{"id":237638,"date":"2024-05-09T11:22:47","date_gmt":"2024-05-09T11:22:47","guid":{"rendered":"https:\/\/www.techopedia.com\/?p=237638"},"modified":"2024-05-09T11:22:47","modified_gmt":"2024-05-09T11:22:47","slug":"cex-vs-dex-which-should-you-choose-in-cur_year","status":"publish","type":"post","link":"https:\/\/www.techopedia.com\/cex-vs-dex","title":{"rendered":"CEX vs. DEX: Which Should You Choose in 2025?"},"content":{"rendered":"<p>Every crypto enthusiast\u2019s journey starts with buying a <a href=\"https:\/\/www.techopedia.com\/definition\/27531\/cryptocurrency\">cryptocurrency<\/a> from an <a href=\"https:\/\/www.techopedia.com\/cryptocurrency\/best-crypto-exchanges\">exchange<\/a>. Primarily, <a href=\"https:\/\/www.techopedia.com\/cryptocurrency\/how-to-buy-cryptocurrency\">buying and selling cryptocurrencies<\/a> occurs on <a href=\"https:\/\/www.techopedia.com\/definition\/33372\/cryptocurrency-exchange\">centralized exchanges<\/a> (CEX) and <a href=\"https:\/\/www.techopedia.com\/definition\/decentralized-exchange-dex\">decentralized exchanges<\/a> (DEX).<\/p>\n<p>The crypto community is constantly debating on which method is the <a href=\"https:\/\/www.techopedia.com\/crypto-trading-strategies\">best way to trade crypto<\/a>. The answer to the DEX vs. CEX debate is subjective. Both methods have their advantages and disadvantages.<\/p>\n<p>In this article, we lay out the differences between DEX and CEX to help you find out which method suits you best.<\/p>\n<div class=\"su-note\"  style=\"border-color:#e5e54c;border-radius:\u201c3\u201dpx;-moz-border-radius:\u201c3\u201dpx;-webkit-border-radius:\u201c3\u201dpx;\"><div class=\"su-note-inner su-u-clearfix su-u-trim\" style=\"background-color:#FFFF66;border-color:#ffffff;color:#333333;border-radius:\u201c3\u201dpx;-moz-border-radius:\u201c3\u201dpx;-webkit-border-radius:\u201c3\u201dpx;\">\n<h2><span id=\"key_takeaways\">Key Takeaways<\/span><\/h2>\n<ul>\n<li>CEXs are operated and controlled by a centralized entity.<\/li>\n<li>DEXs do not need centralized intermediaries and are powered by smart contracts and liquidity pools instead.<\/li>\n<li>Crypto newcomers are advised to use centralized exchanges for their ease of use.<\/li>\n<li>More experienced users can explore DEXs after creating a crypto wallet.<\/li>\n<li>CEXs are convenient and feature-packed, while DEXs are privacy-preserving, censorship-free and permissionless.<\/li>\n<\/ul>\n<\/div><\/div>\n<div>\n    <section class=\"toc-sticky w-100 bg-white \">\n        <div class=\"toc-sticky__container container\">\n            <div class=\"toc-sticky__open d-flex align-items-end\" data-bs-toggle=\"collapse\"\n                 aria-controls=\"multiCollapse1\"\n                 data-bs-target=\"#multiCollapse1\">\n                <button\n                        class=\"btn btn-primary collapse-action-btn p-1 rounded-circle\"\n                        type=\"button\"\n                >\n                    <i class=\"icon-chevron-up\"><\/i>\n                <\/button>\n                <span id=\"toc-current-title\" class=\"d-flex align-items-center\">\n                    Table of Contents\n                <\/span>\n                <span class=\"toc-main-title-permanent\">Table of Contents<\/span>\n            <\/div>\n            <div\n                    class=\"collapse my-3\"\n                    id=\"multiCollapse1\"\n            >\n                <ol class=\"StepProgress\">\n                                                                        <li class=\"StepProgress-item current\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"key_takeaways\"\n                               onclick=handleScrollToTitle(\"key_takeaways\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">Key Takeaways<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"centralized_vs_decentralized_crypto_exchanges_how_do_they_work\"\n                               onclick=handleScrollToTitle(\"centralized_vs_decentralized_crypto_exchanges_how_do_they_work\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">Centralized vs. Decentralized Crypto Exchanges: How Do They Work?