Investing in Bitcoin and Cryptocurrencies

Cryptocurrency exchanges are platforms that allow users to trade Cryptos, and facilitates the buying and selling of Cryptocurrencies, like Bitcoin and Ethereum. Centralized Exchanges (CEX) function as trusted intermediaries in trades, and often act as custodians by storing and protecting the user’s funds.

A Decentralized Exchange (DEX) is an automated program that facilitates Crypto trades, and it’s actively run by a decentralized network of computers, meaning no single entity has control over the platform once it’s set up. Unlike a CEX, a user doesn’t have to create an account instead connect the user’s Crypto wallet (Metamask or Trust Wallet) to a Decentralized Trading Protocol or Automated Market Makers, like UniSwap (ETH) and PancakeSwap (BNB), that will exchange or automatically process swaps between two different Cryptocurrencies.

DEX often supports a wide variety of Cryptos, including new Initial Coin Offerings, and may not support USD-to-Crypto trades, meaning the user will need to add funds to the user’s Crypto wallet before using a DEX app that can be processed with a CEX.

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CEX’s oversee all of the transactions and sets the exchange’s rules and fees, such as the popular online Cryptocurrency broker: CoinMama.com, that offers a browser-based trading platform and mobile app. To get started, a user can simply creates an account, verifies identity and connects to a funding source (bank account, debit or credit card) to start buying, selling or trading between any of the Cryptos the exchange supports.

Benefits of a Centralized Crypto Exchange

  • Easy-to-use interface and customer support
  • Generally complies with state and federal regulations
  • Insurance to protect users against Crypto hacks

Benefits of a Decentralized Crypto Exchange

  • Private keys that gives the user direct control
  • User doesn’t have to create an account or verify identity
  • Mostly lower transaction fees than a CEX

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