TL; DR
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There are pros and cons to both CEXs and DEXs.
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We think the reason most of us still use CEXs is: we’re all lazy as hell – we started with CEXs and never made the jump because we didn’t need to.
Full story
There is a certain amount of hypocrisy in the crypto space…
Everyone is in favor of decentralization, but the majority of crypto transactions take place on centralized exchanges.
(We are guilty of it).
So, why is that? Let’s start here…
When a person wants to buy a token/coin, he or she needs to be paired with someone else who is selling the same asset, in the desired quantity, at the right price.
That’s a lot of records to spin.
Both centralized and decentralized exchanges do this matchmaking for us users, in a process known as “order matching”.
Okay, so both types of exchanges match…what is the real difference?
Centralized Exchanges (CEXs)
Strength: They are very fast. Buying and selling on a centralized exchange is a fast experience (which is very important if you are a high-frequency trader).
In addition, they are much easier to use. Email address, password and ID is all you need to get started.
Weakness: It’s one entity that controls a lot of other people’s money. If the exchange fails, your money probably goes with it (*cough* FTX).
Plus, having everyone’s crypto in one place attracts the attention of hackers. Oh and you give up some of your financial privacy when you hand over your ID.
Decentralized Exchanges (DEXs)
Strength: No sign-up required, as long as you have a crypto wallet you can use a DEX.
Additionally, you are in control of your crypto at all times, so if the DEX goes down or experiences an outage, your funds are safe and accessible.
Weakness: From a new user point of view, DEXs are extremely confusing! (“What the heck is a ‘private wallet’, why can’t I just use my email?”)
And from a professional trader’s point of view, they can be slow, which hurts their trades.
But all those competitive pros and cons aside…
We think the reason most of us still use CEXs is much simpler than all that:
We’re all lazy as hell!
We started accounts on centralized exchanges because it was the only way to buy crypto with a credit card.
Since then, we’ve all been too lazy to make the jump from CEX to DEX.