Home » Blockchain Guides The different types of ”Exchanges” to Buy & Sell Cryptocurrencies Blockchain Guides The different types of ”Exchanges” to Buy & Sell Cryptocurrencies 1826 Views

When buying Cryptocurrencies like Bitcoin and Ethereum, you’ll have the option of choosing a desired Marketplace to trade on, so let’s explore the most popular options in obtaining Digital Currencies from a certain type of Crypto ”Exchange”

Keep in mind that the word ‘’Exchange’’ is somewhat Semantical, so we should try to get a better understanding as to the different styles of Exchange, because this word is often used to describe any platform that allows the changing of money or in this case digital currencies

Traditional Cryptocurrency Exchange

Similar to a Stock Exchange, a Traditional Crypto Exchange lets investors engage in trading using an Open OrderBook that acts as a matching engine to determine which orders can be fulfilled. The Broker acts as the middle by providing a live Orderbook which would list orders that a trading venue uses to record the interest of buyers and sellers

There can be 2 types of Traditional Cryptocurrency Exchange; Centralized & Decentralized. A decentralized Exchange is governed by code whereas a Centralized Exchange is under the full control of the Brokerage. There is some notable downside to centralized Exchanges like Investors having to comply with AML policies, often forcing users to give up sensitive personal information through a KYC procedure and the growing concern regarding security, as centralized services are easily prone to hacks

Peer to Peer Exchanges

This type of Exchange, basically indicates that you’ll be directly trading with buyer/seller instead of dealing with a middleman. Think of it as a Marketplace where everyone is allowed to post a listing in order to seek out a buyer or seller for a certain Cryptocurrency at a set price

While a P2P Marketplace is owned by a centralized authority, investors get to set the price and method used to conduct a trade. Customer support may intervene in the event a dispute arises by requesting for personal information and acting like the middleman to further clarify the issue

P2P Exchanges take somewhat a more decentralized approach since any individual is entitled to post a listing that may request for a trade to be conducted in cash, this method aims to cut out the banks and brokers by providing an anonymous online meeting place for those who are looking to trade Fiat currencies and Cryptocurrencies

Crypto Broker

Basically, Crypto brokers provide a service that allows buyers and sellers to directly purchase Cryptocurrency from the Exchange itself. A Crypto Broker acts just like a Forex Currency Exchange that is found at airports that allow customers to exchange fiat currency at Broker set rates

Exchanges tend to provide more sophisticated trading tools that allow traders to professional trade Cryptocurrencies on an open Market. Whereas trading P2P Marketplaces let you reach out to a certain type of buyer/seller that is interested in your proposal and CryptoBroker specializes in providing a hassle-free experience to buy/sell Digital Currencies

Cryptocurrency Exchanges are technically marketplaces that allow clients to exchange money directly to Cryptocurrencies or trade Altcoin Pairs

Most of the trading volume that makes up the Cryptocurrency Market is found on popular Exchanges like Binance, Bittrex and Coinbase that have millions of customers registered and trading from a live Orderbook. Centralized service at the moment seem to dominate the overall Trading volume for now, this likely due service tailored to more professional traders