A crypto exchange is a platform where users can buy, sell, and trade digital assets. Exchanges are one of the main entry points into the crypto market.
How It Works
Centralized exchanges manage user accounts, order books, custody, and trading pairs. Users deposit funds, place orders, and trade through the platform.
Decentralized exchanges work differently. They use smart contracts and liquidity pools so users can trade directly from their wallets without a central operator holding their funds.
Why It Matters In Crypto
Exchanges matter because they provide liquidity, price discovery, fiat access, and trading tools. They also carry risks, especially when users leave assets under platform custody.
A simple example: a user might buy Bitcoin with dollars on a centralized exchange, then withdraw it to a personal wallet for long-term storage.