margin trading, and instant conversions between different cryptocurrencies. CEXs generate revenue through trading fees, withdrawal fees, and premium services. They employ sophisticated matching engines to pair buy and sell orders, ensuring trades execute at optimal prices. Security measures include cold storage for the majority of funds, two-factor authentication, and insurance policies to protect user assets. However, the centralized nature means users must trust the exchange with their funds, creating counterparty risk. Regulatory compliance, KYC (Know Your Customer) requirements, and potential vulnerabilities to hacks are important considerations. Despite these concerns, CEXs remain the primary gateway for most traders entering the cryptocurrency market, offering user-friendly interfaces, customer support, and the liquidity necessary for efficient price discovery and market operations.

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