What is the difference between a centralized and a decentralized solution?
First, let's find out what are the platforms with centralized management, or as they are commonly called – CEX (Centralized Exchange).
Centralized platforms (CEX) – take on the role of an intermediary in the transaction. Both participants of the exchange will need to create a personal account on the platform, which is often accompanied by the mandatory provision of their personal data to the platform with their further verification (KYC). The platform provides participants with their own accounts, which will further participate in the exchange process.
CEX platforms are managed by specific companies or legal entities that are fully responsible for their activities: the safety of users' funds and compliance with the law. All trading operations are handled by these companies' own servers.
The administration of centralized platforms has full access to customer funds and, if necessary, can block a user's account, his specific transaction, or an entire direction, for example – withdrawal of funds.
Decentralized platforms (DEX) – serve as a link, their main task is to help the buyer and the seller find each other. The transaction itself is carried out directly, without intermediaries, between users' wallets, which are used to connect to the platform. There are no servers to process information, nor is there centralized management. Transactions take place directly within the blockchain network using smart contracts, which means that these processes cannot be changed from the outside and are protected from any interference.
So, the main and fundamental difference between DEX is the underlying blockchain and smart contracts that allow direct exchanges. CEXs are not directly related to blockchain and are classic intermediary sites.
There are also a number of other important advantages of DEX platforms:
DEX does not store users' crypto-assets, so neither platform developers, nor hackers, nor local authorities can divert, block or freeze funds in users' accounts.
To work with DEX platforms does not require user registration, account creation, and verification with confirmation of personal data, so customers are guaranteed complete anonymity.
3. Full control of assets.
Decentralized trading platforms give users full control over their trades and assets.
The future is DEX
Decentralized platforms have earned recognition from millions of users around the world, attracted tens of billions of dollars in investments, and become an integral part of the cryptocurrency market. In addition, a number of centralized platforms, observing how actively this industry is gaining popularity, have started to launch their DEX branches or implement their individual functions into their existing services.
In the future, decentralized platforms are expected to expand functionality for traders and improve the interaction between different blockchain networks for easier, cheaper, and faster exchange of digital assets.
DEX platforms are the choice for those who value anonymity, security, and independence from any government agencies. Here your wallets and accounts are not accessible to anyone but you. All you need to do is to choose the best platform in terms of functionality and skillfully use all its features.
Major CEX platforms are still popular and have a wide audience, but trends are such that many users, especially those with large assets, have long doubted their reliability and are gradually moving towards decentralized resources.
Cripz is a fully decentralized platform with safe functionality for cryptocurrency trading. Experience how easy and reliable a P2P exchange can be by following a few simple steps to connect to the trading platform.