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Home web3.0 What is the difference between decentralized exchanges and centralized exchanges

What is the difference between decentralized exchanges and centralized exchanges

Jul 11, 2025 pm 06:09 PM
Blockchain Bitcoin binance Blockchain technology the difference Binance exchange Huobi trading platform okx Ouyi Bitcoin exchange Ouyi okx

There are significant differences in asset custody methods, security, trading speed, liquidity and user experience.

What is the difference between decentralized exchanges and centralized exchanges - php Chinese

In the field of digital asset trading, there are two main types of platform: centralized exchanges and decentralized exchanges. They have significant differences in operational mode, security, user control, and user experience. Understanding these differences is crucial to choosing a trading platform that suits your needs.

Other mainstream Bitcoin exchanges in 2025:

Ouyi okx :

Binance binance:

Huobi htx:

Centralized exchange

1. This platform is the most common trading venue on the market at present, and is operated and managed by a centralized entity.

2. Users register an account on the platform and deposit assets into the exchange's account. The exchange keeps the user's private key and manages the assets on its behalf.

3. Trading matchmaking is carried out in the internal system of the exchange, with fast speed and high efficiency. User experience is usually similar to trading platforms in traditional financial markets.

Decentralized exchange

1. This platform operates directly based on blockchain technology and does not rely on centralized entities to manage users' funds.

2. The user conducts transactions directly through smart contracts, and the assets are always retained in the user's personal account, and the user controls the private key.

3. Transaction matching is achieved through on-chain smart contracts, or through off-chain agreements supplemented by on-chain settlement, and its technology is diverse.

What's the difference

The most core difference between the two is reflected in the asset custody method . Centralized exchanges adopt a custody model, and users trust the exchange to keep assets, which brings convenience, but there is also a risk that the exchange will be hacked or operated poorly, resulting in user assets losses. Decentralized exchanges realize non-custody , and users manage their private keys themselves. Asset risks mainly depend on the user's ability to keep their own private keys and the security of smart contracts.

In terms of security, centralized exchanges are the main target of hackers because they concentrate a large number of user assets . Once compromised, the impact will be wide. Because decentralized exchanges have assets scattered in the hands of users and transactions are conducted directly on the chain, they are more capable of resisting single-point failures as a whole . However, the risks faced by decentralized exchanges mainly come from smart contract vulnerabilities, which may lead to funds being stolen once the contract has defects.

Transaction speed vs. cost is another significant difference. Transactions on centralized exchanges occur off-chain, so the transaction speed is extremely fast and usually does not charge on-chain miners’ fees , but only the platform’s own transaction fees. Transactions on decentralized exchanges often need to interact with blockchain. The transaction speed is limited by the congestion of the blockchain network and requires payment of corresponding miner fees, which may be high , especially when the network is busy.

In terms of liquidity, centralized exchanges usually have higher liquidity because they have a huge user base, rich trading pairs, and concentrated trading volume. Liquidity on decentralized exchanges is gradually increasing, especially some DEXs based on automated market makers (AMM) models, but overall, some long-tail assets or emerging tokens may be easier to access on DEXs .

In terms of user experience, centralized exchanges provide a more friendly interface and more complete services, such as fiat currency deposit and exit channels, customer support, leveraged trading, etc. The user experience of decentralized exchanges is relatively complex, requiring users to have certain on-chain operation knowledge , and the service functions are relatively basic, which is not friendly enough to novice users.

In terms of compliance and regulation, centralized exchanges, as centralized entities, are more susceptible to scrutiny and management by regulatory agencies in various countries , and usually require KYC (know your customers) and AML (anti-money laundering) verification. Due to its decentralized nature, decentralized exchanges are difficult to regulate and provide anonymity to a certain extent, but may also be used for illegal activities.

In summary, centralized exchanges provide convenient, fast and high-liquid trading experience , but users need to bear the risks of the platform's custody assets. Decentralized exchanges give users complete asset control , which is more in line with the decentralized spirit of blockchain , but there may be shortcomings in user experience, transaction costs and speed at present.

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