A centralized exchange (CEX) offers cryptocurrency exchange services to registered users. Its primary service typically matches buyers and sellers with an order book, though a CEX may offer its verified users various crypto products. For beginners, a CEX provides the simplest way to get started without needing in-depth knowledge of blockchain infrastructure and tools.
A decentralized exchange (DEX) uses on-chain smart contracts to run its exchange services. In most cases, users swap tokens from liquidity pools, with liquidity provided by other users in exchange for swap fees.
You don't need to register for a DEX, meaning they're open to anyone with a wallet and some crypto. DEXs are the gateway to the decentralized finance (DeFi) world and provide users with a lot of freedom. However, they lack the support a CEX can give, and it can be easy to make irreversible mistakes when using them.
If you've been doing your crypto research, you'll likely have come across DEXs. Perhaps you're already a customer with a CEX like P2PB2B and Binance but are interested in using a DEX, or maybe you're looking to purchase the latest DeFi coin not currently available on CEXs.
No matter your story, you should know the crucial differences between a CEX and DEX before deciding which to use. Depending on what you want to do and your level of experience, each has its advantages and disadvantages.