<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"cex_vs_dex_side-by-side_comparison\"\n                               onclick=handleScrollToTitle(\"cex_vs_dex_side-by-side_comparison\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">CEX vs. DEX: Side-By-Side Comparison<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"pros_and_cons_of_decentralized_exchanges\"\n                               onclick=handleScrollToTitle(\"pros_and_cons_of_decentralized_exchanges\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">Pros and Cons of Decentralized Exchanges<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"pros_and_cons_of_centralized_exchanges\"\n                               onclick=handleScrollToTitle(\"pros_and_cons_of_centralized_exchanges\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">Pros and Cons of Centralized Exchanges<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"cex_vs_dex_which_is_best_for_you\"\n                               onclick=handleScrollToTitle(\"cex_vs_dex_which_is_best_for_you\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">CEX vs. DEX: Which Is Best for You?<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"the_bottom_line\"\n                               onclick=handleScrollToTitle(\"the_bottom_line\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">The Bottom Line<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"faqs\"\n                               onclick=handleScrollToTitle(\"faqs\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">FAQs<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"references\"\n                               onclick=handleScrollToTitle(\"references\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">References<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                    <\/ol>\n                <div class=\"toc-sticky__container__disperse\"><\/div>\n                <div class=\"toc-sticky__btn-top justify-content-center\">\n                    <button class=\"btn btn-link d-flex align-items-center\" onclick={btnTop()}><p>Show Full Guide<\/p><img decoding=\"async\"\n                                src=\"\/wp-content\/plugins\/table-of-contents\/assets\/images\/arrow-up-circle.svg\"\n                                alt=\"arrow-up-circle\">\n                    <\/button>\n                <\/div>\n            <\/div>\n        <\/div>\n    <\/section>\n    <div class=\"toc-sticky-list\">\n        <div class=\"toc-sticky__container container\">\n            <div class=\"toc-sticky__open d-flex align-items-end\" data-bs-toggle=\"collapse\" aria-controls=\"multiCollapse2\" data-bs-target=\"#multiCollapse2\">\n                <button class=\"btn btn-primary collapse-action-btn p-1 rounded-circle\"\n                        type=\"button\">\n                    <i class=\"icon-chevron-up up\"><\/i>\n                <\/button>\n                <span id=\"toc-current-title\" class=\"d-flex align-items-center\">\n                    Table of Contents\n                <\/span>\n            <\/div>\n            <div  class=\"collapse my-3\" id=\"multiCollapse2\">\n                <ol class=\"StepProgress\">\n                    \t\t\t\t\t \t\t\t\t\t                                                     <li class=\"StepProgress-item current \">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"key_takeaways\"\n                                   onclick=handleScrollToTitle(\"key_takeaways\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">Key Takeaways<\/a>\n                                                            <\/div>\n                                                    <\/li>\n                    \t\t\t\t\t \t\t\t\t\t                                                     <li class=\"StepProgress-item \">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"centralized_vs_decentralized_crypto_exchanges_how_do_they_work\"\n                                   onclick=handleScrollToTitle(\"centralized_vs_decentralized_crypto_exchanges_how_do_they_work\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">Centralized vs. Decentralized Crypto Exchanges: How Do They Work?