What Is CEX (Centralized Exchange)?
A Centralized Exchange is a traditional company-operated crypto trading platform — Coinbase, Binance, Kraken, OKX, Bybit. The exchange custodies user funds, matches orders through its own engine, and provides fiat on/off-ramps and customer support.
Advantages over DEXs: deep liquidity, fast execution, fiat support, customer service, regulatory clarity in some jurisdictions. Disadvantages: custodial risk (you don't hold your keys), KYC requirements, geographic restrictions, listing fees that affect what gets traded.
Historical failures (Mt. Gox 2014, FTX 2022) showed that CEX custodial risk is real and severe. The crypto community's response — 'not your keys, not your coins' — captures the central trade-off. Most active traders use CEXs for liquidity but withdraw to self-custody for long-term holdings.
Related terms
- DEX (Decentralized Exchange) — Cryptocurrency exchange that runs on smart contracts without a central operator.
- Smart Contract — Self-executing program on a blockchain that runs when predetermined conditions are met.
- Liquidity — The ease with which an asset can be bought or sold without significantly affecting its price.