Top Cryptocurrency Exchanges

What is a Cryptocurrency?

Cryptocurrency is a digital currency that can be traded for goods or services in much the same way as a fiat currency. Cryptocurrencies work using a technology called blockchain. Blockchain is a decentralized technology spread across many computers that manages and records transactions. Operating in this way means that the currency is very secure and unlikely to be manipulated or stolen.

Where can you buy Cryptocurrency?

Cryptocurrencies can be bought and sold at cryptocurrency exchanges.

What is a Cryptocurrency Exchange?

A cryptocurrency exchange is a trading platform that enables their customers to buy an sell cryptocurrency. They often work in a similar way to a traditional stocks and shares exchange but instead of allowing trades of shares of a company they offer the ability to exchange one crypto for another or, dependant on the exchange, for fiat currency.
Each exchange will operate in a slightly different way and serve a different need for a customer, because of this reason it is often a good idea to register at several exchanges as each exchange may have offer a different selection of coins available to trade.
Some exchanges focus on only a single cryptocurrency, most often bitcoin, these bitcoin exchanges exist as a way of trading fiat currency e.g. USD, JPY, GBP for cryptocurrency which can then be sent to a different wallet or exchange and further traded for more unique or niche coins.
Some cryptocurrency exchanges only operate as a website, but a lot of the larger exchanges also offer an alternative in the form of a mobile app. These apps are often the easiest and quickest way to access your funds held on the exchange.

What Are The Types Of Cryptocurrency Exchange?

There are three different types of cryptocurrency exchanges;

• Centralised exchanges (CEX)
• Decentralised exchanges (DEX)
• Hybrids

What Is A Centralised Cryptocurrency Exchange (CEX)?

Known as a traditional cryptocurrency exchange, this is a cryptocurrency platform governed by a company of central organisation which offers cryptocurrency trades from either fiat-to-cryptocurrency or crypto-to-crypto tender.

What Is A Decentralised Cryptocurrency Exchange (DEX)?

A decentralized exchange acts as an alternative to a traditional, centralized exchange. This type of cryptocurrency platform does not depend on a company or a service to control the assets of a customer. Instead, the trades or transactions are controlled by an automated process without any central presence. These trades are considered peer-to-peer or customer-to-customer.
Using blockchain technology, the decentralized exchanges are built to ensure there is a secure way for the transfer of cryptocurrencies without any central figure. Essentially the platform acts as a service which connects trade orders with one another to serve customers looking to exchange tokens. Most decentralised exchanges operate using Ethereum’s blockchain in order to conduct services through the use of smart contracts.

What Is A Hybrid Cryptocurrency Exchange?

A hybrid cryptocurrency exchange is a combination, as the name implies, of both centralized and decentralized exchanges. Taking the best from platform concepts, a hybrid exchange offers the trustless nature combined with the low latency and fast transaction speeds of centralized platforms.
Like decentralised exchanges, a hybrid makes use of smart contracts to ensure that there is no central figure imposing on the integrity of the trade. Basically, this reduces security risks and puts the safety of a customer’s assets onto a blockchain rather than relying on a company.

What Are The Largest Cryptocurrency Exchanges?

Here are the top 5 cryptocurrency exchanges ranked in order according to CoinMarketCap;

• Binance
• Huobi Global
• Coinbase Pro
• Kraken
• Bitfinex

Where can you store your cryptocurrency?

Usually, as with fiat currency, cryptocurrency is stored within a wallet, but this isn't a normal leather wallet but instead a digital wallet. Wallets can be further broken down into two types, custodial and non-custodial.

Custodial Wallets

if you have purchased cryptocurrency from a large exchange such as coinbase then chances are you will have used a custodial wallet. a custodial wallet works in much the same way as a conventional bank, you give them your funds and they store them for you, owning and operating the accounts that they are stored in, when you are ready to withdraw your currency then you give them a new address to transfer the coins to and they enact the transaction, usually taking a small fee for their services.
Custodial wallets are normally used on the larger exchanges to make it easier for new customers to buy and sell cryptocurrency without having to set up their own storage solution.

Non-Custodial Wallets

A non-custodial wallet is a wallet where the owner of the cryptocurrency holds the private key and ownership of the wallet. The key, sometimes referred to as a seed phrase, is a series of words, anywhere between 12 and 24, that acts as a restore for the wallet if it is lost.