A cryptocurrency exchange or crypto asset exchange is an online platform where you can exchange one cryptocurrency for another. The following is a more in-depth explanation of the types, how they work, and pairs to things that you must consider before you register on a crypto exchange.
Types of Cryptocurrency Exchange
Traditional Crypto Exchange
It is an exchange like a traditional stock exchange where buyers and sellers trade based on the current market price of the cryptocurrency, and the business acts as an intermediary who will charge the fees.
Decentralized Crypto Exchange (DEX)
Apart from being centralized, there are also decentralized crypto exchanges, known as DEXs. Examples are Uniswap, SushiSwap, and others. In DEX, everything will be run automatically by the system, and there is no centralized authority or intermediary that regulates. This exchange is more advanced but more difficult for beginners to do.
It is a website-based exchange, allowing customers to buy and sell cryptocurrencies at prices set by the broker (generally at market prices, with a slight premium). Here the exchange occurs between the buyer or seller and the broker, not between the buyer and seller. In this cryptocurrency exchange, users will generally pay a slightly higher price.
Live Exchange Platform
The platform offers direct peer-to-peer trading between buyers and sellers. This type of live trading platform does not use fixed market prices. Sellers set their exchange rate, buyers find sellers through the platform, or they indicate the price they want to buy, and the platform matches the buyer and seller.
How Cryptocurrency Exchanges Work
Exchanges allow the exchange of one cryptocurrency for another, the buying and selling of coins, and the exchange of fiat money into crypto.
Cryptocurrency exchanges set the currency exchange rates for both coins and tokens. The rate of a cryptocurrency usually depends on the actions of sellers and buyers, although other factors can affect the price.
Different crypto exchanges have different options and functions. Some are made for trading, while others are made for fast crypto-fiat exchanges.
There are also crypto exchanges designed for regular traders that allow you to buy and sell crypto for lower commission fees than crypto-to-fiat exchanges.
Crypto exchanges work similarly to common stock exchanges. The difference is that traders buy and sell stock assets or derivatives to profit from fluctuating exchange rates on the stock exchange.
Meanwhile, crypto exchanges and traders use cryptocurrency pairs to profit from highly volatile currency rates.
Cointree is an Australian-based cryptocurrency exchange, allowing customers to buy bitcoin and other cryptocurrencies using Australian dollars. The exchange provides a simple and effective service for newcomers while providing some complex features for experienced cryptocurrency traders, such as the opportunity to trade bitcoin for various altcoins.
- No prior experience is required on the most superficial cryptocurrency exchange in Australia.
- Get fresh trading ideas by viewing the most successful portfolios.
- Safe & Easy – Trade 280+ cryptocurrencies, including Bitcoin, Ethereum, Ripple and Dogecoin
- Crypto investment for your SMSF with detailed ATO compliant reporting – Start in 5 minutes
Cointree has a strong focus on bitcoin beginners. Users can try out the demo version of the whole site and experiment with features such as making dummy bitcoin purchases before making a cash payment.