You may have heard the word “crypto trading exchange” or “crypto trading platform”. So the question is what this crypto trading exchange is and what is the purpose of it?
Crypto Exchange – A Middleman Or A Bank?
A crypto exchange is a middleman who allows a crypto owner to trade cryptocurrencies by utilizing the services of the platform. If there is a crypto owner then he or she must be a member of a crypto trading platform. This is usual in the crypto space. These exchanges render several services such as crypto custodial, trade, buying, selling and exchanging cryptocurrencies. The exchanges also build crypto trading skills, educate masses about crypto and above all is a crypto marketplace.
As in the case of normal cash, there are banks rendering banking services, similarly, for crypto investors, there are exchanges.
The Ultimate Crypto Marketplace
Supposing a person is interesting in buying Ethereum. It would be impossible for that person to find someone with Ethereum and then execute the purchase. Even if he is able to find someone, but there is a chance that the person is not willing to sale or demands an exorbitant price. This is why there are exchanges consisting of both, the buyers and sellers. If a person is willing to sell then he informs his exchange that he wants to sell. Likewise, if someone is looking to purchase then he sends his request to the exchange. In return, these exchanges duly note requests of the customers and then arrange for purchase and sale subsequently.
The other major role of a crypto trading platform is that each of its customers is allocated a space where the customer can store his crypto assets. As there are accounts in a bank, similarly, there are accounts in crypto exchanges as well. Each customer is asked to own and operate an account provided by his or her exchange. Usually there are several types of accounts provided by an exchange. For instance, the accounts could be deposit restricted or specific-trade oriented.
Within these accounts there are multiple features too which become exclusive right of the owner of the account-holder.
Purposeful Trading Experience
For a purposeful trading experience, it is must to have a crypto trading platform on your side. Normally, these exchanges offer liquidities and bonuses upon sign up and execution of crypto trade transactions. For example, there are thousands of crypto firms which contributes a percentage in the customer’s investment. If a customer is putting in 60% then the rest of 40% is pooled in by the firm itself. In return the customer keeps his share of profit while the firm keeps profit according to its share. The importance of this investment sharing is beneficial for both. For example, the trade does not go as planned and there is loss then the burden of accumulated loss is proportionately overtaken by both.
What Does “Decentralize” Mean?
Another important aspect of these crypto trading platforms is that most of them are of decentralized structure. This means that they are free from monitoring and supervision from the governments and governmental authorities. However, in the recent times, there have been some regulations employed upon these exchanges which are apparently in public good. These regulations are also good for encouraging good business environment and healthy competition amongst cyptocurrencies and crypto exchanges.
Being decentralized in nature, although these exchanges charge a fee against a crypto transaction, but the rate is cheaper. In contrast with the charges collected by the banks, the charges of crypto exchanges are extremely low than the banks.
Free of Cost Industry Leading Crypto Tools
In addition, there are several tools of crypto trading which a person would not be able to utilize on his own because they are expensive. Utilization of these tools ensure robust execution of transactions and they automatically notify the traders best available trading opportunities. But by becoming a member of a crypto trade platform, a trader is allowed to utilize the tools without paying anything extra.
One Tiny Problem
The only problem with these firms is that they are 24/7 connected to the internet. Because of that they are at higher risks of being victimized by hackers, scammers and crypto criminals. It is therefore in the best interest of a trader to choose the best crypto trading platform. Prior to engaging anyone for the job, it is equally important to first explore internet and find out about crypto trading platforms.