Difference Between Centralized, Decentralized and P2P Cryptocurrency Exchanges-Crypto soft india

cryptosoftindia

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Cryptocurrency Exchanges has been modifying its architecture from the day of its birth. In the very initial days, Cryptocurrency Exchanges are designed to function in the centralized network as days go, this business gains popularity and stands straight as a promising business model. Later then, technology demands Crypto Exchanges to incorporate multiple dimensions.





The core design of crypto exchanges is to act as the platform where one can buy or sell virtual currencies. Based on the working methodologies, functionalities, integrated features, service they are broadly classified as





  • Centralized Exchange
  • Decentralized Exchange
  • P2P Exchange




What are Centralized Exchanges?





Centralized Exchanges are the earliest version of exchanges. It is the kind of ecosystem built with trust as the backend. Here, the admin of the Exchange has direct control on trading All the data, funds are stored in the central server. i.e, the single pathway for data. It enables quick and easy data handling.





How Centralized Exchanges Work?





Centralized Exchanges more or less functions as a bank. The admin is the one and only the central authority of the exchange. Users store their own assets inside the exchange. Traders of the exchange might have their own individual private keys to access their Crypto wallets but all the assets are stored in the Centralized Server.





It allows





  • Fiat to Crypto trading
  • Crypto to Crypto trading




Benefits of centralized exchange





Liquidity






Liquidity increases with the increase in the user's basis. Centralized Exchanges have more liquidity than other kinds of Exchanges. Till now these exchanges remain popular among traders.





Fast Transaction





In Centralized Exchanges, the funds and data are stored in the central server, there is a single way path for data, once the trade matches, the transaction happens instantly.





Easy maintenance





Centralized Exchanges are easy to maintain quite easy to handle and maintain as there is a central server for storage.





User friendly





Centralized Exchanges provide a rich user-friendly experience and high tech features for features.





What are Decentralized Cryptocurrency Exchanges?





Decentralized Exchanges or DEX evolve with the primary concern of solving the problems and inconveniences in the centralized exchanges. This platform runs directly on the blockchain network. Here, trading happens automatically under smart contracts without the involvement of third parties.





How DEX works?





In Dex, a Smart contract is everything that does the job of Escrow service as well as order matching engines. like centralized exchanges users, need not store their assets inside the exchange. Here, traders own full authority for their assets and can store funds in the private wallet or cold wallet. It supports the only crypto to crypto trading, fiat to crypto trading is not applicable in the case of DEX.





Atomic Swap





Atomic Swap is the kind of technology incorporated in the DEX, that let traders exchange the pair of Cryptocurrencies belonging to a distinct blockchain network.





No Splitted Trading





In DEX, the user can’t implement splitted trading as all the order matching is under a smart contract. End to end trading alone can be executed.





Noncustodial assets





In decentralized exchanges, traders need not store their assets inside the exchange. Users have full accessibility and freedom to store and use their assets in the way they wish.





Benefits of decentralized exchange





Security






The most indispensable and notable benefit in the DEX is security. The chances of hacking and theft are very low here as all the funds are stored outside the exchange under the trader's governance.





Secured Data Storage





All the transaction data, users' data are stored in the distributed ledger technology which is immutable and can’t be stolen.





Anonymous trading





DEX Supports anonymous trading KYC is not a compulsion in decentralized exchanges.





Yet, DEX has limitations such as





  • Low liquidity
  • Inability to restore data
  • Low speed
  • Scalability issues




How P2P Exchange works?





In DEX, the transaction speed is less than centralized exchanges. Peer to Peer Exchange matches people behind the trading and the platform acts as the Escrow account during transaction.





It support


  • Fiat to crypto trading (via bank)
  • Crypto to crypto trading




Escrow





Escrow is the fundamental thing in P2P Exchanges, all the transactions are handled securely within the escrow wallet





Custodial assets





Traders need to send cryptos to the Escrow wallet of the exchange during trading but they no need to store assets on the exchange.





OTC trading





OTC trading is supported here, traders can sell cryptos in the exchange and can get the desired amount via banks or in person.





Key Benefits





  • Secured trading
  • Fast transaction
  • Anonymous trading




As of now, most of the Cryptocurrency Exchanges are centralized. The trade volume of Centralized exchange is very much higher than that of DEX and P2P Exchanges. Slowly and steadily these exchanges gear up and prepared themselves for the race. Yet, we should remind the truth that these two are in the early stage and some other user-friendly features need to be adopted.


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Tina

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Most business people have the idea to start a crypto exchange platform? But, they didn’t How to start? What are the important features? How much does it cost? Like a lot of questions. Well, here I explain all of them in detail.

Before you are going to start a new exchange platform you need to know the basics of the crypto trading platform.

Different Types of cryptocurrency exchange:

Basically there are 2 different types of exchanges in the crypto industry.

  • Centralized Exchange
  • Decentralized Exchange
Centralized Exchange

Centralized exchange is generally called a traditional exchange. In a centralized cryptocurrency exchange a middle man track & stores your the trader’s details like (Transaction history, Private Details). Traders must pay some amount of commission or fee for exchange their digital assets in the centralized exchange.

Decentralized Exchange

Decentralized exchanges are introduced to overcome the drawback of a centralized exchange. Most crypto traders shift from centralized exchange to decentralized exchange.

Decentralized exchanges offer the p2p crypto trade exchange without the involvement of third parties as an intermediator. Traders feel secure in the Decentralized exchanges because transaction details & and private details are not in centralized hands, No need to pay the extra charges or commission in DEX.

How to Start a Cryptocurrency Exchange?

Three ways to develop your own cryptocurrency exchange software

  • White Label Solution
  • Open-Source Solutions
  • Custom Software Solutions
White Label Solution:

White label is an upgrade version of all exchange platform, it is also called ready-made script or software. By using the white label crypto exchange software you can launch your crypto trading platform instantly. It is one of the easiest and fastest ways to start your crypto exchange business.

Open-Source Solutions:

You can start your exchange platform by using free open source code. But these solutions are not reliable, less-secure. So, most entrepreneurs avoid this method.

Custom Software Solutions:

The third way is to build your crypto trading platform from scratch. It needs more time and money to build your crypto exchange platform.

Tips: One of the easiest and safest way to build your crypto exchange platform by using white label crypto exchange solutions

Features of crypto exchange platform:

  • Admin Module
  • Trader Module
  • Crypto Payment Gateway
  • Crypto Wallet
  • Liquidity API
  • Mobile Trading Application (Android, iOS)
  • Atomic Swaps
  • IEO Launchpad
  • Referral Program
  • Margin trading
  • KYC/AML
Tips to launch your crypto trading platform:
  • Determine where you want to start your business
  • Get the proper licenses
  • Hire the best cryptocurrency exchange software provider
  • Connect our exchange to others for high liquidity
  • Implement the best security practices
  • Start marketing
  • Offer 24/7 tech support
How much does it cost to develop the cryptocurrency exchange?

Generally to develop the cryptocurrency exchange in the 8KUSD to 15KUSD which depends on your requirement.

Having an idea to start a cryptocurrency exchange platform? Coinsclone, offers the unbeatable price to start your own crypto trading platform. If you are interested, check their free live demo visit @ cryptocurrency exchange script website.