<\/a>\n                                                            <\/div>\n                                                    <\/li>\n                    \t\t\t\t\t \t\t\t\t\t                                                     <li class=\"StepProgress-item \">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"cex_vs_dex_side-by-side_comparison\"\n                                   onclick=handleScrollToTitle(\"cex_vs_dex_side-by-side_comparison\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">CEX vs. DEX: Side-By-Side Comparison<\/a>\n                                                            <\/div>\n                                                    <\/li>\n                    \t\t\t\t\t \t\t\t\t\t\n\t\t\t\t\t\t <span class=\"show_moretoc\">Show Full Guide<\/span>\n\t\t\t\t\t\t \t\t\t\t\t \t\t\t\t\t\t  \t\t\t\t\t                                                      <li class=\"StepProgress-item ms_hidetoc\">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"pros_and_cons_of_decentralized_exchanges\"\n                                   onclick=handleScrollToTitle(\"pros_and_cons_of_decentralized_exchanges\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">Pros and Cons of Decentralized Exchanges<\/a>\n                                                            <\/div>\n                                                    <\/li>\n                    \t\t\t\t\t \t\t\t\t\t \t\t\t\t\t\t  \t\t\t\t\t                                                      <li class=\"StepProgress-item ms_hidetoc\">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"pros_and_cons_of_centralized_exchanges\"\n                                   onclick=handleScrollToTitle(\"pros_and_cons_of_centralized_exchanges\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">Pros and Cons of Centralized Exchanges<\/a>\n                                                            <\/div>\n                                                    <\/li>\n                    \t\t\t\t\t \t\t\t\t\t \t\t\t\t\t\t  \t\t\t\t\t                                                      <li class=\"StepProgress-item ms_hidetoc\">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"cex_vs_dex_which_is_best_for_you\"\n                                   onclick=handleScrollToTitle(\"cex_vs_dex_which_is_best_for_you\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">CEX vs. DEX: Which Is Best for You?<\/a>\n                                                            <\/div>\n                                                    <\/li>\n                    \t\t\t\t\t \t\t\t\t\t \t\t\t\t\t\t  \t\t\t\t\t                                                      <li class=\"StepProgress-item ms_hidetoc\">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"the_bottom_line\"\n                                   onclick=handleScrollToTitle(\"the_bottom_line\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">The Bottom Line<\/a>\n                                                            <\/div>\n                                                    <\/li>\n                    \t\t\t\t\t \t\t\t\t\t \t\t\t\t\t\t  \t\t\t\t\t                                                      <li class=\"StepProgress-item ms_hidetoc\">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"faqs\"\n                                   onclick=handleScrollToTitle(\"faqs\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">FAQs<\/a>\n                                                            <\/div>\n                                                    <\/li>\n                    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document.querySelector('#multiCollapse1');\n        document.querySelector('html').classList.remove('overflow-hidden');\n        pageLegend.classList.remove('overflow-auto');\n        pageLegend.style.height = 'auto';\n        window.scrollTo({\n            top: 0,\n            behavior: 'smooth'\n        });\n    }\n\n    const handleScrollToTitle = (id) => {\n        const el = document.getElementById(id);\n        const headerHeightDifference = window.innerWidth < 992 ? -30 : -15;\n        window.scrollTo({\n            top: el.offsetTop - 60 - headerHeightDifference - 10,\n        });\n    }\n<\/script>\n\n<h2><span id=\"centralized_vs_decentralized_crypto_exchanges_how_do_they_work\">Centralized vs. Decentralized Crypto Exchanges: How Do They Work?<\/span><\/h2>\n<p><a href=\"https:\/\/www.techopedia.com\/definition\/33372\/cryptocurrency-exchange\">Cryptocurrency exchanges<\/a> are platforms where investors and traders can buy, sell, and trade tokens and <a href=\"https:\/\/www.techopedia.com\/cryptocurrency\/best-crypto-futures-trading-platforms\">crypto futures<\/a>. There are two forms of crypto exchanges \u2013 CEXs and DEXs.<\/p>\n<p>CEX is a crypto exchange that is operated and controlled by a centralized entity. CEXs have a similar setup to traditional stock market exchanges where transactions are settled off-chain and liquidity is provided by parties known as market makers.