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

Greetings to Everyone

I count it a privilege to be part of this amazing contest where I'll be reviewing Centralized Exchanges.

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Centralized exchanges provide the primary gateway for investors to get into the cryptocurrency industry. The term “centralized” is used because these platforms hold the private key to user deposits. This is contrary to decentralized exchanges (DEXes) where users trade with their private wallets and only interact with on-chain smart contracts.

Although decentralized exchanges are growing in popularity, they typically do not provide a fiat on-ramp, meaning that users must still get onboard crypto through centralized exchanges such as Binance, FTX, Kucoin and others.

Benefits of Centralized Exchanges

Fiat on-ramp: As noted earlier centralized exchanges provide fiat on and off-ramps. This means that in order to get money into and out of crypto to and from your bank account, you need a centralized exchange.
Decentralized exchanges tend to allow users to stay anonymous and cannot offer this service (at least not anytime soon). Most fiat/crypto trading volume takes place on centralized exchanges.

Sophisticated trading functionalities: Centralized exchanges offer trading functionalities that are currently unavailable on DEXes. These features include advanced limit orders, futures trading, peer-to-peer trading, recurring purchases, mining pools, and more.

Advanced security: Although some might argue that centralized exchanges are not safe for storing crypto, most top-tier exchanges such as Binance and Coinbase offer insurance schemes to protect investors in the case of platform security breaches.
This level of protection is currently unavailable on DEXes, thus making centralized exchanges a better alternative for new investors who are not convenient with setting up and managing a personal wallet. In the event of hack as since on Binance in 2019, the platform would fully compensate users.

What I look out for when choosing an exchange to trade My crypto assets

When choosing an exchange, one prominent feature I consider is the ability to freely move funds in and out of the platform. Put simply, the platform needs to support Naira deposits and withdrawals, preferably through a P2P exchange service.

Other features I look out for are the trading fees and the number of listed coins. Cheaper fees allow me to get the most of my trades, while a robust list of coins means I can put money into more assets without needing to move funds in and out of the exchange.

My favorite centralized exchange and its unique features

My favorite cryptocurrency exchange is Binance. The primary reason I love Binance is because it supports Naira deposit and withdrawals. Additionally, the platform has relatively lower fees compared to other platforms and also lists a good number of coins.
Unique features

Launchpad: Although other exchanges also offer a token launch platform, the Binance Launchpad is an industry-leader. It appears that Binance conducts due diligence on products that it lists, allowing investors to maximize profits on their investment.

Binance Earn and Staking: This is another unique Binance feature. The platform seems to understand that not all users are willing to explore DeFi and how to make money from it.
Hence, the Binance Earn and staking features allows investors to earn yield on idle crypto assets. The process is also simple and removes the difficulties users typically face when trying to do DeFi on their own.

Binance NFT: The Binance NFT marketplace is another unique feature that sets the platform apart. The exchange has partnered with notable celebrities like Valentina Shevchenko, Jimmy Butler and even Falz have launched NFTs with Binance. I’ve not bought any NFTs though, but like that Binance tries to be an all-in-one platform for crypto users.

Things about My favorite exchange I will like to be changed

At this time, there’s not much I would like for Binance to change. Something I would perhaps like to change is that the app seems to have too many options that it can actually get you confused if you’re just getting into crypto. A simpler user interface would make the app ideal for new investors.

Shortcomings I see on centralized exchanges and my suggestions to protect user funds since we don’t have access to our wallet private keys

The main shortcoming with centralized exchanges is that they often do not disclose how much they make from listing new projects. T
his means that the platform makes money even before users start trading the coin, and makes even more from the trading volume. A little more transparency could help users be more informed about the risks involved.

Another shortcoming is also around listing new coins. Some platforms do not do due diligence and end up listing projects that simply rugpull investors. Investors deserve more transparency too.

In terms of security, the best way user funds can stay protected is for the platform to set up an insurance fund so that it can reimburse users if a hack occurs.
For investors, I always recommended setting up an app or hardware-based two-factor authentication. Also, if possible use a separate device for crypto transactions and never store most of your crypto on a centralized exchange.

Conclusion

Centralized exchange has really aided our cryptocurrency transaction in so many ways and will still continue to onboard new investors to the Crypto space.

I will like to invite @focusnow, @misterfab, @beautybb and @samuel20 to join this amazing contest.