Centralized exchanges (CEX) and decentralized exchanges (DEX) each have their strengths. Understanding the differences helps you choose the right platform for your trading needs.
Centralized Exchanges (CEX)
Platforms like Coinbase, Binance, and Kraken hold your funds and facilitate trades. They offer high liquidity, fiat on-ramps, and customer support, but require trust and KYC verification.
Decentralized Exchanges (DEX)
DEXs like Uniswap and SushiSwap let you trade directly from your wallet. You maintain custody of your funds, access more tokens, and preserve privacy—but need to manage your own security.
When to Use Each
Use CEXs for fiat conversions and high-volume trading. Use DEXs for accessing new tokens, maintaining privacy, and participating in DeFi. Many traders use both strategically.