A Bitcoin exchange is a platform that enables you to transfer or receive Bitcoin to another person in exchange for something else. Some people exchange Bitcoin for fiat money, while others receive services or items for their cryptocurrency. Satoshi Nakamoto designed Bitcoin for value exchange transactions, like fiat money. However, Bitcoin exists in the digital realm, meaning you can trade it for other assets. Moreover, you don’t require intermediaries like governments or banks to transact with Bitcoin.
Currently, most people use platforms like ChainWizard Ai to purchase this cryptocurrency with fiat money. Known as Bitcoin exchanges, these platforms facilitate seamless, efficient, and fast cryptocurrency exchange with other assets, such as fiat money.
Bitcoin Exchange Explained
A Bitcoin exchange is a digital or online marketplace where users can purchase, trade, or sell Bitcoin using fiat money or other cryptocurrencies. A crypto exchange is like a stock exchange. However, its users trade crypto assets instead of stocks.
Most people refer to centralized custodial platforms when talking about Bitcoin exchanges. Nevertheless, there are two primary categories of crypto exchange platforms. These are centralized and decentralized crypto exchanges.
A centralized crypto exchange facilitates the purchase, sale, and trading of Bitcoin or other cryptocurrencies. It’s like an intermediary between Bitcoin buyers and sellers. Centralized crypto exchanges are popular among individuals who want to trade Bitcoin. However, you must trust your centralized crypto exchange to safeguard your funds since you won’t have private keys when using it.
A decentralized crypto exchange allows you to trade Bitcoin directly with other users without a third party or intermediary. Thus, you retain control over your crypto assets. Decentralized crypto exchanges are integral to decentralized finance.
Understanding a Centralized Crypto Exchange
A centralized crypto exchange compared to a traditional bank account or online brokerage. Here’s how it functions.
Sign Up
Once you’ve chosen the centralized crypto exchange, provide personal details like your email address to create an account. Also, create a password and complete the verification process. The verification process may involve providing identity documents and proof of address.
Deposit Funds
After setting up an account and verifying your identity, depositing the funds you wish to spend on your trades is the next step. Most platforms accept Bitcoin and other cryptocurrencies. Also, you can deposit fiat money like EUR or USD. Also, some crypto exchanges allow users to link them to their bank accounts.
Trade
After creating your account and depositing funds, you can start trading Bitcoin. You can place a limit or market order, depending on your preference. Choose the amount to trade and confirm your transaction details.
Understanding Decentralized Exchanges
Decentralized exchanges allow users to exchange Bitcoin directly. Here’s how these platforms function.
Get a Crypto Wallet
You require a self-custody crypto wallet compatible with your chosen decentralized exchange. This wallet allows you to store Bitcoin and interact with the platform.
Fund the Wallet
Send some Bitcoins to the wallet if it’s empty. You can send funds to your self-custody wallet if you have funds on a centralized exchange or another wallet.
Connect to the Decentralized Exchange
Visit the decentralized crypto exchange website and connect it to your wallet. Approve your connection request to link your wallet to the decentralized exchange.
Start Trading
After connecting your self-custody wallet to the decentralized crypto exchange, you will see an interface where you can choose the cryptocurrencies to swap and the amount you will receive. For instance, you can trade Bitcoin for Ether.
Final Word
You’ll find many crypto exchanges when you decide to start trading Bitcoin. Please take the time to learn how the platform you choose functions to enjoy a seamless trading experience.
