CEX vs DEX: Do you really understand how crypto exchanges work?

You've been operating on centralized exchanges for months, but… do you really know what's happening behind the scenes? Let's unravel it without too much technical jargon.

The CEX is basically your “trusted intermediary”

Imagine it this way: when you buy Bitcoin on a centralized exchange (CEX), you are not trading directly with another trader. Instead, there is a platform in the middle that says “OK, I have your order, wait for me to find someone who will sell at the price you want.”

This is identical to how traditional banks, brokerage houses, or payment processors work. The difference is that here the asset is digital and moves on the blockchain.

What makes a CEX special?

• They control which tokens are listed → Not every crypto is listed on the exchange. There is an evaluation process ( although sometimes it is questionable 👀 )
• Provide liquidity → If you need to sell 10 BTC now, the exchange acts as a counterparty so you don't have to wait for hours.
• Everything is recorded on the blockchain → All your transactions are recorded on the corresponding network.

The B Side: Regulation and KYC

Here comes what many do not want to hear: CEXs are required to comply with KYC (know your customer), AML (anti-money laundering), and CTF (counter-terrorism financing).

Yes, it's less “crypto freedom” than what the marketing promises. But in return, you have a level of protection and transparency that simply doesn't exist in a DEX.

CEX vs DEX: The Balance

Centralized exchanges continue to dominate in volume. But decentralized DEX ( are growing because they do not need an intermediary → pure P2P transactions.

Which one is better? It depends on you:

• CEX: Easier, faster, more regulated, but with less total control
• DEX: More freedom, less surveillance, but more risk and complexity

The important thing is to understand that both will coexist. The crypto landscape is evolving, and those who understand how both models work understand the game.