Centralized or decentralized cryptocurrency exchange

(Last Updated On: March 5, 2022)

There are pros and cons to both centralized and decentralized cryptocurrency exchange. In this blog post, we will take a look at the benefits of each type of exchange, as well as how they compare in terms of security and liquidity. We will also give our opinion on which type of exchange is better for the average user – centralized or decentralized? T

There are two main types of exchanges: centralized and decentralized. Let’s take a look at the benefits of each type:

1. What are the benefits of centralized cryptocurrency exchanges over decentralized exchanges?

Centralize will connect to your back but your need to go through the know your customer process for anti-money laundering purposes. This enabled your government to know your intentions. If you are looking for improved ways to secure your account if the exchange is hacked, you should consider central exchanges.

Benefits of centralized cryptocurrency exchanges:

– Centralized exchanges are typically more straightforward to use than decentralized exchanges. They’re more user-friendly and have better customer support.

– Centralized exchanges tend to have higher liquidity – meaning you can buy and sell cryptocurrencies faster and at better prices.

2. What are the benefits of decentralized cryptocurrency exchanges over centralized exchanges?

Decentral (DEX) offers privacy your government may not know about. It is up to you to declare to the tax authority of your account size and returns gains while trading. If you consider hiding this trading activity from your tax authority this can result in tax evasion which can come with a heavy price of imprisonment or fines.

3. How do centralized and decentralized cryptocurrency exchanges compare in terms of security and liquidity?

I find large USA exchanges like Coinbase charge high commission fees with a wider coin selection. Do understand their automation platform is pretty well useless so this should not be considered. Kraken is a better option but it has lower liquidity but more secure and professional support. Binance.com is another decent option if you want high liquidity, low commission, and very coin selection. To get onto this exchange is very restricted in many western countries.

One large up-and-coming decentral exchange is DYDX which can be accessed anonymously. They appear to be gaining in volumes as well with fairly competitive commission rates. Be aware that you can connect many popular wallets directly to this trading account. Popular wallets include Trust, Metamask, Ledger, etc.

4. What is your opinion on centralized and decentralized cryptocurrency exchanges – which do you think is better for the average user?

IIf you are a small beginner US trader from a retail perspective, Coinbase may be ok if you plan to HODL (buy and sell coins). If you want better protection but lower volume, Kraken would be my #1 recommendation. As said, my number one pick would easily be Binance.com for the reasons mentioned above.

If you are not regulated and willing to risk hacking potential, I would try out DYDX as a choice but with a very small account. This minimizes potential risk if the exchange does have proper security in place to protect your trades.

For the average user, decentralized exchanges offer more privacy and security.


One thing that’s been a hot topic in finance recently is cryptocurrency. Bitcoin, Ethereum, and other digital currencies have seen unprecedented growth in recent years, and many people are trying to get in on the action.

Centralized or decentralized cryptocurrency exchange: what’s right for you?


Do your research before deciding which type the average user is, but decentralized exchange offer more privacy and security. Do your research before deciding which type of exchange you want to join.

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