<\/p>\n<p>Most importantly, CEXs keep custody of their customers\u2019 assets unless they withdraw their crypto tokens away from the exchange.<\/p>\n<p>DEX is a crypto exchange that does not need centralized intermediaries to facilitate crypto trading. DEXs use <a href=\"https:\/\/www.techopedia.com\/definition\/32499\/smart-contract\">smart contracts<\/a> and <a href=\"https:\/\/www.techopedia.com\/definition\/liquidity-pool\">liquidity pools<\/a> to process token swaps. All transactions occur on-chain.<\/p>\n<p>Unlike CEXs, trading cryptocurrencies on DEXs allows users to keep full custody of their crypto tokens at all times.<\/p>\n<p>As of May 2024, the DEX vs. CEX volume ratio, which compares the monthly spot trade volumes at decentralized exchanges and centralized exchanges, <a href=\"https:\/\/www.theblock.co\/data\/decentralized-finance\/dex-non-custodial\/dex-to-cex-spot-trade-volume\" target=\"_blank\">stood at 8.2%<\/a>.<\/p>\n<p>According to <a href=\"https:\/\/coinmarketcap.com\/rankings\/exchanges\/\" target=\"_blank\">CoinMarketCap<\/a>, as of May 9, 2024, the Binance centralized exchange is the leading spot CEX with a daily trading volume of $17.5 billion, while SynFutures v3 is the top decentralized exchange with a 24-hour volume of $971.3 million.<\/p>\n<div class=\"infogram-embed\" data-id=\"0bc3985e-1bd5-49e3-a4de-c76173128a56\" data-type=\"interactive\" data-title=\"CEX vs. DEX: Which Should You Choose in 2024\"><\/div>\n<p><script>!function(e,n,i,s){var d=\"InfogramEmbeds\";var o=e.getElementsByTagName(n)[0];if(window[d]&&window[d].initialized)window[d].process&&window[d].process();else if(!e.getElementById(i)){var r=e.createElement(n);r.async=1,r.id=i,r.src=s,o.parentNode.insertBefore(r,o)}}(document,\"script\",\"infogram-async\",\"https:\/\/e.infogram.com\/js\/dist\/embed-loader-min.js\");<\/script><\/p>\n<h2><span id=\"cex_vs_dex_side-by-side_comparison\">CEX vs. DEX: Side-By-Side Comparison<\/span><\/h2>\n<p class=\"p1\"><div class=\"su-table su-table-responsive su-table-alternate\">\n<table>\n<tbody>\n<tr>\n<td><strong>Feature<\/strong><\/td>\n<td><strong>CEX<\/strong><\/td>\n<td><strong>DEX<\/strong><\/td>\n<\/tr>\n<tr>\n<td>Operator<\/td>\n<td>Centralized company<\/td>\n<td>Smart contracts<\/td>\n<\/tr>\n<tr>\n<td>Censorship<\/td>\n<td>The centralized operator has the power to disable crypto withdrawals, buying, selling, trading, and account closures<\/td>\n<td>Permissionless and censorship-free environment<\/td>\n<\/tr>\n<tr>\n<td>Privacy<\/td>\n<td>Users are required to submit personal information and complete <a href=\"https:\/\/www.techopedia.com\/definition\/know-your-customer-kyc\">KYC<\/a> to begin trading on CEXs<\/td>\n<td>Privacy-preserving environment as users are not required to submit personal information<\/td>\n<\/tr>\n<tr>\n<td>Liquidity sources<\/td>\n<td>Provided by the centralized operator and by <a href=\"https:\/\/www.techopedia.com\/definition\/automated-market-maker-amm\">market makers<\/a><\/td>\n<td>Community-sourced <a href=\"https:\/\/www.techopedia.com\/definition\/liquidity-pool\">liquidity pools<\/a><\/td>\n<\/tr>\n<tr>\n<td>Order book<\/td>\n<td>The company maintains control over order matching and matchmaking. Transactions recorded off-chain.<\/td>\n<td>Trades are executed by smart contracts. Transactions recorded on-chain.<\/td>\n<\/tr>\n<tr>\n<td>Fees<\/td>\n<td>The fee structure is set by the centralized operator.<\/td>\n<td><a href=\"https:\/\/www.techopedia.com\/definition\/gas-fee-ethereum\">Gas fees<\/a>, platform fees.<\/td>\n<\/tr>\n<tr>\n<td>Access<\/td>\n<td>Users need to create accounts.<\/td>\n<td>Users need a crypto wallet to use DEXs.<\/td>\n<\/tr>\n<tr>\n<td>Speed<\/td>\n<td>Fast transactions.<\/td>\n<td>Depends on the underlying blockchain.<\/td>\n<\/tr>\n<tr>\n<td>Regulatory compliance<\/td>\n<td>Tends to operate in a compliance-first manner. Requires users to complete KYC processes.<\/td>\n<td>No need for KYC processes.<\/td>\n<\/tr>\n<tr>\n<td>Volume<\/td>\n<td>CEX trade volume is generally higher than that of DEXs.<\/td>\n<td>Total DEX spot trade volume made up about 8% of total CEX spot trade volume, <a href=\"https:\/\/www.theblock.co\/data\/decentralized-finance\/dex-non-custodial\/dex-to-cex-spot-trade-volume\" target=\"_blank\">as of May 2024.