NEW DELHI: Cryptocurrencies are a source of endless fascination–and aspiration–today. However, cryptocurrency exchanges are the real facilitators that have established the crypto market and catapulted cryptocurrencies to massive popularity.
Let's revisit the world of cryptocurrency exchanges and the way they operate.
Cryptocurrencies exchanges are online platforms where trading of digital currencies and fiat currencies take place for which a transaction fee is necessary. The cryptocurrency exchanges like ZebPay act as trustworthy intermediaries between buyers and sellers.
* The trading of cryptocurrency involves buying and selling of cryptocurrencies such as Bitcoin, Litecoin, Cardano, etc.
- Trading could also include changing digital currencies into fiat currencies and vice versa.
* Exchanges can be used to convert cryptos back into fiat currencies when the user wants to withdraw the amount from the banks. How do these exchanges work?
Before we understand the working of exchanges, let us remember first that all the cryptocurrency transactions and trading done through the exchanges are recorded on a distributed ledger.
There are a few basic steps to be followed for crypto trading:
* Firstly, you need to open an account or get registered in one of the crypto exchanges based on your own research and inclination.
* Then the crypto exchange needs to be downloaded, and an account has must be created after fulfilling KYC, email and mobile verifications.
* Finally, a password needs to be set, the user finally gets officially into the world of crypto trading.
This password needs to be remembered for further uses.
* Crypto exchanges allow buyers to deposit money, using various methods like direct bank transfer, UPI, using debit or credit cards.
Now, based on the regulatory framework and customer’s convenience, crypto exchanges can be centralized or decentralised.
In India and across the world centralised exchanges (CEXs) are the most trusted and widely prevalent crypto exchanges as they are controlled and regulated by the exchange, which securely holds the customer’s money like a bank. They are known for higher liquidity and faster transactions.
Decentralised exchanges (DEXs) offer a peer-to-peer marketplace that connects buyers and sellers directly for trading without involving intermediaries. (For the latest crypto news and investment tips, follow our Cryptocurrency page and for live cryptocurrency price updates, click here.)