By: Isha Das
A crypto exchange is a digital marketplace where cryptocurrency can be bought, sold and traded for other digital or traditional fiat currencies. These platforms serve as an intermediary by creating a pool of liquidity where market participants can buy or sell digital assets at market prices.
While crypto exchanges are instrumental for accessing the digital asset class, it's important to recognize that holding your assets in exchanges carries security risks. Unlike holding cryptocurrency in a private wallet, where you have personal control of your keys, your assets are centralized in the custody of the exchange. In the event of a hack, your funds could be at risk.
As crypto exchanges are not truly decentralized finance (DeFi), they could be vulnerable to security breaches. Therefore, users are often advised to move larger holdings to more secure, private wallets.
Many of these platforms now also offer insurance on digital assets as well so it's always better to look into safety and security options before choosing your digital asset trading platform.
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