Crypto Exchange
A crypto exchange is a website where users can buy, sell, or trade cryptocurrencies like Bitcoin, Ethereum, or others. It acts as a digital marketplace, connecting buyers and sellers, similar to a stock exchange but for crypto.
Users can give fiat currency like $ dollar or € euro and buy cryptocurrency. Crypto exchanges will match these buyer with other people who are trying to sell cryptocurrency.
Some crypto exchanges will collaborate with liquidity provided (external firms who provide liquidity in high volume to buy or sell cryptocurrency).
Two types of Crypto Exchanges
1. Centralised Exchanges (CEX)
Managed by a company, they hold your crypto on your behalf, they hold your keys which holds your currency often pose risk of hacks, internal security breach, data leaks and God Freezing.
2. Decentralised Exchanges (DEX)
These are exchanges where you can trade cryptocurrencies directly with others without a middleman like a company, instead governed and controlled by smart contracts(piece of code) that runs in blockchain (No one can modify the smart contract in blockchain), they have logic on matching buyers and sellers.