Exchange

An exchange is a marketplace, run either by a company or by code, where traders swap one crypto asset for another or for fiat currency at a price set by supply and demand rather than by a single price-setter. Centralized exchanges (CEXs) such as Binance or Bybit act as intermediaries: they hold custody of user funds in company-controlled wallets, match orders internally on their own books, and usually require identity verification before a user can deposit or withdraw. A Decentralized Exchange (DEX) works differently, settling trades directly on-chain through smart contracts and liquidity pools, often on networks like Ethereum, so traders keep control of their own private keys throughout.

Most exchanges display an order book, where a limit order sets the exact price a trader is willing to accept and a market order fills instantly against the best price currently offered. Fees, supported assets, and liquidity depth vary widely across platforms, and the resulting price gaps between exchanges are what create opportunities for arbitrage traders.

Regulation has become a defining feature of the exchange landscape. Under the European Union's Markets in Crypto-Assets (MiCA) framework, any crypto-asset service provider operating in the bloc needed full authorization by mid-2026, and most major jurisdictions now require Know Your Customer checks, sanctions screening, and ongoing transaction monitoring before trading. Even so, centralized exchanges continue to handle the large majority of global spot and derivatives volume, prized for deeper liquidity and simpler interfaces, while DEXs keep gaining share among users who prioritize self-custody over convenience.