The term \u201cCryptocurrency\u201d has been ruling the market for quite some time now. Cryptocurrencies have been a primary concern since it is secure and trustable. Cryptocurrencies are digital and they cannot be forged and that\u2019s the main reason why investors are interested in making investments in crypto exchange services.\u00a0\r\n\r\nThere has been a steady rise in the cryptocurrency traders which has increased the demand for cryptocurrency exchanges.\u00a0\r\n\r\nWell, it simply means that the cryptocurrency exchanges are the ones that allow the cryptocurrency investors to buy or sell cryptocurrencies instantly. To form a well-established trading platform, a lot of crypto exchanges support more than 20 currencies on its platform.\u00a0\u00a0\r\n\r\nA cryptocurrency is quite close to what a stock exchange is but it primarily focuses on crypto tokens and not stock trades. There are mainly two types of cryptocurrency exchanges;\r\n\r\n \tCentralized Exchange (CEX)\r\n \tDecentralized Exchanges (DEX)\u00a0\r\n\r\nWhat is a Centralized Cryptocurrency Exchange?\r\nA centralized cryptocurrency exchange is one of the most preferred exchange platforms by crypto traders. Centralized cryptocurrency exchanges are online platforms that are used to buy and sell cryptocurrencies. Since digital currencies themselves are often designated as \u2018decentralized\u2019 few investors still find the idea of centralized exchange misleading.\u00a0\r\n\r\nThe question arises that what makes it a centralized system and why do these exchanges play a crucial role in making the crypto industry a successful one.\u00a0\r\n\r\nThe term \u201ccentralized cryptocurrency exchange,\u201d refers to the idea of centralization of cryptocurrency exchanges, i.e., the presence of an intermediary or third party that conducts the transaction. The buyers and sellers of assets trust the central authority who is responsible for handling these assets. This is somewhere like a bank setup, where the customer trusts the bank to hold their money.\u00a0\r\n\r\nThe centralized cryptocurrency exchange is similar to banks. The transactors trust exchange platforms that it will safely complete the transaction process for them.\u00a0\r\n\r\nAlong with this to keep a record of their trading partners the centralized system makes use of their network of users to have access to the data of transactions made.\u00a0\r\n\r\nIn case of using a cryptocurrency which is mostly stored in a digital wallet, an individual can lose a huge amount of money stored in the wallet if they forget the key to the wallet.\u00a0\r\n\r\nHere the exchange platforms assure to safeguard the valuable assets of the individual.\r\n\r\nWhat is a Decentralized Cryptocurrency Exchange?\r\n\r\nThe term \u201cdecentralized cryptocurrency exchange\u201d is often considered an oxymoron. A lot of cryptocurrency exchanges have publicized it as a decentralized exchange whereas the truth is that it is in a way a centralized platform in itself.\u00a0\r\n\r\nDecentralized exchanges are independent of having any mediator, they are supported only by blockchain technology and not by any company. The server is definitely controlled and centralized, but not the exchange platform. Decentralized cryptocurrency exchanges ensure users full control over their funds and therefore, safeguard the funds from being stolen.\u00a0\r\n\r\nUnlike centralized exchanges, users don\u2019t have to send their funds to wallets that are controlled by a single exchange, whereas a decentralized exchange relies on digital signatures that directly authorize their trading orders. That is the reason decentralized exchanges work slower than centralized ones.\u00a0\r\n\r\nDecentralized exchanges do not store private data and information of its users while they are making transactions and allow only trading.\u00a0\r\nCentralized Exchanges vs Decentralized Exchanges: The Difference\r\nCentralized exchanges allow fiat-to-crypto trade (or vice-versa). Along with this, the exchanges also allow trading between two different cryptocurrencies.\u00a0\r\n\r\nDecentralized exchanges eliminate the intermediary and function as peer-to-peer exchanges. The assets are not under any specific custody and the transactions are completely based on smart contracts and atomic swaps.\r\n\r\nThe key difference between centralized and decentralized exchange is the presence of a middle man. The decentralized exchanges are less popular as compared to their centralized counterpart.\u00a0\r\nCentralized Exchanges: Why is it a Preferred Choice?\r\nThe success or failure of exchange is completely dependent upon a lot of factors. The key component to its success is the trading volume of the exchange platform.\u00a0\r\n\r\nThe volatility of the market is a crucial factor that is taken into consideration to categorize the success or failure of an exchange. The time it takes for the transaction to be completed, there are chances for the price of the given token or coin to be changed. Interestingly, transactions are processed much faster if the trade volume is high.\r\n\r\nThe second crucial factor of categorization is security. No exchange can be totally hack-proof. While some centralized exchanges have been able to refund customer losses, others haven\u2019t been able to do so.\u00a0\r\n\r\nFor investors looking to enter the crypto space, a centralized exchange is still a common choice. When selecting an exchange, it\u2019s important to keep in mind the bunch of factors which will impact user experience, including which pairs are traded, it\u2019s trading volume and security measures, the exchange has adopted to protect the assets of the customers.\r\nDecentralized Exchanges Get Support from Computer Scientist John McAfee, Why?\u00a0\r\nA computer programmer and a businessman, John McAfee, has been promoting a decentralized economy and has also created McAfeeDEX. He was recently seen emphasizing on the importance of distributed\/decentralized crypto exchange.\u00a0\r\n\r\nAs per his analysis, it is not possible to shut down the decentralized system mathematically, technologically, or even physically, and that is the reason the future of the blockchain industry depends on them.\u00a0\r\n\r\nhttps:\/\/twitter.com\/officialmcafee\/status\/1238374522862153728\r\n\r\nThe decentralized exchanges allow the users to have complete control over their funds. There are no chances of having a single failure. It is not centrally controlled by a single group of companies, individuals or the government. And most importantly, the decentralized exchange platform promotes user privacy.\u00a0\u00a0\r\n\r\nThe fact is decentralized exchanges are important for the crypto industry as centralized exchanges are prone to human errors. And some previous reports by QuadrigaCX based on the manipulation reports of the centralized exchanges are strong examples of why a decentralized system is better.\u00a0\r\n\r\nIt is important to be able to choose the appropriate trading platform before investing your funds. Reliable platforms like bitcoin code ensure good benefits to its traders. To know more about this platform it is recommended to go through Bitcoin Code review.