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Decentralized Exchanges Vs. Centralized Exchanges: Know The Difference



When we talk about crypto trading, it is hard to miss the mention of exchanges. An exchange is a platform or portal that gives you access to the markets, allowing you to trade various assets and commodities. Platforms that let users buy and sell cryptocurrencies are called crypto exchanges. Decentralized and Centralized are two of the most common types of crypto exchanges out there. Continue reading for decentralized vs. centralized exchanges.

Centralized exchanges are the oldest type of crypto exchanges. They were quite popular until users identified their drawbacks, which include lack of security, high trade commission and high probability of errors & fraud, to name a few. This gave birth to the notion of decentralized exchanges.

Decentralized exchanges overcame some limitations of centralized exchanges, but they have their own pros like they don’t support fiat to crypto trading, have low liquidity, low speed and inability to recover lost data & passwords. Also, payment options in both the above types of exchanges are limited.

The attempts to find a more reliable and better overall crypto exchange led to the evolution of P2P crypto exchanges, which are a kind of mix of centralized and decentralized exchanges.

In this article, we’ll learn in brief about these three popular types of crypto exchanges as well as discuss their basic differences in order to figure which one is the best out of the three.

Centralized Cryptocurrency Exchanges

Centralized crypto exchanges work more or less like your regular exchanges, where the control lies in the hands of the exchange owner, manager or admin. The exchange performs all trade transactions on behalf of users and charges a commission for its services. All the user data, funds, bank details, etc. are stored on the exchange server.


* Support for fiat currencies
High liquidity
* It’s possible to recover lost data & passwords
* Online storage for funds, data, etc.
* Support to multiple cryptocurrencies
* Easy to use & user-friendly
* Fast transaction speed


* High probability of errors, hacks, etc. with centralized management
* Too much control with the admin
* Privacy and security issues
* Lack of transparency
* High trade fee/ platform commission

Decentralized Crypto Exchanges

Decentralized exchanges are crypto exchanges that run directly on the blockchain and facilitate crypto trading between users through special programs called smart contracts. One of the biggest benefits of crypto trading on a decentralized exchange is the lack of middlemen, which ensures privacy and reduces transaction cost (but not necessarily time).


* No need to store assets inside the exchange in order to trade
* Traders have full control over their funds and data
* Easy & secure transfer of funds
* Highly secure, data stored on the blockchain network
* Full transparency
* Anonymous trading
* Low trade fee
* Multicurrency wallet support


* Low liquidity
* Low trade speed
* Limited scalability
* Data once lost cannot be recovered

P2P Crypto Exchanges

Then, there comes the third type – Crypto exchanges that are not exactly decentralized but are also different from traditional centralized exchanges and offer more security, transparency & flexibility in crypto trading. A P2P exchange like Shiftal would be a good example.


* Support fiat to crypto trading (with multiple payment options)
* Escrow support
* Low trading fee
* High security and privacy
* Users have full control over their assets
* Direct bank account payments
* Fast transaction speed


* Limited liquidity
* Occasional delay in releasing coins from escrow

How does Shiftal P2P Exchange work? Is it better than centralized or decentralized crypto exchanges?

What is a P2P crypto exchange? In the definition, the Shiftal P2P exchange is similar to decentralized exchanges, where it allows end-to-end or peer-to-peer trading of cryptocurrencies. However, unlike decentralized exchanges that use smart contracts, the P2P exchange uses the escrow wallet/service to handle the security and authenticity of transactions.

So, you can say that the Shiftal P2P exchange brings the best of both worlds (based on the difference between decentralized and centralized exchanges) while providing users with a highly secure, easy and low-cost way to buy/sell cryptocurrencies using 70+ payment options.

To know more, or to start trading bitcoin on Shiftal, visit


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