<\/a><\/td>\n<\/tr>\n<tr>\n<td>Examples<\/td>\n<td>Binance, Coinbase<\/td>\n<td>Uniswap, Aerodrome Finance<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p class=\"p1\"><\/div>\n<h2><span id=\"pros_and_cons_of_decentralized_exchanges\">Pros and Cons of Decentralized Exchanges<\/span><\/h2>\n<p><img decoding=\"async\" src=\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/05\/2-Pros-and-Cons-of-Decentralized-Exchanges-163x300.jpg\" alt=\"Pros and Cons of Decentralized Exchanges\" width=\"1200\" height=\"2210\" class=\"aligncenter wp-image-237660\" srcset=\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/05\/2-Pros-and-Cons-of-Decentralized-Exchanges-163x300.jpg 163w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/05\/2-Pros-and-Cons-of-Decentralized-Exchanges-556x1024.jpg 556w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/05\/2-Pros-and-Cons-of-Decentralized-Exchanges-768x1414.jpg 768w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/05\/2-Pros-and-Cons-of-Decentralized-Exchanges-834x1536.jpg 834w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/05\/2-Pros-and-Cons-of-Decentralized-Exchanges-1112x2048.jpg 1112w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/05\/2-Pros-and-Cons-of-Decentralized-Exchanges-1200x2210.jpg 1200w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/05\/2-Pros-and-Cons-of-Decentralized-Exchanges-1980x3646.jpg 1980w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/05\/2-Pros-and-Cons-of-Decentralized-Exchanges-scaled.jpg 1390w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><\/p>\n<h3>Advantages of DEXs<\/h3>\n<ul>\n<li><strong>Decentralized<\/strong> \u2013 DEXs provide users with <a href=\"https:\/\/www.techopedia.com\/definition\/decentralization\">decentralized<\/a> and <a href=\"https:\/\/www.techopedia.com\/definition\/permissionless\">permissionless<\/a> trading environments, free of the control and influence of centralized operators.<\/li>\n<li><strong>Permissionless<\/strong> \u2013 Anyone with <a href=\"https:\/\/www.techopedia.com\/cryptocurrency\/best-crypto-wallets\">a crypto wallet<\/a> and internet access can trade cryptocurrencies on a DEX.<\/li>\n<li><strong>Open-Source <\/strong>\u2013 DEXs are built on <a href=\"https:\/\/www.techopedia.com\/definition\/3294\/open-source\">open-source<\/a> code, which allows anyone to study how they function.<\/li>\n<li><strong>Liquidity Pools<\/strong> \u2013 The decentralized nature of DEXs requires it to maintain <a href=\"https:\/\/www.techopedia.com\/definition\/liquidity-pool-tokens-lp-tokens\">liquidity pools of tokens<\/a>, which are used to facilitate token swaps. Anyone who contributes to liquidity pools by depositing their tokens earns a part of the trading fees on a pro rata basis.<\/li>\n<li><strong>Anonymity<\/strong> \u2013 DEXs do not require users to set up an account and completely know your customer (KYC) processes. Users only need a crypto wallet to use a DEX.<\/li>\n<li><strong>Variety of Tokens <\/strong>\u2013 DEXs are permissionless in nature, which means that any token that exists on a <a href=\"https:\/\/www.techopedia.com\/definition\/30246\/blockchain\">blockchain<\/a> will be available for trading (provided there is enough <a href=\"https:\/\/www.techopedia.com\/definition\/liquidity\">liquidity<\/a> to fulfill trades). Users will find popular and exotic tokens listed on DEXs.<\/li>\n<li><strong>Self-Custody <\/strong>\u2013 Whenever users trade on DEXs their crypto tokens are always stored in their own <a href=\"https:\/\/www.techopedia.com\/how-to\/how-to-use-a-crypto-wallet\">self-custodial wallet<\/a>. DEXs do not custody tokens for traders.<\/li>\n<li><strong>Reduced Counterparty Risk <\/strong>\u2013 Since DEX users\u2019 crypto tokens are stored in their personal wallets, they will not lose their tokens in the event that the DEX fails.<\/li>\n<\/ul>\n<h3>Disadvantages of DEXs<\/h3>\n<ul>\n<li><strong>Complexity<\/strong> \u2013 Using DEXs requires some technical knowledge about cryptocurrencies. Users must know how to use self-custodial wallets, how to traverse various blockchain networks, how to pay gas fees, and more.<\/li>\n<li><strong>Gas Fees <\/strong>\u2013 Since DEXs function on-chain, users need to pay gas fees each time they execute a transaction on a DEX.<\/li>\n<li><strong>Smart Contract Vulnerabilities <\/strong>\u2013 Smart contracts that power DEXs can be exploited and hacked, which can result in the loss of user funds.<\/li>\n<li><strong>Low Liquidity <\/strong>\u2013 Certain tokens listed on DEXs may have low liquidity, which can result in wider spreads and higher slippages during token swaps.