Current trends in the financial market are changing quite quickly, one of the relative innovations that, nevertheless, has already managed to successfully consolidate itself and provide quite promising opportunities for millions of people around the world — cryptocurrency exchangers or digital currencies. They are successfully used as a means of payment, an investment instrument. But as soon as a beginner tries to get into the essence of all the possibilities and processes, a number of concepts and terms arise that need to be sorted out. One of the original swaps.
Such a concept is typical not only for the cryptocurrency market service, it often appears in economics, mathematics, investor, banking. The essence of the service is the equivalent exchange of something, but most often it still implies a trade and financial transaction. For example, as the simplest and most understandable example, we can give an example of exchanging one car for another, with approximately the same characteristics. It will also be customary for each person to exchange traditional fiat currencies $, which is provided under certain conditions by a centralized or commercial bank.
In the digital currency market, such a concept means a cryptocurrency exchange, in which you receive an equivalent amount of money after conversion at the current cryptocurrency exchange rate. When conducting a SWAP, there is necessarily a certain sequence of actions, when the obligations of each of the parties under the planned transaction are first agreed upon, and then it is closed by fulfilling these obligations by both parties. For example, you can buy Ether by selling Bitcoin, or vice versa.
Both SWAP and Trading are ways of earning money. In the first case, the goal of the least risky operations is set, in the second, the result may not always be expected. SWAP is great if you need to:
get a certain amount of profit;
diversify the investment portfolio;
get passive income from available assets.
A profitable cryptocurrency exchange, which is available today in several ways, allows you to realize each of these goals.
Trading is a slightly different direction. There is an increased risk of all financial transactions. It is important to take into account the possibility of conducting a particular transaction “here” and “now”. Usually, there are more aggressive methods in trading aimed at getting more profit from cryptocurrencies in a short period of time. Therefore, beginners should still limit themselves to SWAP opportunities to begin with, delve into all the nuances of the financial market and the principles of the exchanges. After that, you can get acquainted with the basic concepts of trading and try yourself in this direction.
Thus, SWAP is more suitable for people starting their activities in the financial market of cryptocurrencies, cryptocurrency trading is for advanced people who are aware of the differences between different strategies and ways of earning, receiving passive income.
Given the worldwide popularization of cryptocurrencies, as well as the fact that today the cryptocurrency exchange is not only bitcoin, but also several thousand other options, there are already a lot of ways to exchange.
The basic concepts that should be clarified here for each beginner:
CEX (Centralized Exchange). This is a method provided by a centralized cryptocurrency exchange. That is, all processes take place on the site of one company that manages and regulates cryptocurrencies. She, the company, acts in this case as an intermediary between the seller and the buyer. To carry out any transactions, for example, to buy Bitcoin, you can go through the registration and verification procedure, create a personal account on the provided platform. After that, fiat money is deposited into the account, for which you can purchase various types of crypts. At the same time, you can buy ether or cue ball, or litecoin, or any other currency, but you will not have it in full possession. In this case, the exchange is the repository of all assets involved in transactions. It is often impossible to withdraw them from the system in the chosen digital currency. To better understand the essence, it is necessary to take into account the peculiarities of using cryptocurrency. To buy ether, you need to make a cryptocurrency wallet on this blockchain. At the same time, you will have individual access with unique keys for cryptocurrency. When you use the services of the exchange, the keys are not provided, and the actual cryptocurrency wallet is not created. You only have alternative access to them in the system for performing various trade and financial transactions and making a profit. Profits can usually be withdrawn in fiat money.
DEX (Decentralized Exchange). In this case, the exchange provides such an option: cryptocurrency assets are not held inside the system. All transactions are carried out on the principle of peer-to-peer exchanges. Payments are made on the terms of smart contracts, each operation is recorded in the blockchain.
Taking into account all these nuances, it makes sense to create your own personal cryptocurrency wallet to get a stable income. You can use special exchangers as Exnode.ru , in which it is even possible to exchange cryptocurrency for rubles, with a wide list of both digital and fiat currencies.
Summing up the results
In order to draw certain conclusions for yourself and finally decide how to act in the financial market, so as not to go into a drawdown, but to make a real profit, it is necessary to get as much information as possible and structure it for a more complete understanding of the essence of all processes and their differences. For example:
The CEX exchange makes it possible to conduct financial transactions with various fiat currencies, provides a fairly wide functionality for trading, has high liquidity, but access to unique keys is excluded here, which guarantee ownership of a particular cryptocurrency. In addition, such systems are more likely to be hacked (hacker attacks).
DEX — with this choice, absolute anonymity of the transaction is guaranteed, private keys and access to assets are available only to the owner of the wallet. At the same time, there is a fairly wide list of available crypts, but it does not support fiat. The liquidity in this system is often lower than when using CEX.
How to buy and where to exchange cryptocurrency — every novice trader or investor decides for himself individually, taking into account all the pros, cons and, most importantly, risks.