The most popular method for purchasing and selling digital assets, including cryptocurrency, is to use cryptocurrency exchanges.
Yes! But for crypto dummies like me, it is okay to wonder: What are cryptocurrency exchanges? These platforms are privately owned and specifically meant for trading digital assets such as NFTs, fiat currencies, and crypto.
Today, I will delve deep into the world of crypto exchanges and talk about how you can trade on these platforms.
As a beginner, chances are you are somewhat confused about how these work – this is where my weekly blogs can help you stay afloat (after all, we are in the middle of a recession!).
Stay tuned!
What Are Centralized Cryptocurrency Exchanges (CEX)?
There are two major types of cryptocurrency exchanges – centralized and decentralized.
CEX (Centralized Cryptocurrency Exchanges) are intermediary platforms between sellers and buyers that make money via transaction fees and commissions.
Moreover, centralized crypto exchange platforms can easily be compared to stock exchange platforms, except that these are meant for trading digital and crypto assets instead of stocks.
The most popular CEX platforms in 2025 are as follows:
- Binance.
- Coinbase Exchange.
- Kraken.
- KuCoin.
- Bitfinex.
- Gemini.
- Bitstamp.
- Coincheck.
- Bybit.
Like stock trading apps or websites, these exchange platforms enable crypto investors to trade digital assets at prevailing rates, known as spot, or to leave orders executed once the asset reaches the investor’s desired price, known as limit orders.
In addition, CEXs function with the help of a solid system based on order books. This means the platforms list both sell and buy orders based on the intended sell or buy price.
After this, the exchange platform’s matching engine simply matches sellers and buyers based on the most executable prices after considering the desired size of the whole lot.
Hence, the price of a digital asset typically depends on the demand and supply of that digital asset compared to another, regardless of whether it is a cryptocurrency or fiat currency.
Also, these exchange platforms determine which assets should be up for trading. This, in turn, offers some comfort that huge chunks of digital assets might be left out of these exchange platforms.
Centralized Cryptocurrency Exchanges: Pros And Cons
So, let’s check out the advantages and disadvantages of centralized cryptocurrency exchanges.
| Pros | Cons |
| 1. User-Friendly platform – ideal for beginners. | 1. Faces hacking risks despite amplified security. |
| 2. Reliable with additional security in trading and transactions. | 2. Charges very high transaction fees for both convenience and service. |
| 3. It allows investors to leverage borrowed money from exchange platforms. | 3. Becoming a custodian of your assets offers major fraud risk. |
In this context, I would like to remind you about the bombastic failure of TerraUSD, the algorithmic stablecoin, and its sister token, Luna, which is worth $50 billion. Then, Alameda Research and FTX suddenly collapsed. There are more such failure stories—the point is to be careful of the disadvantages, especially if you are just starting.
What Are Decentralized Cryptocurrency Exchanges (DEX)?
Coming to decentralized exchanges, these cryptocurrency exchange platforms enable direct, peer-to-peer transactions from a trader’s digital wallet. Yep, with the help of DEXs, you don’t need an intermediary.
The most popular DEXs in the world currently are as follows:
- PancakeSwap.
- Uniswap.
- Kyber.
- dYdX.
- Kine Protocol.
- Curve Finance.
- ApolloX DEX.
- Perpetual Protocol.
- DODO (Ethereum).
Moreover, these DEXs depend on self-executing blocks of code located on a blockchain known as smart contracts. These contracts enable less slippage and more privacy compared to centralized cryptocurrency exchanges.
Also, since these smart contracts are practically rules-based and lack any intermediary third party, it is obvious that traders here are alone. As a result, DEXs are perfect for seasoned investors.
Decentralized Cryptocurrency Exchanges: Pros And Cons
So, let’s check out the advantages and disadvantages of decentralized cryptocurrency exchanges.
| Pros | Cons |
| 1. Traders enjoy custody of their digital assets and don’t have to share access with a third party. | 1. Complexities in usage – users will lose their assets forever if they forget their password and keys. |
| 2. It prevents market manipulation and protects users from fake trading. | 2. It is not good for investors trying to trade with fiat currency. |
| 3. It has relatively low censorship and doesn’t need users to fill out KYC forms. | 3. Due to a significant lack of volume, DEXs have relatively low liquidity. |
How To Choose A Cryptocurrency Exchange?
