Exchange

A crypto exchange matches buyers with sellers. It is the main place where prices are discovered and where new users first convert national currency such as dollars or euros into crypto. Exchanges earn money from trading fees, usually a small percentage of each trade, and sometimes from withdrawal fees, listing fees, or lending products.

There are two broad kinds. Centralized exchanges like Coinbase, Binance, and Kraken are companies that hold customer funds, require identity verification, and run an order book on their own servers. Decentralized exchanges like Uniswap are smart contracts that let users trade directly from their own wallets without an intermediary.

The choice involves trade-offs. Centralized exchanges are easier for beginners and support bank transfers, but customers depend on the company staying solvent and honest. The collapse of FTX in November 2022 showed that risk clearly. Decentralized exchanges remove that counterparty but require users to manage their own keys and gas fees.