How Does Cryptocurrency Exchange Work?

Crypto exchanges are services for operations with digital currencies and trading. Users can buy and sell cryptocurrency, and use trading bots and different trading strategies on such platforms. They can be of two types:

  • centralised exchanges (CEX)
  • decentralised platforms (DEX).

Every cryptocurrency exchange offers its own range of crypto assets available for trading. For example, the WhiteBIT exchange provides over 400 crypto pairs.

Prices for crypto assets on crypto exchanges are determined depending on the previous transactions with those assets and usually are equal to average market rates.

Clients usually have to register and pass KYC to buy cryptocurrencies on centralised crypto platforms. Regular spot trading does not require verification, but other features, such as buying crypto with fiat, futures trading, etc., require user verification.

Decentralised exchanges do not ask for user registration and verification, so anyone can conduct transactions on DEX. However, the thing is that DEX is not responsible for user funds. DEX is only an intermediary between users who exchange crypto directly from their wallets. In this case, the responsibility for funds lies sorely on users. It is the reason why centralised exchanges are safer to use.

Coins Rates And Charts

Every crypto exchange offers a range of crypto assets for trading. Coins rates change independently on the platform they are traded on, though the exchange rate may be slightly different from the average market price. Crypto rates depend on market fluctuations, news background, competition, etc. It is important to note that the less capitalisation a coin has, the higher its volatility in the market; thus, it is easier to manipulate its price.

When traders buy and sell cryptocurrency, they rely on the market situation, current trends, news background, and cryptocurrency charts. Every crypto platform offers crypto graphs where you can see the most recent price fluctuations and understand which next step you need to take in your trading strategy.

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