Definition of Decentralized and Centralized Exchange
A centralized exchange is a platform for trading of crypto assets which has a central authority that monitors transactions. The central authority acts as a third party, connecting the buyer and seller, validating transactions and keeping records of transactions. Centralized Exchanges are the most commonly used given that they were first adopted.
Centralized Exchanges are easier to operate but require a level of KYC (Know-Your-Customer) to have good access to it's features. They are not blockchain-based because of the presence of a central authority.
Decentralized Exchange (DeX)
This is the opposite of a centralized exchange. A decentralized exchange is a platform for trading of crypto assets in which there's no presence of a third party. This type of exchange is built on a distributed database and allows for peer-to-peer trading.
Transactions on a DeX are stored on a the blockchain and owners of assets have full control over their assets. No level of KYC is needed as users are given keys on registration which give them total access to their assets.
Differences Between Decentralized and Centralized Exchange
|Centralized Exchange||Decentralized Exchange|
|Central Control||Distributed/User Control|
|Risk of Hacking||No Possible Risk of Hacking|
|High Fees Incurred for Using Platform||Minimal or No Fees Incurred|
|High Liquidity||Low Liquidity|
|KYC Required||No KYC Required|
2 Best Centralized Exchanges of 2021
Binance is ranked number 1 by coinmarketcap as the best crypto exchange with a 24 hours trading volume of $36,837,266,413. It supports thousands of markets, lots of fiat currencies and important coins. I like binance because of the ease of use when it comes to spot trading and p2p trading.
Roqqu is a Nigerian based exchange. It allows for use of fiat to trade crypto assets. Roqqu was actually the first exchange I used back in 2019 but I lost my previous account. Roqqu may sometimes delay payments but the issue is always resolved when the problem is made known to the customer care service.
Install Metamask, and share step by step screenshot
- I opened app store and searched for Metamask. I selected "install"
- After installing, I opened the app
- I selected "Get Started." Due to Android policy on privacy, I couldn't take screenshots of the key phase and password entry process.
- I imported the keys and set up my wallet.
How to use Uniswap for swapping
- Open Uniswap
- Select "Connect wallet
- Select the wallet you wish to connect to. In my case I'm to choose between Trustwallet and Metamask
- Select Metamask. You'll be redirected to Metamask app. Select "connect"
- Go back to browser. Select the tokens you wish to swap. I choose to swap Ether for DAI
- In my case I have an insufficient balance. If I had sufficient balance, "Confirm swap" will be displayed. Select "confirm swap" and you're good to go.
Thanks for reading my assignment post and for the opportunity to partake. I've learned yet another important thing through this lesson. My screenshots are taken from an android device which has policy on privacy. As a result of this, some screenshots couldn't be included.
Thank you for understanding.