Crypto glossary

Exchange

A crypto exchange is a platform where you can buy, sell or swap cryptocurrencies, either against traditional money such as euros or francs, or against other crypto. The two main types are centralized exchanges (CEXs), run by companies, and decentralized exchanges (DEXs), run by smart contracts.

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Centralized exchanges

A centralized exchange works much like an online broker. You open an account, verify your identity (KYC), deposit money by bank transfer or card, and trade on the exchange's order book, where buy and sell orders from all users are matched. The exchange holds your coins in its own custody until you withdraw them to your wallet.

CEXs are usually the easiest on-ramp from fiat money to crypto, offer customer support and often provide advanced products such as futures and margin trading.

Decentralized exchanges

A DEX is a set of smart contracts on a blockchain. You connect your own wallet and swap tokens directly, usually against a liquidity pool rather than an order book. There is no account and the DEX never holds your funds between trades. You pay network gas fees plus a trading fee to liquidity providers.

DEXs list almost any token, which offers access to new projects but also means many scam tokens are available. Most do not handle fiat money.

Fees and costs

On a CEX, costs include maker and taker fees, the spread between buy and sell prices, and deposit and withdrawal fees. Simple buy buttons often include a wider spread than the exchange's trading screen. On a DEX, costs include the pool fee, gas and slippage. Comparing the total cost of a trade, not just the headline fee, gives a clearer picture.

Risks

With a CEX, the main risk is counterparty risk: hacks, frozen withdrawals or insolvency, as in the collapse of FTX in November 2022. Account takeovers through phishing are another. With a DEX, the risks are smart-contract bugs, phishing copies of the site, malicious tokens and signing harmful approvals. In both cases, checking that a platform is licensed or genuine and not leaving more funds there than needed reduces exposure.

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Frequently asked questions

What is the difference between a CEX and a DEX?

A CEX is run by a company that holds your funds and matches orders. A DEX is a smart-contract protocol you use directly from your own wallet, without handing over custody.

Is it safe to keep crypto on an exchange?

It exposes you to the exchange's security and solvency. Many people keep only what they actively trade there and hold the rest in self-custody.

Why do exchanges ask for ID?

Regulated exchanges must follow anti-money-laundering rules, which require them to verify customers' identity before allowing deposits and withdrawals.

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All glossary terms · Educational reference only — not investment, legal, tax or financial advice.