Exchanges · Question 1 of 5
What is a crypto exchange?
A crypto exchange is a platform for buying, selling, or swapping cryptocurrency. Some are run by companies that hold your funds; others let you trade directly from your own wallet.
What it does
An exchange matches buyers and sellers and provides the rails to convert between currencies and crypto, or between different cryptocurrencies.
Two main types
- Centralized (CEX): a company operates it, holds customer funds, and manages accounts.
- Decentralized (DEX): trades happen directly between wallets through smart contracts, with no company holding funds.
Why it matters
Exchanges are most people's entry and exit point for crypto. Knowing how they differ shapes both convenience and risk.
A practical way to picture it
A centralized exchange is like a currency-exchange bureau that holds your money while you trade; a decentralized one is like swapping directly with another person through an automated booth.
Risks & common mistakes
- Centralized platforms can be hacked, freeze accounts, or become insolvent.
- Decentralized trading shifts responsibility (and mistakes) entirely to you.
- Funds left on any platform are only as safe as that platform.
Put it into practice
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Practice verification in the Wallet Simulator
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Last reviewed 2026-06-25. This topic can change over time; always confirm current specifics from primary sources.