While searching for a good cryptocurrency exchange, one of the first things to consider is how you will deal with fraud and scams. That’s true for all aspects of investing in cryptocurrency. The risk of fraud can easily influence individual investors.
For instance, Mt.Gox is one of the most popular, not to mention the earliest, digital currency exchange platforms that collapsed after someone hacked it. There are other examples of hacking such platforms.
Moreover, there are many other ways in which an exchange platform can collapse. In addition, exchange executives and owners have been arrested for stealing funds from their clients.
So, how can you guarantee that a specific exchange will offer legitimate service? In the United States, the best way to do so is to begin by checking the exchange’s physical address.
Moreover, if the address isn’t readily available on the exchange’s official website, you should definitely investigate further before making any decision.
Where To Search For Cryptocurrency Exchanges?
The next question in this context is where to look for cryptocurrency exchanges. First, you must check CoinGecko or CoinMarketGap’s list of crypto spot exchanges.
FYI, these are aggregator services for ranking exchanges based on legitimacy, trading volume, liquidity, trust, or traffic to help people determine where to trade. Moreover, these websites also get summaries of supported cryptos, each exchange, and whether they are decentralized, registered, centralized, or more.
In addition, you can also monitor the Financial Crimes Enforcement Network system for centralized exchanges or its equivalent in your country.
This way, you will be able to get more details on the exchange platform’s registration—is it registered as a money transmitter or a money services business?
The Best Cryptocurrency Exchanges:
So, here’s a brief breakdown of the top cryptocurrency exchanges in the market, accompanied by transaction fees and available cryptos:
| Company | Transaction Fees | Available Cryptocurrencies |
| Gemini | 0.0% – 0.40% (for active traders) | 1.49% (for transactions on the regular platform) | 70+ |
| Crypto.com | 0.00% – 0.075% | 350+ |
| Coinbase | 0.00% – 0.60% | 200+ |
| Kraken | 0.00% – 0.40% | 200+ |
How To Trade On Cryptocurrency Exchanges? Best Practices!
When trading on an exchange platform and investing in crypto, reputation becomes crucial. So, even before you can create your account and connect a wallet, it is best to do some research on the exchange you are considering.
Find out what other investors are saying about the crypto exchange. Moreover, what does the exchange say about itself? Have there been any such security issues before? Also, how has the crypto exchange addressed the problems?
While searching, go deep. Search for stories that exchanges don’t want potential customers to encounter.
In fact, it is possible that there could be stories about crypto exchanges or even legal actions taken against the platform by a regulator. These stories are like testimonies to an exchange’s practices and ethics.
Right now, in the evolution of crypto, you don’t have to look for a platform blindly. Yes! There are over 250 exchange platforms, and the more popular and reputable platforms are documented, reviewed, and monitored.
In this context, briefly, here are two vital tips to remember:
- The higher the security, the safer the platform.
- Be careful about transaction fees and hidden commissions.
Are Cryptocurrency Exchanges Safe?
Of course, not all cryptocurrency exchanges are safe, while others are relatively safer. The best way to determine whether an exchange is safe or not is by measuring it against the following parameters:
- Hacking prevention approach.
- Account security.
- Limited insurance.
- Private key storage.
Moreover, since not all exchanges are safe and secure, it is better to research a platform’s security aspect while doing so.
Which Cryptocurrency Exchange Is Best For Beginners?
The reputation, operational years, and safety practices of a cryptocurrency exchange platform are crucial, especially for beginners. Centralized and regulated exchanges such as Kraken, Coinbase, and Binance are ideal for beginners.
Moreover, the simpler, not to mention the popular way of staking, selling, and buying digital assets, is via crypto exchanges. It does sound simple, doesn’t it? Perhaps not much when considering how almost 252 crypto exchanges are globally available.
So, when you are trying to determine which exchange to select, it is vital to search for supported currencies, withdrawal options, security, and pricing.
Read Also:
