Do you want to know whether to use CEX or DEX? Well, you’re at the right spot. As the title of the post suggests (CEX Vs DEX), this post will cover all the differences between these two types of exchanges, so you can decide which is better for you.
We’ll also recommend the best CEXs and best DEXs later, but first, let’s talk about CEXs Vs DEXs.
CEXs Vs DEXs
CEXs and DEXs have plenty of differences. By reading this section about CEXs Vs DEXs, you’ll become familiar with all of them.
Anonymity
The biggest difference you’ll find in this CEXs Vs DEXs comparison is anonymity. DEXs offer far greater anonymity than CEXs. This is because, unlike CEXs, they don’t make their users complete KYC and AML procedures.
Completing these procedures eliminates anonymity because the user has to give all sorts of personal information to the authorities. The users will have to provide at least some of the following information:
- Name
- Phone Number
- Official ID
- Permanent/Temporary Address
However, not following these procedures can be considered a double-edged sword. KYC and AML help prevent hackers and scammers from joining the exchange, and they make it easier to identify them after they have committed the fraud.
Nonetheless, the absence of KYC and AML shouldn’t be considered a downside for DEXs, because these exchanges are already quite secure, so they don’t need KYC and AML.
Wallets
When it comes to wallets, DEXs are doing far better than CEXs. All the DEXs offer non-custodial wallets, whereas, the majority of the CEXs don’t.
In case you’re not familiar with the non-custodial wallets, these are the wallets that provide keys to the owners. As for custodial wallets, the exchange gets custody of the private keys.
Since most CEXs offer custodial wallets, they own the private keys of the assets. The problem here is that in case the exchange gets hacked, the hacker can steal the users’ assets. This isn’t an issue for DEXs’ users because they own the private keys of their wallets.
