Maybe you’re new to cryptocurrency and blockchain market, or maybe even though you don’t consider yourself to be tech-savvy, you like to learn more about NFTs, different cryptocurrencies, and DeFi projects; in either case, our weekly recap is for you.
In our first Weekly Recap, we talked about MarketCap, Circulating Supply, and Total MarketCap which are the basic terms you should know in the cryptocurrency world.
This week, we want to take a look at the places where you can buy crypto: Exchanges
Top 5 Centralized Crypto Exchanges
Whether you’re interested in blockchain games, decentralized applications, NFTs, or DeFi protocols, you may have to buy cryptocurrencies at some point. You can use cryptocurrencies to buy in-game items or pay the fees of the services you receive in a blockchain network. To buy crypto, we use Exchanges.
We have so many crypto exchanges right now and most of them allow you to buy cryptocurrencies using your credit cards.
Source: CoinMarketCap
Crypto exchanges are often judged by their Trading Volume. Trading Volume shows the total value of the platform’s trades at a particular period. As you can see, $16.3B worth of trades were performed on Binance exchange in the past 24h.
Trading Volume is a good metric to see how trustworthy a crypto exchange really is, but you should remember that this number is not always correct. Many exchanges create fake trading volumes to boost their reputation and that’s why CoinMarketCap uses a combination of other factors, such as traffic and liquidity, in its ranking as well. As you can see, KuCoin is ranked 5th even though its trading volume is higher than Kraken.
You can also see the Fiat Supported for each exchange. Fiat is a government-issued currency like Dollar, Euro, or Pound. As you can see, Coinbase only supports USD, EUR, and GBP, while Binance has much more options to choose from.
To buy a specific cryptocurrency, you have to make sure that it is available on the exchange first. We call this process “Listing”. Centralized crypto exchanges always announce their newly listed coins. As you can see, FTX, Kraken, and KuCoin have 314, 118, 610 coins listed respectively.
But what if you couldn’t find your coin in any centralized exchange?
Top 5 Decentralized Crypto Exchanges
Source: CoinMarketCap
Centralized exchanges work as a middleman and they charge a fee for that. You always trade with the exchange, not any particular trader. The exchange can list or unlis any cryptocurrency for any reason at any time. What’s more, the exchange holds your cryptocurrency for you, which can be risky.
Decentralized Exchanges or DEXs are the alternatives for centralized exchanges. Instead of a company, like Binance or Coinbase, a program is responsible for facilitating the trades between users. So you directly trade with another user, and the program handles that between you and the other user.
We call that program a Smart Contract that runs on a blockchain network. So a smart contract is just a piece of code that enforces specific rules for us to make sure everything goes as planned. In a DEX, we don’t have a centralized entity and users are responsible for providing coins. In this case, we don’t have the listing process like centralized exchanges.
Even though DEXs are decentralized and open, and align with blockchain goals better, well-known centralized exchanges may be a safer choice to start with.
You can also see the Market Share for each DEX. Market Share is based on trading volume and shows how much of the total volume belongs to a specific DEX. As you can see, PancakeSwap has almost 2% of the total trading volume.
You might remember the same thing from the last week’s chart. The market share of a cryptocurrency
is called “Dominance”. You may have heard about Bitcoin Dominance and how much it may affect the overall crypto market. Bitcoin Dominance is almost 42% now, which means that 42% of the total MarketCap belongs to Bitcoin.
Endnote
Centralized Exchange: a centralized marketplace for buying and selling cryptocurrencies with a single company in charge.Decentralized Exchange: instead of a company, like Binance or Coinbase, a program is responsible for facilitating the trades between users.Trading Volume: shows the total value of the platform’s trades at a particular period.Listing: the process of adding a cryptocurrency to a crypto exchange.Smart Contract: a piece of code that enforces specific rules for us to make sure everything goes as planned.Market Share: is based on trading volume and shows how much of the total volume belongs to a specific DEX.
Dominance: the market share of a cryptocurrency that is calculated based on the Total MarketCap of Crypto Market.