Cryptocurrencies, a guide: How to choose the exchange

When you want to buy Bitcoin or other types of cryptocurrencies, the user is asked a series of questions, about which token to choose, but also on which exchange platform to make the purchase. Let's start from the difference between decentralized (DEX) and centralized (CEX) exchanges and let's see the advantages and disadvantages of the main exchange platforms.

Image

Who has never bought cryptocurrencies before is now faced with a series of problems, of which the main two are: which digital currency to buy? Which exchange platform to use for the purchase?

The first question is relatively easy to answer because this is up to you, It depends from a series of factors such as the initial capital, the risk margin, which with cryptographic assets is; however generally high, and even if you think about short or long-term investments.

Certainly investing substantial capital in cryptocurrency brings the gaze to Bitcoin, which by market capital has a consolidated basis and is the new digital gold.

The same goes for Ethereum, which moreover compared to Bitcoins is much more of a cryptocurrency, but has its strength in the internal project that is based on an open source Blockchain.

Otherwise, novice investors, who have tens or hundreds of euros to invest, would be better off turning their attention to coins, especially in the ICO (Initial Coin Offering), where with little money you can buy thousands of token at the lowest price. In this case, if the risks increase, but increase also earnings, especially because these investments are affordable with small capital at the start.

Now we come to the other question: where to buy cryptocurrencies and specifically what difference is there between the centralized exchange platforms (CEX), such as Coinbase, Crypto.com, eToro, and the decentralized exchange platforms (DEX), as PancakeSwap or Uniswap.

Where to buy cryptocurrency? What does the CEX and DEX exchange platform mean?

If you want to buy Bitcoin and other types of cryptocurrencies, the first step is to choose where you want to buy them, that is on which website or smartphone application.

At this point we need a basic premise in the world of cryptocurrencies and that is to understand what is the difference between a centralized exchange platform (CEX) and a decentralized exchange platform (DEX).

Decentralized trading platforms (DEX), such as PancakeSwap or Uniswap, allow users to exchange cryptocurrencies without the oversee of third parties, such as the trading platform team, acting as intermediary.

Otherwise, decentralized platforms must be imagined as a three-step transition, where the whole is managed by the platform that acts as an intermediary for the exchange. It follows that because a cryptocurrency is listed on a centralized exchange platform (CEX), and must meet the requirements imposed by the platform itself, which it earns by applying its commissions to transactions. 

Basically, for a cryptocurrency, it is much more difficult to be listed on a CEX platform such as Coinbase.

Conversely, anyone can exchange cryptocurrency on decentralized platforms such as PancakeSwap and therefore this offers a lower level of security, but they also cost much more less.

In short, the CEX platforms act as banks and apply commissions for the transactions they handle, the DEX platforms eliminate intermediaries and costs.

Differences between decentralized (DEX) or centralized (CEX) cryptocurrency exchange platforms

Today, the launch of a new cryptocurrency requires a ICO (Initial Coin Offering) sales phase in which the launch is partial and the token present only on the decentralized exchange platforms, at a later time at full launch this is also listed on the main CEX platforms.

In short, precisely because of the ease with which a token can be listed on a decentralized platform the first listing of a new cryptocurrency takes place on the decentralized platforms (DEX), where between Pancakeswap and Uniswap there is a fundamental difference: the first lists the cryptocurrencies that operate on the Binance Smart Chain Blockchain, while the second lists the digital currencies that run on the Ethereum Blockchain and therefore also on the Polygon network.

When a coin is present only on DEX platforms, so we are faced with initial projects and therefore tokens that cost little; then if the project is successful, the listing on Coinbase etc. takes place. And there is an immediate price increase in the short term.

For the first cryptocurrency purchase, a centralized exchange (CEX) like Coinbase is better?

In any case, even after the listing on the CEX platforms, it is always possible to continue trading the same cryptocurrency on the DEX platforms.

We come to the big question, where should you buy cryptocurrencies? Is it a decentralized or centralized platform better?

The starting point is always the experience in this sector, for the first investments it is undoubtedly better to use a centralized exchange platform CEX, where there are higher costs related to the commissions of the exchange, but also security and greater use of the interface.

When we made our first purchases and investments in crypto assets we used Coinbase, which costs quite a bit, with high commissions but also greater security.

Above all, for the beginners, by downloading smartphone applications such as Coinbase or Crypto.com you will be faced with a interface similar to that of any online store, where you will choose the cryptocurrency, you will set the quantity of euros you want to buy and with the debit or credit card you will proceed with the purchase in some clicks. All without necessity to have first downloaded and configured a Cryptographic Wallet.

So the answer is simple: for your first purchase it is better to use a centralized exchange platform, such as Coinbase or Crypto.com, also because they are more safe and user friendly in the facility of use of the interface, compared to DEX exchanges.

Buying Cryptocurrencies Using Decentralized Exchanges (DEX), What's the difference between PancakeSwap and Uniswap?

A great potential investment in crypto assets is represented by the coins in phase ICO (Initial Coin Offering), because when the project is at the beginning the price is advantageous. These cryptocurrencies have low costs precisely because they present only on decentralized exchange platforms (DEX), where anyone can list a token.

The exchange on a decentralized exchange (DEX) is not so immediate and fast as when using Coinbase, also because you cannot buy cryptocurrencies by paying directly in euros or dollars with an ATM, but you have to exchange another type of cryptocurrency, the native one of the Blockchain, for the digital currency you want to buy.

Furthermore, PancakeSwap and UniSwap, the two main decentralized trading platforms are not interchangeable, that is you cannot choose whether you prefer one or the other, as you do with Coinbase and Crypto.com.

Pancakeswap hosts the cryptocurrencies connected to the Blockchain White Smart Chain and Uniswap those that operate on Ethereum and therefore also on the Polygon network.

Having said this, again from direct experience, it is now on decentralized exchanges that you can find real opportunities, that is low-cost cryptocurrencies which then have an immediate increase in value after listing on centralized platforms.

Read also: Crypto Exchanges Play an Important Role in Cryptocurrency!

How do I buy cryptocurrency on a decentralized exchange (DEX)? 

Always from first-hand experience we tell you that at the beginning the exchange of cryptocurrencies through the DEX platforms is a bit cumbersome and scaring, but we assure you that after a couple of transactions it will be something you can do with your eyes closed. Everything is to understand the mechanism!

For those who want to buy tokens on PancakeSwap or Uniswap, the first thing to do is: obtain a cryptographic wallet, such as Trust Wallet and MetaMask, just download the apps and register.

Having chosen the coin to buy, let's imagine that we are buying a very promising new cryptocurrency called LBlock and, running on the Blockchain Binance, listed on PancakeSwap.

We already have said that on decentralized exchange exchanges (DEX) you do not pay directly in euros, so in the case of running on Binance it requires BNB, that is the native cryptocurrency of the Blockchain.

So, first buy the BNB Smart Chain, operation that you can carry out directly from Trust Wallet or MetaMask, then go to PancakeSwap and connect the Wallet to the site by clicking on connect.