how to choose your fighter

And we’re back with another day of Crypto 101.

Yesterday, we covered the different types of crypto trading – if you missed it, catch up here.

And today, we’re looking at where you can do it.

More specifically, we’re comparing CEXs vs. DEXs – what they are, how they work, their pros, cons, and why you might pick one over the other.

Ready? Let’s jump in 👇

CEXs

Full government name: centralized exchanges.

These are your classic crypto trading platforms – like Binance, Kraken, Bybit, MEXC, and ChangeNOW – where most people start their crypto journey.

And just like the name suggests, the control over these platforms is centralized – a single entity runs the show, manages your account, and makes the rules.

These platforms basically work like Tinder for crypto trades.

When you wanna buy or sell, they use something called an order book – a list of who’s buying and selling, and at what prices.

When your order matches someone else’s, the exchange connects the two and the trade happens.

However, most of the time, there aren’t enough regular people placing trades to keep things going.

That’s why CEXs rely on market makers – usually bots or companies that constantly place buy and sell orders to make sure there’s always action in the order book.

They profit from the price difference (called the spread), but more importantly, they keep the exchange liquid so you’re not stuck waiting forever for someone to match your order.

Now, when you buy crypto on a CEX, the coins don’t go straight into your personal wallet. Instead, they’re stored in what’s called a custodial wallet- a wallet the exchange controls for you.

You can see your balance, sure, but you don’t actually hold the keys to access the funds directly.

That’s why you’ll often hear the phrase: “Not your keys, not your coins.” If something bad happens or the platform crashes (hi, FTX 👋), you could lose access to your funds.

But in return for that trust, you usually get a smoother, more beginner-friendly experience: fiat deposits, credit card payments, mobile apps, customer support, and even features like staking or earning interest on your coins.

So, you’re giving up control for convenience.

DEXs

Full government name: decentralized exchanges.

These are platforms with no central authority – no company runs it, no sign-ups, no forms asking for your passport.

You’re in full control.

(Which is kinda the whole point of crypto in the first place.)

But how do they work without someone running things?

Well, everything everything is powered by smart contracts – self-executing code on the blockchain that processes everything automatically.

When you hit “swap,” the smart contract checks if the trade is possible, processes it, and moves the assets between wallets.

Now, DEXs don’t use order books like CEXs do. Instead, they rely on something called liquidity pools.

Think of a liquidity pool like a vending machine that’s stocked with two different tokens – let’s say ETH and USDC.

Instead of a company filling the machine, it’s regular users (called liquidity providers) who supply both tokens hoping to earn a cut of the fees every time someone makes a trade.

When you trade, you’re not dealing with another person directly. You’re just swapping tokens with the machine – taking some USDC out, putting ETH in, or vice versa.

And the price? There’s no one setting it manually. Instead, the vending machine uses a built-in formula – called an automated market maker (AMM) – that adjusts prices automatically based on supply and demand.

If lots of people are buying ETH, the pool runs low on ETH, so the AMM raises the price to reflect that.

And now, for the big difference: DEXs are non-custodial. That means you keep full control of your crypto at all times.

You connect your non-custodial wallet (like MetaMask), approve the transaction, and the trade happens directly between your wallet and the smart contract.

There’s no KYC, and the exchange itself never touches your private keys or holds your funds.

But freedom comes with risk. If you lose access to your wallet or mess up a transaction, there’s no support team to call. You’re the one holding the keys and the consequences.