Why CEX and DEX Are Like a Restaurant and Home Cooking
CEX is like a restaurant where you can eat quickly and conveniently (buy cryptocurrency), but you pay a large tip and risk security issues. While DEX is like a good, hearty meal at home, where you can prepare your food (cryptocurrency) yourself, controlling the quality and safety of funds.
Centralized cryptocurrency exchanges (CEX) are among the popular platforms for buying and selling cryptocurrencies.
On such platforms, investors buy and sell cryptocurrencies, with the exchange acting as an intermediary. All transactions take place through the platform, and it takes a commission for providing services.
The most popular CEXs are Coinbase, Binance, OKX, and Bybit.
However, despite their popularity, centralized cryptocurrency exchanges have their drawbacks. One of the main disadvantages is the risk of hacker attacks. Last year, many exchanges were subject to exploits that resulted in millions of dollars in cryptocurrency being stolen.
According to BitOK, hackers managed to steal more than $300 billion in cryptocurrency in November last year alone
Another disadvantage of CEX is the lack of anonymity. When registering on a centralized exchange, users must provide personal information: passport data, residential address and telephone number - this means that regulatory authorities will be able to monitor transactions and freeze them until the reasons are clarified.
In addition, centralized cryptocurrency exchanges are subject to the risk of market manipulation. Exchanges can “game” prices using tools such as fake trading volumes and wash trading.