What is the key difference between centralized and decentralized cryptocurrency exchanges?
The fundamental distinction between centralized and decentralized cryptocurrency exchanges lies in their structure of operation and control over user assets. Centralized exchanges function as intermediaries owned and managed by a single entity, handling transactions on behalf of users. Although these exchanges offer convenience and faster transaction processing, they expose users to security risks and regulatory oversight.
Conversely, decentralized exchanges (DEXs) operate on blockchain technology, enabling users to trade directly from their wallets without reliance on a central authority. In DEXs, users maintain control over their private keys and assets, emphasizing security and autonomy. However, decentralized exchanges may encounter challenges such as lower liquidity and a steeper learning curve.
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