Apart from stocks, mutual funds, etc, crypto has become the new buzzword or the latest trend in the investor’s world. Even laymen are aware of crypto trader, Litecoin, Ethereum, etc. Today’s famous cryptocurrency Bitcoin first appeared in 2009. It was the greatest creation of a pseudonymous identity Satoshi Nakomoto.
Since then, Bitcoin has seen lots of ups and downs but still today it stands as the most dominating and biggest cryptocurrency ever. Over 18,000 cryptocurrencies exist. But, not a single one of them has been able to touch the mark of Bitcoin’s Market capitalization. Bitcoin itself holds more than half of the total crypto market.
Bitcoin and the whole world of crypto stem from the dire need for a decentralized system for transactions or exchanges between two parties without any interference from a third party.
Though, as it is a newcomer to the economic market, some people still are not sure about it. As cash is the most liquid asset, you can transfer cash or exchange cash for any worldly or materialistic pleasure, be it a car or education. But as we all know Bitcoin and other cryptocurrencies have not been accepted by some countries. And still, there is a fear in people’s minds about their assets being stolen or hacked as it is based on a digital platform and with no centralized systems the security is almost negligible.
If we talk about bitcoin, it is more liquid than any other crypto asset. Market participants of Bitcoin are in thousands or say sufficient enough to make Bitcoin the largest cryptocurrency. Even though after having so much market participation, Bitcoin is not as liquid as cash. Here, comes the primary motto of Bitcoin Exchange.
What is a bitcoin exchange?
Bitcoin exchange can be defined as a digital marketplace where exchanges of bitcoins take place. It can be considered as any form of service which connects buyers of Bitcoins to the sellers. Or the more technological definition, a centralized or decentralized cryptocurrency exchange platform that acts as the intermediary between makers (sellers of bitcoin) and buyers.
All You Need To Know About Bitcoin Exchanges
To understand the concept of Bitcoin Exchange, we must gain a deep understanding of the two types of Bitcoin Exchanges. These have been highlighted below:
1. Centralized Bitcoin Exchanges
Centralized Bitcoin exchanges take place through Bitcoin exchange companies, these companies act as intermediaries between buyers and sellers of digital currencies such as Bitcoin, altcoins, etc. Centralized Bitcoin exchanges are considered to be much more secure or more reliable than Decentralized exchanges. The reason is that these exchanges are carried out by the companies and they apply certain rules and regulations. According to data, almost 99% of Bitcoin exchanges take place through centralized mediums.
The Benefits of Centralized Bitcoin Exchange
- User-friendly: If you are a beginner in the world of crypto, then these centralized exchange platforms are considered to be the best choice. Centralized exchanges give user-friendly and familiar ways of doing Bitcoin trading. They also provide certain trading tools.
- Reliable: It offers more secure and reliable exchanges. It provides guidance and easy exchanges.
2. Decentralized Bitcoin Exchange
Decentralized Bitcoin exchanges take place on digital exchange platforms. These platforms enable users to have direct transactions. Here no third party is controlling the transactions as an intermediary. These exchanges take place with no central authority.
The Benefits of Decentralized Bitcoin Exchanges
- Less risk of hacking: You are the one looking for your assets and digital wallets. You will not be transferring your keys to any third party or no third party will be holding transactions on your behalf. This limits the risk of hacking.
- Anonymity: This is the best feature of digital exchanges. Decentralized Bitcoin exchange platforms don’t need their customers to fill out the forms and reveal their identities. The transactions can be done even anonymously.
Final overview
The popularity of cryptocurrency has gone through the roof in the recent past as more and more people have realized the potential digital currencies possess. With renowned individuals such as Elon Musk promoting the cause, Bitcoins Exchange is no longer a secret. However, the truth can’t be denied that the market is unstable. Interested individuals must be willing to take risks to reap the rewards. So, thorough research before the investment is a must thing to get more detailed information about this concept. Happy investing.
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