In the world of cryptocurrency, centralized exchanges are still a very common sight. That is a bit unusual, especially in an industry where decentralization is the main selling point. Even so, there are several positive aspects of centralized exchanges, especially during these early stages of the cryptocurrency industry.
6. High Volume
Even though there have been concerns over the cryptocurrency trading volume on centralized exchanges, it is one of their main selling points. Thanks to high volume, exchanges tend to attract new users and potentially even institutional investors. This high volume is mainly apparent on bigger exchanges, whereas smaller platforms tend to struggle in this regard.
5. A Lot of Users
Any exchange noting high volume numbers will usually have plenty of users on board. With so many exchanges on the market, it is only natural that their success is primarily determined by the number of active users. Some companies continue to note strong gains in this regard, including Binance and Coinbase. More users means more volume and more liquidity.
4. Cold Storage Security
Although cryptocurrency exchanges still tend to lose a lot of money every single time they get hacked, a lot of funds are moved into cold storage these days. That is by far one of the most positive developments affecting centralized exchanges, and it’s also one of their strong suits. Additional focus on security measures will elevate this industry to new heights.
3. Advanced Trading Features
Even though cryptocurrency trading should not be about seeking out any more risk than is absolutely necessary, margin trading is a very common feature. It is also something which advanced traders will gladly take advantage of, as it makes investing in certain cryptocurrencies a lot more appealing. Decentralized exchanges will not be providing these advanced features anytime soon.
2. Licensing = Legitimacy
As discussed in a previous article, cryptocurrency exchanges must obtain many licenses to be fully compliant with regulations. Not everyone sees the benefits of regulating cryptocurrency, but for a lot of people, it is a necessary evil in order to surpass mental barriers to entry. Most centralized exchanges have taken the necessary steps in this area.
Despite the growing popularity of decentralized exchanges, their centralized counterparts are still very convenient. Both novice and advanced cryptocurrency traders value convenience first and foremost. Centralized exchanges provide this convenience much more than other service providers, but convenience should not necessarily trump everything else.