How does an exchange operate?
🏦Exchange serves as a tool for trading commodities, currencies, securities, derivatives and other market instruments.
Previously, an exchange was a place or building where traders, intermediaries, stockbrokers gathered at certain hours to conclude transactions with securities or commodities. Before the era of computerization, the parties had to agree on transactions verbally. Now people trade mostly in electronic form via specialized programs.
💵A cryptocurrency exchange is a platform where you can exchange one cryptocurrency for another or for fiat currencies. The main source of income for cryptocurrency exchanges is fees they get for each transaction and withdrawal of funds. Transaction fees are quite low so that traders would make more transactions. Withdrawal of funds from crypto exchanges will cost a little more — 2–3%.
How a crypto exchange operates?
🖥️Crypto exchange as an information product consisting of computer hardware and software.
✉️To register, you need to enter some name, come up with a password and a new e-mail address for the security of your account on the exchange.
👥On some exchanges, users are divided into several levels of available features, and verification is required to increase the level and expand the functionality, including sending passport data and document scans. Anonymity is lost in this case but the user has access to more trading operations, input and output methods, and the ability to restore access to the account in case of password loss.
🛠️After creating an account, the exchange will indicate the address to which the funds should be transferred to start trading them. Or to use them to exchange for the currency you need. But keep in mind: although the wallet address is declared as yours, it is generated by the exchange server, and the private keys from it are stored by it.
🔐It is not worth storing cryptocurrency on the stock exchange — keep only what you intend to trade on your accounts. The rest is better to withdraw to your address — it is desirable to transfer large amounts to “cold storage”.