Crypto Exchange 101: The Difference Between DEX and CEX


For those who are considering buying or selling cryptocurrencies, the first thing that you should do is go to a crypto exchange.

These digital marketplaces provide you with everything you need in buying and selling cryptocurrencies. You might have already heard of some exchanges in the crypto space: Binance, Kraken, Riverex, Enifex, and so on.

Most traders choose between a centralized exchange (CEX) or a decentralized exchange (DEX) when choosing what type of crypto exchange they will use. Having known this, let us dive deeper into the difference between the two.


Centralized Exchange (CEX)Decentralized exchange (DEX)

1. A centralized exchange has its own order book. Every order is recorded and validated.
2. A centralized exchange is facilitated by a central authority under regulatory supervision.
3. A centralized exchange has built-in KYC (know-your-customer) policies. 
4. A centralized exchange applies laws to prevent money laundering.
5. A centralized exchange allows the purchase of cryptocurrencies against traditional, fiat currencies.
6. A centralized exchange has fixed fees that are incurred when trading.
7. A centralized exchange is perfect for beginners because of its user-friendly interface, making buying and selling cryptocurrencies easy.
8. A centralized exchange user has no control over his private keys.

1. A decentralized exchange also has order books called Automated Marke Maker, a trading venue, a matching system, and security functions but these functions are decentralized.
2.  A decentralized exchange is not based on internal servers or IT infrastructure but acts as a decentralized application on a blockchain network.
3.  A decentralized exchange gives anonymity to traders.
4.  A decentralized exchange does not need a user’s data for trading.
5.  A decentralized exchange does not use any third party, authority, or financial regulators for monitoring or imposing regulations on the platform.
6. A decentralized exchange user has control over his private keys.
7. A decentralized exchange imposes a high level of security.
1. High trading volume
2. High liquidity
3. Fiat to crypto trading
4. Crypto to fiat trading
5. High functionality
6. User-friendly
7. Speedy transactions
1. Protection from hackers
2. Lower fees and costs
3. No fraud
4. Allows DeFi and NFT integration
5. Extensive variety of tokens
6. Free from government control
1. Vulnerable to hacking
2. Collects extensive data from their customers
3. Custodial
1. Lower liquidity 
2. Limited performance

Final Thoughts

Before diving into the world of cryptocurrencies, understand the difference between the crypto exchanges and learn more about your preferred exchange (no matter if it is centralized or decentralized). This way, you will be able to navigate the exchange smartly and protect yourself from any harm and issues.

Disclaimer: This article solely expresses the author’s thoughts, which may not reflect those of Enifex. Nothing in this article should be interpreted as investment guidance. Enifex encourages all clients to do their own research before investing in cryptocurrencies.