Types of Cryptocurrency Exchanges

As the name entails, Cryptocurrency Exchange is a platform where users can trade cryptocurrencies for other cryptocurrencies or fiat currency at a determined rate that is decided by market dynamics.

Not all crypto exchanges are formed the equivalent! There are different types of cryptocurrency exchanges existing in the forex market.

Administrator-User Cryptocurrency Exchange

This type of exchange goes well with users who do not have much knowledge in buying or selling cryptocurrencies. It has an easy navigation element and an easy interface. The exchanges are through straight away between the user and the administrator.

The profit lies in the exchange margins. If the recent value of the Bitcoin is $20,000, you can sell it for $21000 to one user when you have purchased it for $19000 from another user. The $1000 difference is your profit. Usually, the increase contrasts within 3% to 5% of the current market value.

Peer-to-Peer Exchange

This type of exchange is relatively comparable to an administrator-user exchange, although it works directly and entirely with the block-chain. The variation is that there is no regulatory body. The transaction takes place straightforwardly between the users, and it directly joins the buyers and the sellers. The profit lies in the exchange charges that are composed for every transaction. Polonix and Binance are good examples of this type of exchange.

Decentralized Cryptocurrency Exchange

Decentralized cryptocurrency exchanges manage entirely within the block-chain. As the name entails, it does not have a centralized authority to administrate exchange activities. There are different types of decentralized exchanges, together with cross-chain, on-chain and off-chain.

Exchanges can also be completely or incompletely decentralized. It has some functionality executed on the block-chain. The wallet and the registration module are usually decentralized. Decentralization provides an elevated measure of safety because funds do not accumulate in the system. Though, the functionalities presented by the exchange are quite limited.

Currency Exchange with Margin Trading and Leverage

It is a new exchange trend that has been increasing reputation and desirability among some users. Cryptocurrency exchange with margin trading facilitates you make contracts in economic terms. This enhances profits in the amount to the danger. There are not numerous players in this field, and the target audience is also undersized.

There are not many indicators to be taken into concern before you select a cryptocurrency exchange.

The Legal Requirements

Integrating a cryptocurrency exchange is not compulsory, but it does present a benefit over other companies. It would be a fine practice for any exchange to go behind the Know Your Customer (KYC) and Anti-Money Laundering (AML) types. The permissible requirements might fluctuate from region to region. Some of the most excellent countries that you can select to integrate your cryptocurrency exchange are:

• Switzerland
• Australia
• Singapore
• Estonia
• Seychelles

An important feature of cryptocurrencies is that they are usually not concerned by any central authority, representation them hypothetically resistant to government interfering or manipulation.