Cryptocurrency exchanges are services that allow users to swap one cryptocurrency for another or trade cryptocurrencies with several fiat currencies; some crypto exchanges provide wallet services that allow users to hold tokens within them. Beyond these core functions, crypto exchanges also offer additional tools such as margin and derivative trading.
A crypto exchange is either a Centralized Exchange (CEX) or Decentralized Exchange (DEX). The major difference between both types is that CEXs facilitate trading via an order book, which is a virtual intermediary that matches buyers and sellers on the platform; hence, if you place an order to sell Bitcoin at $20,000, the exchange will match you with a buyer that wishes to buy Bitcoin at $20,000.
What Is a Centralized Exchange (CEX)?
Centralized Exchanges are controlled and managed by a single company, which enjoys all the profits and manages user data; similarly, they set all rules for the platform, including fees charged. They usually comply with regulations and government rules, including KYC and AML requirements; unlike decentralized exchanges, they need a license to run in every country; hence, following rules is important.
Since they are run by companies with huge investors, their major advantage over DEXs is that they have ever-high liquidity, making it easy for users to sell or buy crypto at any time; more importantly, CEXs can facilitate fiat purchases directly from banks, and DEXs cannot.
Although CEXs have long existed since 2010, the market leaders have now changed, as newer platforms have dominated the market; hence, this article will examine the best CEXs to consider in 2022; our rankings prioritize excellence in User Experience, Cost of Use, and Platform Security.
Our Top 5 Picks are:
Binance – Overall Best
Although Binance was launched after many of its top competitors, it has risen to become the best crypto exchange with over $19billion in daily trading volume, more than 3x the trading volume of every other CEX in this list combined. It is widely accepted in Asia (where it was founded), Europe, and Africa. Although Binance isn’t available in the U.S., the company has released a U.S. version (Binance U.S.)
It can be accessed on desktop and mobile, with a basic and pro version, allowing beginners to access basic services and switch to a professional interface if they wish.
- Numerous trading pairs.
- Available across several continents (and supports multiple languages).
- No deposit fees and low withdrawal fees; maker and taker fees are set at (0.1% and 0.1%, respectively); no fee is charged for trading Bitcoin.
- Good customer support.
- Influential market leader.
- The main app is not available in the U.S. (Binance U.S. isn’t as sophisticated)
Coinbase – Best For Beginners
Coinbase is one of the influential leaders and pioneers among crypto exchanges. Coinbase excels for its easy-to-use interface, which makes it suitable for beginners. Very easily, users can trade coins and even get access to in-depth technical analysis (for a fee). Coinbase Pro is available for experienced traders who may need more functions.
Coinbase is available in the U.S. and 100+ countries and has 90 million global users.
- Beginner friendly.
- Very secure platform
- 200+ available cryptocurrencies.
- Maker and Taker Fees at (0.4% and 0.6%) which is relatively high compared to others.
- Doesn’t support many fiat currencies.
FTX – Best for NFT Trading
Created in 2019, FTX is one of the youngest CEXs in existence, and it has quickly risen to become one of the most prominent in the crypto space; it offers several functions, including crypto options and an embedded NFT marketplace. It also offers educational content to users to enable them to familiarize themselves with the ins and outs of cryptocurrency.
Like Binance, FTX has a second option for the U.S. audience (FTX US), which isn’t as sophisticated as the major platform; however, it is fast-growing and already making waves to become one of the top 10 CEXs.
- Good range of crypto support.
- Low maker and taker fees.
- Withdrawal is free for stablecoins and all coins on the Solana Network. Deposit is free for all coins.
- An active NFT marketplace.
- The user interface may be confusing for beginners.
- No live chat support.
Kucoin – Best for Trading Altcoins
Kucoin is popular as an exchange with several altcoins, with over 700 cryptocurrencies available for trading on the platform, second to Gate.io in altcoin volume. It is an excellent platform to trade several low-mid cap altcoins not listed on Binance, Coinbase or FTX.
Founded in Seychelles, it isn’t available to U.S. users and doesn’t have a U.S. version.
- Supports many cryptocurrencies, including several low-mid cap altcoins.
- Low trading fees.
- Not available in the U.S.
- The user interface isn’t beginner friendly.
Kraken – Best for U.S. Citizens
Founded in 2011, Kraken is one of the oldest crypto exchanges, offering services to U.S. citizens and many other countries. Like Coinbase, Kraken has an easy-to-use interface; however, it is better suited for U.S. citizens than any other CEX in this list.
Like many other apps, Kraken has a basic and a pro version, where users can easily switch to their preferences based on their trading experience.
- The user interface is easy to navigate.
- Live chat is available, as well as phone customer support.
- Fees are moderately okay.
- Not available in all 50 U.S. states
- Doesn’t support many national currencies.
- A few security concerns.
Advantages of Centralized Cryptocurrency Exchanges
- High liquidity makes it very easy to buy and sell cryptocurrencies.
- Much easier to use than DEXs; hence, it is better for beginners.
- Much more trading pairs than decentralized exchanges.
Disadvantages of Centralized Cryptocurrency Exchanges
- As it is owned by a single company, it faces the risk of hacks, which can jeopardize users’ funds.
- Transaction fees may be unnecessarily high on many CEXs
- CEXs usually have an embedded custodial wallet that holds users’ cryptocurrency within; although this allows convenience, it could compromise users’ funds in the case of fraud.
Centralized Exchanges have some clear advantages over DEXs, making them important within the crypto space. Even if you prefer making your transactions on DEXs, the ease of swapping crypto for fiat on CEXs will see you use them a few times.
At least one of these 5 picks listed above should be in your consideration for crypto trading; compare their pros and cons, and determine the one which is best for your trading strategy.
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