Understanding the risks of trade with CEX and Dex: a guide for investment in cryptocurrency
The cryptocurrency world has exploded in recent years and many new investors enter the market every day. As exciting as it may be, investing in cryptocurrencies requires a solid understanding of the associated risks. In this article, we will examine the risks that deal with the Cryptocurrency Trade Trade (CEX) and Decentralized Scholarships (DEX), also known as Dexs, in connection with trade in connection with commerce (DEXs).
What are CEXS?
Cryptocurrency exchanges are platforms with which users can buy, sell and act cryptocurrencies. They offer resellers a convenient way to exchange cryptocurrencies for another, usually with the additional advantage of the lever and margin trade. Cexs can be categorized in two main types: central exchange (CEX) and decentralized change (DEX).
Types of CEXS
* Central Value Scholarships (CEX): These are traditional values that work under a central authority. As a rule, users should register an account, check their identity and follow strict rules before they can act.
* Decentralized Change (DEX): Dexs, on the other hand, are decentralized platforms that work without a central authority. You use Blockchain technology to facilitate and allow users to maintain and manage multiple cryptocurrencies.
Risks related to CEX trade
Although the negotiation of CEX can be comfortable, there are also several risks:
- High rates: Centralized stock exchanges charge high stores, usually between 0.5% and 2.5% per transaction.
- Liquidity risks: If the exchange has a liquidity crisis or has a low trading volume, users will not be able to sell their cryptocurrencies at affordable prices.
- Safety risks: Exchange is susceptible to cyber hackers and attacks, which can lead to considerable financial losses to resellers.
- Regulatory Risks:
Changes in regulatory environments may affect CEX viability and force them to adapt or risk completely.
What are Dexs?
Dexs are decentralized platforms that use blockchain technology to facilitate retail without a central authority. They offer several advantages about traditional CEXS:
- Lower rates: Dexs usually charge lower rates in stores compared to CEXS.
- Increased security: Decentralized change is safer because no third party mediators are required to do business.
- Largest liquidity: Dexs usually have higher trading volumes and a more active community of users.
Risks related to dex trading
Although Dexs offers several advantages, some negotiation -related risks on these platforms are also connected:
- Liquidity risks: As already mentioned, Dexs may have liquidity problems if the number of resellers is too small.
- Smart Contract Risks: Smart contracts are code -based systems that automate many aspects of Dex operation. However, you may be susceptible to errors and explorations, which can lead to considerable losses to resellers.
- Regulatory Risks: As already mentioned, regulatory changes may influence the feasibility of Dexs.
Diploma
Negotiation with CEXs or Dexs requires a solid understanding of the associated risks. Although CEXs offer comfort and lower rates, they also have high risks and liquidity risks. Dexs, on the other hand, are decentralized platforms at lower rates and higher safety, but can be liquid risks if the number of resellers is too small.
How to minimize risks by negotiating CEX or Dexs:
* Perform complete surveys before entering an exchange.
* Understand the rates and rates that are assigned to each platform.
* Choose a serious exchange
that has a good history of safety and customer support.
* Keep your software up to date to ensure you have the latest security patches.
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