What is Cryptocurrency Exchange?
An online platform where users can buy, sell, and store cryptocurrencies.
A cryptocurrency exchange is a digital marketplace that facilitates the trading of cryptocurrencies for fiat money (like USD or GBP) or other digital assets. Centralized exchanges (CEXs), such as Coinbase or Binance, act as intermediaries, holding users' funds and matching buy and sell orders on their internal order books.
Decentralized exchanges (DEXs), like Uniswap, allow users to trade directly from their personal wallets without a central authority. While convenient, keeping assets on an exchange carries counterparty risk (the exchange could be hacked or become insolvent) and security risks, leading many users to transfer funds to private wallets for long-term storage.