What is the need for multiple cryptocurrency exchanges?

Exchanges that facilitate the trading of cryptocurrencies for other assets, such as digital and fiat currencies, are known as cryptocurrency exchanges. Cryptocurrency exchanges, in effect, act as the middleman between buyers and sellers, earning money through commissions and transaction fees.
A majority of cryptocurrency exchanges are currently centralised. These exchanges are managed by centralised bodies, are simple to use and provide professional traders with advanced features. However, centralised exchanges have a drawback as hackers can gain access to these exchanges. Furthermore, they impose KYC requirements on traders and exchange users. Decentralized exchanges have arisen to address these issues by protecting users’ privacy and anonymity while also being resistant to hacking.

cryptocurrency exchanges

Centralised Cryptocurrency Exchanges

Centralized exchanges are more reliable because they are controlled by a company. Between a buyer and a seller, centralised cryptocurrency exchanges act as a middleman.
Examples of centralized cryptocurrency exchanges include:

  • GDAX
  • Kraken
  • Gemini

Decentralised Cryptocurrency Exchanges

DEXs (decentralised cryptocurrency exchanges) allow users to conduct peer-to-peer transactions without the use of a middleman. Decentralized exchanges are preferred by some users due to some of the issues associated with centralised exchanges.
Decentralized exchanges, on the other hand, do not permit the exchange of fiat currencies for cryptocurrencies.
Examples of decentralized cryptocurrency exchanges include:

  • AirSwap
  • Barterdex
  • Blocknet

Features of a Crypto Exchange Platform Software

Some of the features are must-haves for crypto exchange platform software that are distinctive across various exchanges. Hence, one should research according to their needs before selecting a crypto exchange.

Wallets

A wallet is a place where users store their assets. Users will benefit greatly from an exchange that includes a secure wallet. However, an exchange must provide a wallet that supports multiple cryptocurrencies so that traders do not need to keep multiple wallets for different assets.

User-Friendly Interface

Cryptocurrency and trading are unfamiliar to many traders. When a new trader wants to invest in cryptocurrency, the first place he/she goes is to an exchange. As a result, it is critical for a successful exchange to provide its users with a user-friendly interface. It must meet the requirements of both novice and experienced traders. It should also have a user-friendly interface that hides all of the complexities of cryptocurrency trading by providing two modes, “Lite” and “Pro”.

Liquidity and Fund Management

The primary requirement for any exchange to begin operations is to secure liquidity. Liquidity can be created in a variety of ways. Decentralized exchanges, for example, require traders to become Liquidity Providers (LPs) by depositing their assets with the exchange. The exchange builds liquidity while the LPs earn interest on their deposits.
A fund control strategy is required for any exchange to function successfully. This is due to the fact that each fund control strategy necessitates a unique set of security measures.

Trade Engine

For any crypto exchange platform software, a trading engine is an important feature. Live price charts, volatility index indicators, and analytical tools for professional traders should all be included in the trading engine.
In the case of a decentralised exchange, instead of a trading engine, there is a need for smart contract logic. These smart contracts allow trading and ensure that trades are completely secure. Traders and exchange operators do not need to keep an eye on the trades because smart contracts execute automatically.
Different cryptocurrency exchanges provide distinct features, such as all exchanges have security features and measures in place, charge different rates on fees of trades, payment methods available to customers on exchanges, supported coins available on the exchange and their customer support.
Hence, it is necessary to evaluate all the features of cryptocurrency exchanges and choose accordingly to one’s needs and wants.

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