A crypto exchange is a platform where individuals can buy, sell, and trade cryptocurrencies. These exchanges are pivotal to the cryptocurrency ecosystem, providing a gateway for converting traditional fiat currencies (like USD, EUR, etc.) into cryptocurrencies (like Bitcoin, Ethereum, etc.) and vice versa in the case of centralised exchanges, as well as enabling the trading of one cryptocurrency for another.
Centralised vs. decentralised crypto exchanges
Centralised Exchanges (CEX)
Operated by a company or organisation, these exchanges act as intermediaries in transactions. They are known for their ease of use, faster transactions, and better customer support. Examples include Coinbase, Binance, and Kraken.
Thanks to the nature of these exchanges, users can purchase coins and tokens, and participate in other trading activities via a simple onramp that allows them to use their FIAT money.
Decentralised Exchanges (DEX)
These operate without a central authority, using smart contracts on a blockchain to facilitate direct peer-to-peer transactions. They offer increased privacy and security but can be less user-friendly and have lower liquidity. Examples include Uniswap and PancakeSwap.
In order to interact with these exchanges, users require a crypto wallet.
What exchange should I use to buy crypto?
Choosing the right exchange for buying cryptocurrency depends on various factors, including your experience level, security concerns, the specific cryptocurrencies you want to purchase, and the services you require.
If you’re a beginner, you might prefer an exchange with a user-friendly interface and good customer support. Centralised exchanges are known for their ease of use and offer the easiest way for anybody to get started. Some exchanges also allow bank transfers, credit/debit card payments, and even PayPal transactions.
On the other hand, if you prefer maintaining control over your private keys and retain control of your funds, a decentralised exchange (DEX) might be suitable. These platforms offer more privacy and direct control over one’s assets.
How to buy crypto on a decentralised exchange?
Buying crypto on a decentralised exchange (DEX) is different from using a centralised exchange. The choice of exchange might depend on which blockchain you’re interested in, as some DEXs are specific to certain networks (like Ethereum or Binance Smart Chain).
What’s a crypto wallet?
Once you know what exchange and network you’ll be interacting with, you’ll need a digital wallet that’s compatible with the DEX and the blockchain network it operates on. “Hot wallets” like MetaMask, Trust Wallet, or “cold wallets” like Ledger (hardware wallet) are commonly used. Ensure the wallet supports the cryptocurrency you plan to trade. Always make sure you’re on the legitimate website of the DEX to avoid phishing scams.
Something else to consider when using a DEx is Gas Fees. These are fees charged by the network to complete your purchase. Be aware of gas fees on networks like Ethereum can vary greatly.
What’s the easiest way to buy more than one crypto?
There are a few friction points when making crypto purchases – regardless of using a centralised or a decentralised exchange. DexFund resolves this issue by simplifying the diversification of crypto portfolios with a one-of-a-kind decentralised crypto index fund.
Crypto index funds provide investors with a way to gain exposure to a basket of cryptocurrencies, rather than having to pick and choose individual coins to invest in.
DexFund is built on a low-fees network, reducing yet another friction point for new investors.
