Introduction to Centralized Exchange (CEX)
The crypto ecosystem has come a long way and one of the key facilitators to the everyday adoption of cryptocurrencies and projects are Centralized Exchanges. In this article, we will share how centralized exchanges can help you make transactions and encourage trading and investing in cool projects, like the FantOHM DAO ;-).
What is a Centralized Exchange?
Centralized exchanges are platforms that facilitate the trading of cryptocurrencies for assets including crypto and fiat currencies. As such, CEX acts as intermediaries between buyers and sellers. Since these exchanges are managed and maintained by a central organization, investors essentially put their trust in them to safely complete their transactions and to even safely hodl their precious crypto assets.
For most investors, CEX are one of the most important platforms for transacting because they allow trading of tokens between blockchains or even the trading of fiat currency for cryptocurrency.
In short, the idea of centralization in CEX refers to the use of a common middle man or third party to help conduct transactions. Very similar to how a Bank manages transactions.
Spoiled For Choice
So how many CEX do we have to choose from? Way more than a dozen ;-)
Coinmarketcap.com also lists these exchanges on their webpage.
As you can see, there are many centralized exchanges to choose from, including Binance, Kucoin, Kraken, and more.
And how do you select your ideal cryptocurrency exchange? We recommend looking into the factors mentioned below before making that decision:
- Accessibility: Some cryptocurrency exchanges are not accessible everywhere. Make sure the exchange you choose is available where you reside
- Security: Different exchanges offer different security measures and insurance policies. Do not ignore the security of your assets and investments
- Fees: CEX typically makes revenue by adding transaction costs (and other fees) to each buy and sell (trade) step. Make sure you know what you pay and are comfortable with the associated fees.
- Coins/ Tokens offered: Some exchanges offer only limited coins/ tokens and blockchain networks. Is your favorite token available in that CEX?
- Storage: Many exchanges come with an associated crypto wallet offering to help you keep your investments secure. It is essential to know where your assets are stored and how they are protected. Most CEX offer cold storage (cold wallet) option, for example.
Deposit, Withdraw & Transfer Funds
One thing all CEX have in common is that your funds are held within their platform and so once you’ve created an account, you can add crypto assets. And the most common way of adding crypto assets is to buy them with fiat currency. You can usually do this by linking a bank account for the deposit. You can also transfer funds to your CEX account(personal CEX wallet per token) from your other cryptocurrency wallets! Did we mention one is spoiled for choice?
The screenshots below show that typically, each asset is assigned a unique deposit address by the CEX. This allows a single point of transferring assets from other wallets (or even CEX) to your personal CEX account. Similarly, withdrawing assets from CEX involves providing the withdrawal address (address of the recipient) and choosing the right network and token to withdraw.
Very recently, we published a medium article on How to set up MetaMask Wallet.
If you want to transfer your assets from a MetaMask wallet to a CEX, you can simply select the token in your MetaMask wallet, click Send, and enter your CEX account address for that token. After the submission step, the specified amount of tokens will be transferred to your CEX account.
Always double-check the address you are sending your tokens to as such transactions are irreversible
Withdrawing from CEX to MetaMask is a similar process. Add your MetaMask wallet address, select the right network, and the amount of token you want to withdraw.
Always double-check that you are transferring to and from the same network and the recipient’s address is as intended.
Reach Out To Us
If you have questions about choosing a centralized exchange or transferring funds, drop us a line in our Discord. We’re always available to help.