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Definition: crypto exchange

(CRYPTOcurrency exchange) An online trading platform that is used to buy, sell and exchange cryptocurrencies. Exchanges convert fiat currency (dollars, Euros, etc.) to crypto (Bitcoin, Ethereum, etc.), and vice versa.

Centralized Exchanges Are Convenient
Like a stock brokerage account, "centralized" exchanges such as Coinbase and Bitfinex make it easy to invest in crypto because they maintain the keys to the assets. In addition, centralized exchange websites and apps are no more difficult to use than online bank accounts. However, all digital services are subject to hacking, and exchanges have been hacked. For a monthly fee, Coinbase added an indemnification option up to $1 million, and time will tell if other exchanges follow suit. See Coinbase and Bitfinex.

Decentralized Exchanges Offer More Options
For maximum security and diversity, users can download and manage their own wallet software and trade on a "decentralized" exchange (DeX) such as Uniswap or SushiSwap. Wallets also have access to myriad applications (see smart contract). However, interfaces differ dramatically. Some are easy to use; others are downright obtuse. In addition, the private keys must absolutely be backed up (see seed phrase). See cold wallet.

Exchanges Differ
Like brokerage firms, some crypto exchanges offer trading alternatives, such as limit orders. Other platforms allow sellers to set their own exchange rate. The crypto world is relatively new, and different options become available all the time. See crypto wallet, decentralized exchange and crypto glossary.