📝Hi, I’m 10. This is the popular science branch of the #区块链发展史 series. This issue briefly introduces: centralized exchanges and decentralized exchanges!
Virtual currency players, except for a very small number of over-the-counter transactions, cannot escape exchanges. Due to the decentralized nature of blockchain, exchanges have also developed into two types: decentralized and centralized.
Centralized Exchange (CEX):
This is a traditional trading model where users need to register an account on the exchange and deposit their assets into the exchange's custodial wallet, which is then kept and managed by the exchange. Users do not need to use the blockchain network directly to buy and sell within the exchange, but instead complete transactions through the order book and matching engine provided by the exchange. After the transaction is completed, users can withdraw their assets to their personal wallets or keep them in the exchange.
The advantages of centralized exchanges are fast speed, high liquidity, simple operation, and support for multiple fiat currencies and tokens. The disadvantages of centralized exchanges are low security, poor transparency, regulatory restrictions, and high fees.
Decentralized Exchange (DEX):
This is a trading model based on blockchain technology. Users do not need to register an account on the exchange, nor do they need to deposit their assets into the exchange's custodial wallet. Instead, they can directly use their own personal wallets to buy and sell. Users trade on the blockchain network, and do not need to go through the order book and matching engine provided by the exchange, but through smart contracts or other protocols to complete the transaction. After the transaction is completed, users can control their assets at any time without interference from third parties.
The advantages of decentralized exchanges are high security, good transparency, no regulatory restrictions, and low fees. The disadvantages of decentralized exchanges are slow speed, low liquidity, complex operations, and support for a small number of tokens.
Most of the article content comes from the Internet. If there are any errors, please leave a comment and let me know. Thank you!
Table of contents of blockchain development history series: https://twitter.com/0x10_btc/status/1698385515752599652
