Differences between centralized and decentralized exchanges

  • Control

For a decentralized exchange, transactions and funds are managed by a third-party server. For a decentralized exchange, there is no central server governing operations or holding funds. Participants also have more control over their assets.

  • User privacy

On a centralized exchange, every user is required to provide extensive information about themselves as a know your customer (KYC) requirement regulation. On a centralized exchange, it may be more difficult to ensure that private information is not stored off somewhere and anonymity cannot be ensured. A decentralized exchange on the other hand does not need to comply with these requirements. You do not need to have to fill in overly detailed information about yourself before being granted access to trade on a decentralized exchange. Trading on a decentralized will help you maintain your identity if you wish to keep it hidden.

  • Authentication

Choosing to trade from a centralized exchange will require that all transactions be approved by a central exchange authority. The exchange will be the middle-man approving transactions and ensures reliability. A decentralized exchange will not have a central authority governing or approving transactions; they are rather facilitated through smart contracts which allow users to initiate and complete transactions.

  • Speed

In this case, the centralized exchange actually can have faster speeds overall. Considering it all runs on a closed off ecosystem, all resources are within reach and are done internally. The speed of decentralized exchanges on the other hand largely depends on the Blockchain protocol used. If the underlying Blockchain is slow, then transactions on the exchange will be affected by that, the ability to utilize a different Blockchain though or in our case, having two of them running side by side helps alleviate the speed issues that may arise from using a decentralized exchange model.

  • Security

There have been more reported cases of hacks being carried out on centralized exchanges due to the simplicity of its foundation. Since the centralized exchange has a central governing system in place, taking over the governing system makes it less difficult to move customer funds. All wallets in the central exchange are obligated to accept all modifications made from the central governing system. A decentralized system, on the other hand, does not have a single point of entry. This means that it is much harder to gain access to it.

#crypto #blockchain #AXLToken #AXL #cryptocurrency #cryptoinvestment #cryptonews #NFT

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Axl Token

Axl Token

Axl is a Decentralized exchange that will support Liquidity Providing, Yield Farming, Staking, Launching IDO, NFT and Lending & Borrow.