An Introduction to Decentralized Exchanges, Centralized Exchanges and Wallets
Decentralized exchanges, centralized exchanges, and wallets offer different opportunities for people to buy and store cryptocurrency.
January 17, 2022
An Introduction to Decentralized Exchanges, Centralized Exchanges and Wallets
Decentralized exchanges, centralized exchanges, and wallets offer different opportunities for people to buy and store cryptocurrency.
A centralized exchange (or CEX), e.g. Coinbase or Binance, is a company that facilitates the buying and selling of assets. A CEX takes custody of funds and can shape — and reshape — the rules that govern the platform. Too often in crypto, they’ve proven vulnerable to hacks and theft.
The Pros and Cons of Centralized Exchanges
In contrast, decentralized exchanges ( or DEX), — for example, Uniswap or Sushiswap — are autonomous decentralized applications (Dapps) that enable buyers and sellers to exchange their cryptocurrency without losing custody of their funds. They operate 24/7 and remove the need to trust a third party to manage trades.
Pros and Cons of Decentralized Exchanges
What are wallets?
Broadly speaking, a crypto wallet is a digital wallet that allows users to store, manage, and trade their cryptocurrencies. It is your identity when you buy Bitcoin, Eth or any other cryptocurrency. Your its address and what you’re buying and selling is recorded on the blockchain.
A crypto wallet also stores the public and/or private keys for cryptocurrency transactions. A public key is like your bank account number. You can share it with other people or institutions, so they can send money to you or take money from your account when you authorize it. These people usually view your public keys as a wallet address — a hashed, or more compressed, version of that public key.
A private key, on the other hand, is like your bank account password or the PIN to your debit card. Anyone with access to your private key, will have access to all of your assets stored in your wallet, so it’s critical that you keep your private key a secret.
As a purely digital currency, cryptocurrency isn’t directly held within your wallet; instead, the wallet stores information about your public and private keys, which amount to your ownership stake of the cryptocurrency. Using these keys, you can send or receive cryptocurrency while keeping your private key encrypted.
About Index Coop
Index Coop is a decentralized autonomous organization (DAO) that powers structured decentralized finance (DeFi) products and strategy tokens using smart contracts on the blockchain. We offer a suite of sector structured products, leverage and inverse products, and yield-generating products. We aim to create products that are simple to use, accessible to everyone and secure. Our products are built on Set Protocol, a twice-audited, self-custodial DeFi tool that allows for the creation and management of Ethereum-based (or ERC-20) tokens. Among users, partner protocols, and our composable products, Index Coop maintains one of the largest partnership networks in the DeFi ecosystem.
How to buy Index Coop products with fiat currencies:
- First, you’ll need to create an Ethereum wallet like Argent, Metamask, Gemini, or Rainbow.
- Next, you’ll set up your new wallet and connect your bank account.
- Once you’ve deposited fiat currency in your wallet you can exchange it for Index Coop products like DeFi Pulse Index (DPI) or the Metaverse Index.
You can also earn or buy DPI tokens directly via your favorite decentralized exchange.
Disclaimer: This content is for informational purposes only and is not legal, tax, investment, financial, or other advice. You should not take, or refrain from taking, any action based on any information contained herein, or any other information that we make available at any time, including blog posts, data, articles, links to third-party content, discord content, news feeds, tutorials, tweets, and videos. Before you make any financial, legal, technical, or other decisions, you should seek independent professional advice from a licensed and qualified individual in the area for which such advice would be appropriate. This information is not intended to be comprehensive or address all aspects of Index or its products. There is additional documentation on Index’s website about the functioning of Index Coop, and its ecosystem and community.
You shall not purchase or otherwise acquire our restricted token products if you are: a citizen, resident (tax or otherwise), and/or green card holder, incorporated in, owned or controlled by a person or entity in, located in, or have a registered office or principal place of business in the U.S. (defined as a U.S. person), or if you are a person in any jurisdiction in which such offer, sale, and/or purchase of any of our token products is unlawful, prohibited, or unauthorized (together with U.S. persons, a “Restricted Person”). The term “Restricted Person” includes, but is not limited to, any natural person residing in, or any firm, company, partnership, trust, corporation, entity, government, state or agency of a state, or any other incorporated or unincorporated body or association, association or partnership (whether or not having separate legal personality) that is established and/or lawfully existing under the laws of, a jurisdiction in which such offer, sale, and/or purchase of any of our token products is unlawful, prohibited, or unauthorized).