A rather brief definition of the term “Crypto exchange” would be a platform that allows you to give or/and receive crypto. Cryptocurrency Exchange, or briefly called by some as crypto exchange, is a term that is a combination of two words. I will explain the two words separately and then the term holistically.
What Is an Exchange?
An exchange can be defined as the act of giving and receiving that takes place between two or more parties, often simultaneously. It is the act of giving something to receive another or receiving a thing in place of giving another thing.
What is Cryptocurrency?
Cryptocurrency is a digital currency based on software actions performed on blockchain technology. It is a currency because you can use it to buy and sell items. It can be used as a means of exchange based on the current market value of the cryptocurrency. Being based on blockchain technology means that every transaction eventually creates a block. This block, when verified, is then added to a chain. Hence, the name “Blockchain.” Several cryptocurrencies exist, similar to how we have several currencies for different nations with different values. The most popular and also most valuable cryptocurrency right now is bitcoin.
In-depth definition of Cryptocurrency Exchange
I believe that by briefly explaining each concept individually, the right perception of crypto exchange is beginning to form. A crypto exchange is a transaction between two or more parties using cryptocurrency as the means of exchange. In cryptocurrency, however, Crypto Exchange is used to define a platform that allows for crypto exchanges.
Contrary to conventional currencies we are used to, which are regulated by banks, no one regulates cryptocurrencies.The autonomous use of cryptocurrency without dependency on any government or individual body is what decentralization means. So, cryptocurrencies are verifiable, traceable, and belong to you and the market.
While it gives you full autonomy, the current price used in the transaction is not fixed. Rather than where the price is heavily dependent on the laws of demand and supply, the pricing action here is not like the marginal plus or minus one to two percent fluctuation seen with currency pairs at the bank. Here, bitcoin or any cryptocurrency can go up with a rate of 30% in a day.And in the same market, Ethereum (another cryptocurrency) can drop by 50%. (These are only hypothetical price movements.)
A crypto exchange is a digital platform that allows you to exchange cryptocurrency. It allows you to exchange your money (say $100) for cryptocurrency or one cryptocurrency for another. In a manner of speaking, crypto exchanges act as Brokers for cryptocurrencies. However, they do not own most of these cryptocurrencies. Rather they act as avenues to exchange them, buy them, sell them, or in some cases, store them. Hence, several crypto exchanges exist out there. That is why it is very important to get a trusted and verified crypto exchange. Adequate research is always necessary before using any crypto exchange.