<\/li>\n<li><strong>Risky Tokens <\/strong>\u2013 As DEXs are permissionless crypto exchanges, all cryptos that exist on the underlying blockchain network can be listed on it. Traders must conduct their own due diligence before trading tokens on DEXs to avoid getting scammed.<\/li>\n<li><strong>No Fiat On-Ramp &amp; Off-Ramp <\/strong>\u2013 One of the biggest drawbacks of DEXs is that they do not offer <a href=\"https:\/\/www.techopedia.com\/definition\/fiat-currency\">fiat<\/a> on-ramps and off-ramps. Usually, DEXs only offer crypto-to-crypto exchanges.<\/li>\n<\/ul>\n<h2><span id=\"pros_and_cons_of_centralized_exchanges\">Pros and Cons of Centralized Exchanges<\/span><\/h2>\n<p><img decoding=\"async\" src=\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/05\/1-Pros-and-Cons-of-Centralized-Exchanges-163x300.jpg\" alt=\"Pros and Cons of Centralized Exchanges\" width=\"1200\" height=\"2210\" class=\"aligncenter wp-image-237663\" srcset=\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/05\/1-Pros-and-Cons-of-Centralized-Exchanges-163x300.jpg 163w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/05\/1-Pros-and-Cons-of-Centralized-Exchanges-556x1024.jpg 556w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/05\/1-Pros-and-Cons-of-Centralized-Exchanges-768x1414.jpg 768w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/05\/1-Pros-and-Cons-of-Centralized-Exchanges-834x1536.jpg 834w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/05\/1-Pros-and-Cons-of-Centralized-Exchanges-1112x2048.jpg 1112w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/05\/1-Pros-and-Cons-of-Centralized-Exchanges-1200x2210.jpg 1200w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/05\/1-Pros-and-Cons-of-Centralized-Exchanges-1980x3646.jpg 1980w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/05\/1-Pros-and-Cons-of-Centralized-Exchanges-scaled.jpg 1390w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><\/p>\n<h3>Advantages of CEXs<\/h3>\n<ul>\n<li><strong>Convenience <\/strong>\u2013 Convenience is one of the biggest advantages of CEX over DEX. CEX platforms tend to prioritize user-friendliness over providing a <a href=\"https:\/\/www.techopedia.com\/definition\/4923\/web-30\">web3<\/a> experience. These platforms are designed to appeal to crypto traders and investors of all experience levels.<\/li>\n<li><strong>High Liquidity <\/strong>\u2013 CEXs are known for providing high liquidity, which enables tighter spreads and lower slippages in trading.<\/li>\n<li><strong>Fiat On-Ramp &amp; Off-Ramp<\/strong> \u2013 As CEXs cater to crypto traders and investors of all experience levels, they prioritize fiat-to-crypto (and vice versa) over token swaps. Even regular DEX users use CEXs to convert their crypto into fiat.<\/li>\n<li><strong>Compliance<\/strong> \u2013 CEXs prioritize <a href=\"https:\/\/www.techopedia.com\/definition\/regulatory-compliance\">regulatory compliance<\/a> to stay on the good books of government authorities. Therefore, CEXs are obliged to implement KYC and <a href=\"https:\/\/www.techopedia.com\/definition\/anti-money-laundering-aml\">anti-money laundering procedures<\/a>. This compliance-first way of doing business not only protects investors but also ensures that the exchange is available to users in the future.<\/li>\n<li><strong>Variety of Features<\/strong> \u2013 CEX platforms are known to be loaded with features such as <a href=\"https:\/\/www.techopedia.com\/definition\/staking-blockchain-staking\">staking<\/a>, copy trading, limit orders, <a href=\"https:\/\/www.techopedia.com\/cryptocurrency\/best-nft-marketplaces\">NFT marketplace<\/a>, futures exchange, systematic investment plans, learning modules, news, and more.<\/li>\n<li><strong>Tax Record<\/strong> \u2013 CEX makes it easy for <a href=\"https:\/\/www.techopedia.com\/definition\/crypto-taxes\">crypto tax<\/a> payers to record transactions and generate income tax reports.<\/li>\n<li><strong>Fast Transactions <\/strong>\u2013 The centralization of power and off-chain settlement allows CEXs to offer fast and cheap transactions to users.<\/li>\n<\/ul>\n<h3>Disadvantages of CEXs<\/h3>\n<ul>\n<li><strong>Censorship <\/strong>\u2013 CEXs are not permissionless environments. These platforms are operated and maintained by a centralized entity, giving them the power to censor customers and listed tokens. CEXs can also restrict withdrawals and buying\/selling of tokens.