exchange for cryptocurrencies what they are and how they work

Exchanges for cryptocurrencies have become increasingly used in the cryptocurrency sector, especially in recent years.

This is because the development of this technology has led to the birth of many crypto projects.

With increasing tokens and therefore increasing market demand, this sector has specialized more and more.

Today the demand for transactions that allow the exchange or purchase and sale of cryptocurrencies is increasingly growing.

And as this demand increases, the market has gone on to create more and more players offering this service.

Many fraudulent services have also developed with it, and it is therefore that we need to clarify a bit about this sector.

Before seeing which cryptocurrency exchanges we can use, and how, let’s talk a bit about the history of the sector.

The birth and development of the exchange concept

Originally what bitcoin had been created and launched on the market, there was no exchange that allowed the purchase and exchange.

In fact, many people who entered this environment, in order to exchange bitcoins, met in a bar and exchanged their BTC for wallets.

This procedure was very slow because not only did you have to waste time for the meeting, but you had to do the operation by entering the data by hand.

Also because in that period of 2009 smartphones were not yet as widespread as now and many people had to use PCs.

With the increase in the adoption of bitcoins and with the increase in projects that continued to arise in this sector, exchanges had to be resorted to.

From then on there were a series of events that led to the development of the exchange sector at a high level.

This is because at the time exchanges were created that had internal security problems and many people lost a lot of money.

The most exemplary case of this example was Mt Gox, an exchange for cryptocurrencies that laid the foundations of modern exchanges but also made hackers richer.

In fact, there was a hacker attack in 2014 that led to the loss of around 720,000 bitcoins causing investors to lose all the money.

Even today, the exchange, which has been the subject of numerous debates, occasionally releases payment to some of the victims of the damage done.

But this is just one of the many cases that this sector brings with it.

What is an exchange for cryptocurrencies

An exchange is an exchange of anything that takes place directly via specialized online platforms.

But it can also be the old market that was done in the 1800s where the merchants offered their goods to buyers.

Nowadays even if there are forms of this type of trade, most of the transactions are done online.

An obvious example is Alibaba which allows you to meet producers and retailers on the internet.

In the world of cryptocurrencies there are exchanges in English Exchange, which are specialized in providing services for cryptocurrencies.

They are referred to in technical jargon as Exchange for cryptocurrencies.

They have the function of storing inside them cryptocurrencies in special wallets that control them and allow customers to exchange their tokens.

It takes place as a bank, where the customer deposits money and the bank manages it or the customer carries out securities purchase operations.

In addition to the high level of security, an exchange must have great liquidity in order to speed up the customer’s order.

As it happens, the most liquid exchanges are the largest and the ones with the most security.

In addition, they must have a function that allows you to deposit the tokens in offline wallets in order to avoid hacking.

To date, there are decentralized exchanges that are managed by nodes but have little liquidity and demonstrate long-term problems.

But how does an exchange for cryptocurrencies work

First you need to register on the official website and upload a valid document and personal and access data.

The largest exchanges, which are the safest, have a high level of security and are in compliance with the nations that operate.

Activating a double authentication, a notification via sms or email, or even a delay of withdrawals allow to increase the security level.

After having done all these steps, you have the possibility to deposit fiat currencies by bank transfer or prepaid card.

It will also be possible to deposit our cryptocurrencies so that we can exchange or sell them.

The platforms of all exchanges offer the possibility of having order management and an optimized screen for these types of operations.

For example, many also allow other services including the loan or the staking of some cryptocurrencies.

In fact, it will be sufficient to deposit one of those crypto supported by the service and at that point the exchange will start to generate interest from your crypto.

Margin contracts that use leverage to increase profits or losses have also developed recently.

These contracts are for a more specific audience who specialize in trading and therefore have requirements for operations.

Each exchange allows you to withdraw or token withdraw, with the possibility of moving them into personal wallets.

Which exchange can I use

There are multiple exchanges but you have to understand which are the best and which to use.

There are two types of exchange that must be recognized and therefore know how to use them.

1- Centralized ones

exchange for cryptocurrencies with centralized operation

The centralized ones are also the ones with the most liquidity but you have the possibility of being hacked.

An example of a centralized exchange of great liquidity that can be used in security and Binance.

In fact, leader for a long time, Binance represents an excellent exchange for those in this sector.

I have already spoken in this article about how binance works, I recommend reading it for those who have not already done so.

But there are others like Coinbase, Kucoin, etc., but the function is the same.

2- Decentralized ones

exchange for cryptocurrencies with decentralized functioning

Then instead we have the decentralized ones that are even less liquid but are the safest.

This is because, these exchanges use scattered nodes in order to function, and their system is completely on blockchain.

So if a hacker should tamper with the system he has to modify the whole blockchain and it would be very utopian.

Furthermore, our tokens would be safe as they are stored in the blockchain and not offline wallets as in centralized ones.

An example is Maker Dao, which precisely uses nodes for its system and offers the possibility of generating stablecoins with the use of currency.

But there are others like Bancor, EosDex, and so on, all of which have the function of the blockchain to work.

My advice is to exchange your token in one of the ones I indicated earlier, then to remove the token from the Exchange and store it in the official wallets.

This is the only way not to lose your tokens, because they could be stolen in the centralized ones or lost due to failure in the decentralized ones.

Obviously the odds of these are high, however, nothing takes away from being cautious.

In addition, having adequate levels of security such as double authentication allows you to minimize these risks.

Furthermore, do not trust those exchanges that do not know the team, the headquarters and the possibility of activating further levels of security.

For this article, everything is waiting for you.

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