CEX vs DEX: centralised vs decentralised exchanges

How centralised and decentralised exchanges actually work

Centralised exchanges (CEXs) are companies that hold your assets and run a private trading system. You’re trading through the platform itself, not directly with another user on the blockchain. The CEX keeps custody; it matches buyers and sellers using its own order book. For a step-by-step look at what’s behind that, see what a crypto exchange is and how it works.

A decentralised exchange (DEX), in contrast, is code that exists on a blockchain. It lets you trade tokens straight from your own wallet, usually by signing a transaction. You won’t go through an account creation or hand over documents. The most common type uses something called an automated market maker, so trades are priced from liquidity pools on-chain. If you want to know how these fit into the bigger picture, take a look at what is DeFi.

Detailed comparison: custody, access, pricing, and total fees

Custody: CEXs take custody of the coins or tokens you deposit; you don’t directly hold them on the blockchain while funds are there. With a DEX, you sign in using a wallet you control, and only send tokens when you’re making a trade.
Access: Bank transfers and fiat currencies like euros are usually available on CEXs, but you’ll be asked for ID documents and, sometimes, a payslip or utility bill. DEXs let you swap crypto to crypto; anyone who can use the right wallet can often access them (though some restrict access).
Pricing: CEXs use order books, so your order may match with others at a listed price. On DEXs, price is set by the pool’s algorithm, and big transactions can shift the rate steeply; see how this happens in slippage.
Fees: On a CEX, expect trading and withdrawal charges. On a DEX, pool fees and network charges apply. Network charges can rise sharply when the blockchain is busy.

There’s no fixed answer for which is more affordable. It’s your trade amount, market conditions, and coin choice that decide. Price things out for yourself if cost is your main concern.

Risks specific to these exchanges when things go wrong

Centralised exchanges have been hacked, frozen withdrawals, or failed outright; some customers have waited for months or lost access completely. Licensing status and custody practices differ, so it’s important to verify the platform’s registration on your local regulator’s website before trusting it. Look for your country’s official register.

Decentralised exchanges move these risks to the protocol and the user. Faulty smart contracts can be exploited, draining liquidity pools or allowing other attacks. Mistaking a phishing site for the real thing is common; signing the wrong transaction can be permanent, since blockchain transfers can’t be reversed. Fake tokens that mimic popular ones are another threat.

Frequently asked questions

Is a decentralised exchange anonymous?

No, not truly. Many DEXs won’t demand your real name, but every transaction you confirm is broadcast on a blockchain for anyone to inspect. Wallet addresses and amounts get linked and monitored. National rules might require identity checks on connected services, such as exchanges where you swap crypto for regular money. Don’t expect full privacy.

Which is cheaper, a CEX or a DEX?

Neither option is always cheaper. On a CEX, add the trading fee and the spread between buy and sell. On a DEX, total up pool fees, network costs, and price impact. For small value swaps in periods of high blockchain fees, a DEX could cost you more, but with large transfers, it may shift. Comparing the exact numbers for your situation is the only way to be confident.