BlockchainBeginner#Trading#Infrastructure
CEX (Centralized Exchange)
C
Definition
A platform managed by a central entity that facilitates the buying and selling of digital assets and may provide custody or conversion services.
Source reviewed
- SEC Investor Bulletin: Crypto Asset Custody Basics for Retail Investors opens in a new tab
Supports: Explains self and third-party custody, private-key control, cold and hot wallet trade-offs, custodian research, insurance, asset use, and account-security questions.
- SEC Investor Alert: Exercise Caution with Crypto Asset Securities opens in a new tab
Supports: Explains platform, withdrawal, custody, insolvency, ownership, market, and legal risks, and cautions against treating proof-of-reserves claims as a full financial-statement audit.
Concept Diagram
Key Takeaways
1
CEXs like Binance and Coinbase are platforms that match buyers and sellers through a central order book
2
Features, legal status, liquidity, asset support, and custody arrangements vary by platform and jurisdiction.
3
Third-party custody generally means the provider controls platform keys and can affect account or withdrawal access.
4
Self-custody and third-party custody have different key, recovery, provider, legal, and operational risks.
5
Research provider terms and test an appropriate withdrawal; marketing or prior uptime is not a custody guarantee.
Practical Example
Before funding an account, a user checks which legal entity serves their country, the supported network for deposits and withdrawals, fees and limits, how customer assets may be held or used, the provider's failure and dispute terms, and account-security options. They use a small transfer to verify the complete route before moving a larger amount.
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Related Terms
Blockchain
Cold WalletA wallet arrangement that keeps signing keys in an offline or more isolated environment. It can reduce some online attack exposure, but its safety depends on device, backups, transaction review, and the user's operating practices.
Trading
DerivativesA contract whose value or payoff is linked to an underlying asset, rate, index, event, or another reference. It is a separate contractual position, not the same thing as holding the referenced asset.
Blockchain
DEX (Decentralized Exchange)An exchange design that uses blockchain transactions, smart contracts, or an onchain order book to match or execute trades. Custody, operator roles, access controls, fees, execution, and protections vary by protocol and jurisdiction.
Trading
SlippageThe difference between a quoted or expected trade result and the result that can execute under the protocol's state and limits.
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