CEX Crypto: A Comprehensive Explanation of Centralized Exchange

Bittime - If you want to buy and sell cryptocurrency assets, you need a crypto exchange platform, which is divided into two main types: centralized (CEX) And decentralized (DEX). Both types of exchanges play an important role in the crypto ecosystem, each with unique advantages, disadvantages, and features. 

In simple terms, they make it easy for new users to exchange fiat currency, such as dollars or rupiah, for cryptocurrency.

What is a Centralized Exchange (CEX)?

Centralized Exchange (CEX) is a platform owned and operated by a single entity that acts as an intermediary between buyers and sellers. These entities help carry out transactions by providing liquidity for supported tokens. 

CEXs use an order book system to set cryptocurrency prices, similar to how traditional banks operate. Users typically deposit funds into an account managed by the exchange, which acts as custodian of those funds.

Read too How to Buy Bitcoin (BTC)

Key Features of Centralized Exchange

1. Managed by One Entity

A distinctive feature of CEX is that the platform is managed by a single entity, which allows for faster decision making and efficient strategy implementation. This allows CEX to offer advanced trading tools, fiat currency support, and good customer service.

2. Custodian Wallet

CEXs typically require users to use their custodian's wallet. This means that the user deposits funds into an account that is under the control of the exchange. Although CEX implements various security measures, such as two-factor authentication and cold storage, users do not have full control over their private keys.

3. KYC (Know Your Customer)

CEX also requires official documents to verify the user's identity which is usually referred to KYC This is due to the fact that CEXs are businesses subject to local laws, so users must share sensitive information with centralized entities.

How Centralized Exchange Works

CEX uses an order book system to facilitate cryptocurrency trading. An order book is an electronic register that records all buy and sell orders, displaying the price and quantity of each order. When a user places a buy or sell order, CEX will match the order and execute the trade for a fee.

Comparison of CEX and DEX

With increasing demand for greater control over assets, decentralized exchanges (DEX) are growing in popularity. DEXs use Automated Market Maker (AMM) to eliminate intermediary processes in cryptocurrency trading, allowing users to manage their own funds.

Centralized Exchange Example

Some of the well-known CEXs in the cryptocurrency market include:

- Binance

The world's largest centralized exchange, offering thousands of cryptocurrencies and millions of users.

- Coinbase

The most commonly used CEX in the US, it is known for its ease of use despite its high fees.

- Kraken

One of the most trusted CEXs, known for its low fees and suitable for intermediate to expert users.

Do I Need to Use Centralized Exchange?

If you want to buy cryptocurrency using fiat currency like Rupiah for example, you have to use CEX, because most DEXes do not support fiat currency. 

However, you can buy cryptocurrency without losing control of your private keys by using a tool like Ledger.

Bittime CEX

Conclusion

Although cryptocurrency exchanges can seem complicated, both CEXs and DEXs have clear benefits and risks. It is important to understand how safe your assets are and whether you retain ownership of them. Ultimately, the security of cryptocurrency is in your hands, because that is the essence of self-custody.

FAQ 

1. What is a Centralized Exchange (CEX)?

A Centralized Exchange (CEX) is a platform owned and operated by a single entity that acts as an intermediary between buyers and sellers, providing liquidity and using an order book system to set cryptocurrency prices.

2. What are the main features of CEX?

Key features of CEX include management by a single entity, use of a custodial wallet that does not provide full control over private keys, and KYC (Know Your Customer) requirements for user identity verification.

3. Do I need to use CEX to buy cryptocurrency?

Yes, if you want to buy cryptocurrency using fiat currency such as Rupiah, you need to use CEX, because most DEXes do not support transactions with fiat currency.

How to Buy Crypto on Bittime

Want to trade sell buy Bitcoins and crypto investment easily? Bittime is here to help! As an Indonesian crypto exchange officially registered with Bappebti, Bittime ensures every transaction is safe and fast.

Start with registration and identity verification, then make a minimum deposit of IDR 10,000. After that, you can immediately buy your favorite digital assets!

Check the exchange rate BTC to IDR, ETH to IDR, SOL to IDR and other crypto assets to find out today's crypto market trends in real-time on Bittime.

Also, visit the Bittime Blog for interesting updates and educational information about the crypto world. Find reliable articles about Web3, blockchain technology, and digital asset investment tips designed to enrich your crypto knowledge.

Reference

Gaurav Roy, What is a Centralized Cryptocurrency Exchange (CEX)?, Accessed January 24, 2025

Author: IN