What are Centralized Cryptocurrency Exchanges?

The crypto popularity is influencing the traders to buy the crypto in its boom. We all know that the trading activity of crypto has increased by several folds in the last few years. Although, new investors find it challenging to understand how cryptocurrency exchanges are bought & sold. It is particularly vital as there is more than one method to buy and sell cryptocurrency.  

Traders usually have to choose between centralized and decentralized exchanges. It happens when they start investing in cryptocurrency for the first time. In this article, we are trying to provide you with a closer look at what centralized cryptocurrency exchanges mean and the advantages associated with them.

Centralized cryptocurrency exchanges are privately owned firms that help investors trade cryptocurrencies. They offer a platform where investors can acquire cryptocurrency by fiat currency. On the other hand, you can also exchange one type of crypto for another. The centralized crypto exchanges are licensed corporations with a physical existence such as office premises, employees, and other infrastructure—cryptocurrency platforms like the bitcoin trading platform act as an intermediary for a buyer & a seller. They make money from transaction fees and commissions in return for their services.

Read: How To Avoid The Most Common Crypto Scam Attacks

Most famous Centralized cryptocurrency exchanges:

The following centralized cryptocurrency platform is top of the list due to its liquidity, traffic, and trading sizes.

  • Bitcoin
  • Binance
  • Kraken
  • Huobi Global
  • Coinbase (Pro)
  • Bithumb
  • KuCoin
  • bitFlye
  • Bitfinex
  • Bitstamp
  • FTX

There are many benefits to using centralized crypto exchanges, which you should know before deciding to invest in different cryptos. Few advantages we have mentioned below:

Benefits of Centralized Cryptocurrency Exchanges

1. Safety against Scandals

We all know that the whole world of cryptocurrency is based on online networking. Transactions typically involve the usage of complicated jargon, which makes the new traders uncomfortable and prevents them from using different trading platforms. 

There can be another case where the absence of any centralized trading platform can create legitimacy issues that can make the dealings risky or even murky to a considerable extent. Cryptocurrency traders have faced their part of scandals in the past. Stable investors want to ensure they trust a reliable intermediary to save themselves against this kind of scandal. 

These are the situations where centralized crypto exchanges come with their positives. Since these companies have a physical existence and are regulated by the government, traders feel safe that they can avoid such scandals if they use these crypto exchange aggregator services.

2. Accessed by Institutional Investors

Many institutional clients try to diversify their investments through investing in cryptocurrencies. However, they can only diversify under prevailing laws and regulations. As a result, they can only deal with reliable and reputable trading platforms such as cryptotrader.software. For institutional investors/entities, centralized cryptocurrency exchanges are crucial since they know this is the only way to invest in the crypto markets.

3. Provision of Services

Centralized cryptocurrency exchanges deliver a very vital service to crypto investors. These centralized exchanges have their call centers where the well-trained cryptocurrency customer support employees explain the features of cryptocurrencies to novice and experienced investors in an easy-to-understand way. The centralized cryptocurrency exchanges also provide custodian services to investors. This stands that they own a specialized infrastructure to safe digital currency. 

These centralized exchanges offer digital wallets, which are based on high-level security. A few crypto exchanges even give services where the investors can store digital coins offline in a particular hardware form. All of these services are valuable for traders who are very much concerned about the safety of their investments.

Read: Finding The Next Cryptocurrency Investment [A Practical Guide]

4. Insurance Option

Centralized cryptocurrency exchanges are fully aware that it doesn’t matter how sophisticated their security is; there still be chances of digital attacks/spam. Because of this reason, all the funds present at a cryptocurrency exchange are fully insured. Indeed, an extra fee needs to be charged to offer such insurance services. However, it provides peace of mind to traders who may be continuously worried about the possibility of digital attacks.

5. Investment Tools

Lastly, centralized cryptocurrency exchanges also bestow value-added services to their clients. These services consist of charting tools that assist the investors by providing sufficient information in a well-organized manner which helps them in decision making.

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