<\/li>\n<\/ul>\n<ul>\n<li><strong>Exchange Failure Risk <\/strong>\u2013 Since CEX holds custody of their customer\u2019s assets, the event of failure\/hack\/bankruptcy of the exchange may result in users losing their cryptocurrencies. We saw this play out in 2022 when <a href=\"https:\/\/www.techopedia.com\/the-sam-bankman-fried-saga-from-crypto-tycoon-to-alleged-fraudster\">FTX exchange<\/a> customers were unable to access their cryptos following its collapse.<\/li>\n<\/ul>\n<ul>\n<li><strong>Privacy Concern<\/strong> \u2013 Customers can only use the CEX platform after setting up an account with them and completing KYC obligations. These processes require users to submit their personal information.<\/li>\n<\/ul>\n<ul>\n<li><strong>Platform Fees <\/strong>\u2013 CEXs charge users various fees when they trade, buy and sell cryptocurrencies.<\/li>\n<\/ul>\n<ul>\n<li><strong>Less Listed Tokens <\/strong>\u2013 Compared to DEXs, CEXs have fewer cryptocurrencies listed on their platform. The listing process of new tokens can be slower as they are first vetted by the CEX.<\/li>\n<\/ul>\n<ul>\n<li><strong>Hacks<\/strong> \u2013 Users are at the risk of losing their investment if the CEX they use gets hacked. Therefore, it is important to study the various security and insurance measures taken at a centralized exchange when choosing a CEX.<\/li>\n<\/ul>\n<h2><span id=\"cex_vs_dex_which_is_best_for_you\">CEX vs. DEX: Which Is Best for You?<\/span><\/h2>\n<p>Choosing a CEX vs. DEX crypto exchange ultimately depends on your needs as a crypto investor\/trader. Let\u2019s go through the key areas that you should consider.<\/p>\n<h3>1. Experience Level<\/h3>\n<p>If you are a newcomer to the crypto world, it is best to start your crypto investment journey using a centralized exchange such as Binance, <a href=\"https:\/\/www.techopedia.com\/cryptocurrency\/coinbase-review\">Coinbase<\/a>, or Robinhood. CEXs have user-friendly interfaces which make it easy for first-time investors to learn more about the crypto sector. Once you master how to use a CEX, you can try using a DEX and experiencing the web3 world.<\/p>\n<h3>2. Risk<\/h3>\n<p>DEXs are considered a less risky option than CEXs because your cryptos are always under your control when you use a DEX. Your cryptos will be held in your self-custodial wallet when you use a DEX. On the contrary, CEX users give the exchange custody over their crypto asset, which can lead to a loss of investment in the event the CEX gets hacked or goes bankrupt.<\/p>\n<h3>3. Liquidity<\/h3>\n<p>When it comes to liquidity, CEX trading outperforms DEX trading. CEXs typically use market makers who provide liquidity, which results in fast transactions, tighter spreads, and lower slippages. On the other hand, DEXs depend on the community and projects to deposit tokens to liquidity pools. Trading in exotic tokens poses the risk of high slippages and wider spreads, resulting in investor losses.<\/p>\n<h3>4. Privacy<\/h3>\n<p>If <a href=\"https:\/\/www.techopedia.com\/definition\/10380\/information-privacy\">privacy<\/a> is a big concern for you, then using a DEX will suit you well. Users do not need to create an account or submit private information to use DEXs. Users only need crypto wallets to begin trading on a DEX. Meanwhile, CEXs require users to create accounts and complete KYC processes to begin trading.<\/p>\n<h3>5. Regulatory Compliance<\/h3>\n<p>If you want to prioritize regulatory compliance, then using a CEX will suit you best. Most CEXs operate in a compliance-first manner to reduce the risk of regulatory action. Furthermore, CEXs also provide users with tax reports, which make it easy for crypto investors to report their crypto transactions and pay taxes incurred.<\/p>\n<h3>6. Exposure to Cryptocurrencies<\/h3>\n<p>If you want to trade and invest in less-known cryptocurrencies, then DEX trading will suit you. The permissionless nature of decentralized exchanges allows all types of tokens to list on DEXs (provided they have adequate liquidity). On the other hand, CEXs tend to implement strict and slow vetting processes, which results in a lesser number of tokens listed on CEXs compared to DEXs.<\/p>\n<h2><span id=\"the_bottom_line\">The Bottom Line<\/span><\/h2>\n<p>The choice between trading crypto on DEXs vs. CEXs ultimately boils down to your priorities.