What are centralized cryptocurrency exchanges?

Centralized exchanges can be used to conduct trades from fiat to cryptocurrency (or vice versa). They can also be used to conduct trades between two different cryptocurrencies. While this may seem to cover all of the potential transaction types, there is still a market for another type of cryptocurrency exchange as well.

That is how a Centralized exchange works. The platform offers an efficient trading environment at the cost of user’s privacy and personal information. The cryptocurrency data gets transferred through a network including passwords and gets stored on a centralized server. These pieces of information are sometimes shared with the government due to regulations. Centralized cryptocurrency exchanges are online platforms used to buy and sell cryptocurrencies. They are the most common means that investors use to buy and sell cryptocurrency holdings.

In the term “centralized cryptocurrency exchange,” the idea of centralization refers to the use of a middle man or third party to help conduct transactions. Centralized exchanges are trading platforms that function like traditional brokerage or stock markets.

In essence, centralized exchanges often act as the first point of contact for newcomers that are interested in trading cryptocurrency. Many individuals seek to have an interface that can connect them to both cryptocurrency trading and the real economy, and centralized exchanges provide that.