Steemit Crypto Academy Contest / S1W2 – Reviewing Centralized Exchanges by @avagah

Greetings everyone,

Welcome once again to another wonderful episode in the crypto Academy community. Before I present my homework post, I would like to acknowledge the professors and the crypto Academy community for making such an educative lecture possible. Today the topic is all about centralized exchange

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About Centralized Exchange

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In the crypto world, there are a lot of cryptocurrencies many people from different parts of the world use. However, anyone involved in the crypto world would prefer some specific crypto asset at a point in time. Depending on the choices of coin preferred, the person would like to exchange his asset for the other. This practice is also known as Exchange. However, exchanging crypto-assets can only be done on Exchange platforms.

Exchange refers to a platform where traders trade their crypto assets. Initially, all Exchange platforms were Centralised, meaning it was managed by an individual or an organization. Recently, there are other decentralized Exchanges where people trade their assets by providing liquidity into the Liquidity pool to swap their assets as well.

Moreover, Exchange provides its wallet for users to keep their assets. Usually, most people use the Wallets to keep their crypto assets but the Exchange equally provides wallets for users to keep their holdings.

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Centralized Exchange is a platform that is managed by a specific organization or an individual which allows users to swap their crypto assets, trade, and keep their assets as well.

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Examples of Centralized Exchange

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There are numerous Exchange platforms built by many individuals and organizations from different parts of the world.

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Advantages of Centralised Exchange

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• Has different crypto pairs: there are more numerous crypto pairs on the centralized exchange than on the decentralized exchange. Most people prefer the centralized because of the numerous pairs.

• High Scalability and low transaction fees: numerous transactions on the centralized exchange emerge faster. Which makes the system reliable in terms of fast transactions and also charges low transaction fees. Unlike, the decentralized platforms which may require high percentage slippage to swap the asset.

• User-friendly: The centralized exchange has a user-friendly interface. It requires basic English to understand the interface. Unlike the decentralized exchange which requires in-depth crypto knowledge before you can swap an asset.

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Disadvantages of Centralised Exchange

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• No Transparency: Transactions cannot be monitored by other people. Fraud can easily be carried out.

• Low security: The system is managed and controlled by an organization or an individual. This means the system is controlled by one server by the individual or the organization. This makes the system easier to attack compared to the decentralized exchange which uses multiple servers.

• Third-party involved in transactions : The centralized exchange requires an Intermediary to complete transactions. Unlike the decentralized exchange where the transaction is carried out without any third party.

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What I look out for when choosing an exchange

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Numerous exchange platforms have different features. Usually, it is advisable to have more than one exchange platform. Here, I would enumerate some reasons why I would choose some exchange platforms and ignore others.

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• For Security: The first thing I would look out for when choosing an exchange platform is its security. Usually, most exchange platform ends up being a scam. Scammers build different exchange platforms for inexperienced traders to Join. Although exchange can be hacked, some exchange platforms have strong security and have been relevant for quite a time now. An exchange like Binance and coinbase would be very difficult to hack. According to my opinion, every crypto user should have a Binance account.

• Low transaction Fees: everyone in the crypto ecosystem would like to be charged a lower transaction fee or better still no transaction fees. Different exchange platforms charge different transaction fees. A typical example is between Binance and Poloniex exchange. When swapping steem which is worth less than 10usd on Binance, the transaction cannot be complete however, swapping 2 USD worth of steem on Poloniex can still be possible. Poloniex also charges no fees when transferring any worth of USDT with the TRC-20 network. Unlike other exchange platforms that charge a dollar as transaction fees.

• Different Pairs available: There are different pairs available on different exchange platforms. That’s why it’s very necessary to have more than one crypto exchange platform. Sometimes, traders would like to buy some specific crypto asset that may not be available on the user’s exchange platform. A typical example is Telcoin. Telcoin is a very popular coin but is only available on the kucoin exchange platform at the moment. Before I could purchase the Telcoin, I needed to register myself on the kucoin platform.

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These are the major things I look out for when choosing an exchange platform. Of course, I check out the position among the top 20 exchange platforms.

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About my Favorite Exchange platform

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My Favorite exchange platform is the Gate.io exchange. This platform is one of the most common exchange platforms in the crypto ecosystem. It’s currently ranked at 7th position in the current exchange rankings with over 5 trillion volume.

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Features of Gate.io

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• Multiple Account: Here you can add multiple gate.io accounts. Other users prefer to create and manage multiple accounts. This feature would allow any user the opportunity.

• My profile: Here you can view the details of your account. The referrals, the age of your account, the subscribers and follows as well.

• Payment Method: Here, you can add different payment methods. Either a credit card or other payment methods are available.

• Security Center: Here, you can change your password and complete other verification requests.

• Customer Support: Here, you can report any problem the account is facing to the organization.

There are a lot more features available as seen in the screenshots above.

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Market

All the various crypto assets are available in the market. Also, you can view the top gainers and top losers at this place. Also, there are a lot more options available in the market place. P2P trading is available, copy trading is available on the platform, liquidity mining and cloud mining are all available on the platform.

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Exchange

With this option, traders can make trades, swap tokens, and make all kinds of trading orders.

There’s spot trading available which allows users to quickly swap tokens at market price and order price as well. Moreover, there’s leverage trading which allows users to multiply their trade profits.

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Wallet

Wallets allow users to keep their assets. Just like the decentralized wallets which allow users to keep their crypto holdings, the gate.io wallets also provide space for users to keep their assets.

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The main reason why I choose gate.io as my favorite centralized exchange is that, gate has numerous crypto pairs compared to most of the top exchange platforms. Most times when new coins are generated, gate.io is part of the first platform to list them. And it’s very simple to purchase since it would be paired with either BTC or USDT.

Moreover, gate.io has very good security just like the popular guy exchange that platforms.

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Things I would like to change about Gate.io

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• KYC Verification: Many people complain about other exchange verification. Like Binance, coinbase, kucoin and other. But non of these exchange verifications is as tedious as gate.io’s. To verify your identity with gate, you need to go through a whole lot of processes and after doing everything, the verification process takes some days to complete. This is one of the major reasons why most people do not like the platform.

• Gate.io does not allow users to swap assets with a smaller value. Unlike Poloniex and houbi where you can easily swap assets which is worth 2 USD, gate.io does not allow its users to swap assets with smaller values. Not long ago, I Swapped some USD to BTC and when I wanted to swap it back, I was left with 4.5 USD worth of BTC which they assumed it cannot be swapped back to usdt.

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Aside from these two problems, gate.io has been very friendly to me and would recommend to everybody

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Shortcomings and solutions of CEX

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The centralized exchange has many shortcomings in general, since the platform is managed and operated by one organization and a particular server, the platform can be simply hacked when relevant information is leaked.

From my experience, I think the 2-factor verification form can be enforced to reduce the risk of falling victim under such circumstances.

Not long ago my steemit wallet was hacked. However, with the help of my country rep and the recovery account option, I have gained my account back. My experience during this period was that I realized the reason was saving passwords online. When you are using an iPhone, saving your passwords online may seem very simple and secure since it would require your Face ID or fingerprint to unlock. However, this is a very huge trap that may cause you a lot.

Even if a secured decentralized wallet like steemit-wallet is hacked how much more than a regular exchange platform that is managed by an organization.

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CONCLUSION

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To conclude, I would say every user should have more than one exchange platform. Keeping all your asset at one exchange platform would be very risky. The asset should be shared among different exchange platforms to avoid loss of all your asset in case there’s and fraud cases.

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