<\/p>\n<p>Users need not think too hard when choosing between CEXs and DEXs. You can use CEXs and DEXs simultaneously to make the best of both worlds.<\/p>\n<p>More importantly, you should conduct thorough due diligence on which particular CEX and DEX to use in your crypto investment journey.<\/p>\n<h2><span id=\"faqs\">FAQs<\/span><\/h2>\n<div class=\"man_faq_sec\" itemscope itemtype=\"https:\/\/schema.org\/FAQPage\"><\/time><section class=\"ms_faq ms_card \" ><div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\"><div class=\"accordionButton\"><h3 itemprop=\"name\">Is DEX safer than CEX?<\/h3> <\/div>\n<div class=\"accordionContent\" itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none;\"><p itemprop=\"text\">DEXs are considered a less risky option than CEXs because your cryptos are always under your control when you use a DEX.<\/p>\r\n                <\/div><\/div><\/section>\n<section class=\"ms_faq ms_card \" ><div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\"><div class=\"accordionButton\"><h3 itemprop=\"name\">Is Coinbase a DEX or CEX?<\/h3> <\/div>\n<div class=\"accordionContent\" itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none;\"><p itemprop=\"text\">Coinbase is a centralized exchange.<\/p>\r\n                <\/div><\/div><\/section>\n<section class=\"ms_faq ms_card \" ><div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\"><div class=\"accordionButton\"><h3 itemprop=\"name\">What is the difference between centralized exchanges and DEXs?<\/h3> <\/div>\n<div class=\"accordionContent\" itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none;\"><p itemprop=\"text\">CEX is a crypto exchange that is operated and controlled by a centralized entity. DEX is a crypto exchange that does not need centralized intermediaries to facilitate crypto trading.<\/p>\r\n                <\/div><\/div><\/section>\n<section class=\"ms_faq ms_card \" ><div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\"><div class=\"accordionButton\"><h3 itemprop=\"name\">What is the difference between a DEX wallet and a CEX wallet?<\/h3> <\/div>\n<div class=\"accordionContent\" itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none;\"><p itemprop=\"text\">A crypto wallet is a self-custodial digital wallet that gives its owner full control of the cryptos held in it. Meanwhile, CEX users give the centralized exchange custody of their crypto tokens.<\/p>\r\n                <\/div><\/div><\/section>\n<div class=\"reference-content\">\n<div class=\"reference-heading reference-content-collapsible-heading\">\n<h2><span id=\"references\">References<\/span><\/h2>\n<\/div>\n<div class=\"reference-content-body\">\n<ol>\n<li><a href=\"https:\/\/www.theblock.co\/data\/decentralized-finance\/dex-non-custodial\/dex-to-cex-spot-trade-volume\" target=\"_blank\">DEX to CEX Spot Trade Volume (%)<\/a> (Theblock)<\/li>\n<li><a href=\"https:\/\/coinmarketcap.com\/rankings\/exchanges\/\" target=\"_blank\">Top Cryptocurrency Spot Exchanges<\/a> (Coinmarketcap)<\/li>\n<\/ol>\n<\/div>\n<\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>Every crypto enthusiast\u2019s journey starts with buying a cryptocurrency from an exchange. Primarily, buying and selling cryptocurrencies occurs on centralized exchanges (CEX) and decentralized exchanges (DEX). The crypto community is constantly debating on which method is the best way to trade crypto. The answer to the DEX vs. CEX debate is subjective. Both methods have [&hellip;]<\/p>\n","protected":false},"author":286557,"featured_media":237699,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_lmt_disableupdate":"","_lmt_disable":"","om_disable_all_campaigns":false,"footnotes":""},"categories":[601],"tags":[],"category_partsoff":[],"class_list":["post-237638","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blockchain"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.2 (Yoast SEO v24.5) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>CEX vs. DEX: Which Should You Choose in 2025? Techopedia<\/title>\n<meta name=\"description\" content=\"Choosing between CEX vs. DEX ultimately depends on your needs as a crypto investor. Let\u2019s go through the main differences between CEX and DEX.\" \/>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"CEX vs. DEX: Which Should You Choose in 2025?\" \/>\n<meta property=\"og:description\" content=\"Choosing between CEX vs. DEX ultimately depends on your needs as a crypto investor. 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