Cryptocurrency is emerging at a great speed all around the world. Many people tend to use this virtual form of money that makes transactions easier in the digital world. The newcomers who step into the cryptocurrency world might think this is a complicated process when it is not.
Nothing seems to be a complication when you try to grasp the concept behind it. This guide makes you clearly understand a cryptocurrency exchange, its types, and how you can make transactions via it.
Functions that a cryptocurrency exchange performs:
Cryptocurrency exchange performs transactions of buying, selling, and trading of various cryptocurrencies. People invest in such coins to own a valuable asset that has a less fluctuation rate when compared to that of their national currency.
In a cryptocurrency exchange, the flat currency or the government issues currency is spent on buying cryptocurrencies and vice versa.
Types of cryptocurrency exchanges:
There are three types of cryptocurrency exchanges based on the comfortability of customers, competitive pricing, and government norms.
Centralized exchanges (CEX):
This type of cryptocurrency exchange is the most accepted one worldwide. As the name suggests a centralized exchange or a company regulates the flow of a particular cryptocurrency. It is nothing but a stock exchange that trades cryptocurrencies for flat to crypto and crypto to crypto.
It has higher liquidity but is prone to cyber-attacks when compared to the other two types.
Decentralized Exchanges (DEX):
A decentralized form of cryptocurrency exchange takes place as a peer-to-peer transaction method. You can directly contact a seller or a buyer of cryptocurrencies to make the transactions take place without any agents or intermediaries.
The core concept on which this method is established is that there is no central power to control the flow of trade of cryptocurrencies. Not even government can interfere in it at any cost. This is possible due to the automated process which does not let any third parties involved in making the transactions being made.
Even though both the types mentioned above seem to be perfect, they tend to have certain limitations. This hybrid type combines the centralized and decentralized format reducing the limitations that they possess.
This is formed by merging the privacy and security that the decentralized network possess and the quick transactions, regulated framework, and liquidity as in the centralized framework. The involvement of blockchain technology and the freedom available in this type makes it the most preferred model of cryptocurrency exchange.
How can I open an account in a cryptocurrency exchange?
Find a genuine cryptocurrency exchange website like the Zikex platform. You must create an online account providing your proof of identity by following the KYC standards. You will be required to answer certain personal questions and verify the process using a third-party application. Images of your driver’s license are also valid proof in this process.
What makes you still ponder over the process and buying cryptocurrencies? Visit the most trusted cryptocurrency exchange, the zikex website, and commence cryptocurrency trading.