Overview about CEX

So I figure for today's post, it would be interesting to look at the history and facts on CEX.

Note, CEX is a Centralized Exchange. So think of Kraken, Coinbase, and others like it.

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Historical:

Note I'm not getting into the complete history. There is A LOT of exchanges out there, and I wanted to highlight a few major ones.

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While the first crypto (BTC) was made in 2009. The first CEX was made in 2010. The first centralized cryptocurrency exchange was launched by Jed McCaleb under the name Mt. Gox. The following year in 2011 Bitstamp, Kraken, and a few others were made. In 2012 Coinbase was made.

In 2014 Mt. Gox filed for bankruptcy after losing 850,000 Bitcoins. Or what would be equal to today as in 2023, $25,488,950,000.

Skipping to 2017, Binance was launched in China, 2018 Coinbase became the first exchange to be valued at over $1 billion. And in 2019, Binance became the largest exchange by trade volume. In the same year, 2019 FTX was founded. And November 11, 2022 FTX went bankrupt due to illegal practices.

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Again this isn't a complete history. There is a lot of crypto exchanges out there, a lot of events, and I doubt anyone would want to read a complete history here.

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List of crypto exchanges:

I don't think most people understand how many exchanges there were and are. A good list is here, but note it isn't even a complete list. https://blockspot.io/exchange/

The list shows over 1,000 exchanges that are up and closed. Almost 925 of them currently online.

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Note there is other list which shows the fees and what not. But note that not all exchanges are to be trusted. As the saying goes

"Not your keys, not your crypto."

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Benefits to using a CEX:

A major benefit is it's a great way to on/off ramp. On top of this, many exchanges are extremely easy to use, you don't have to worry about transaction fees giving the crypto stays on the exchange, and with some exchanges it can be a safe way to test out crypto without having to learn about wallets and everything else.

Some exchanges even give rewards for learning or using the exchange like Coinbase's learn to earn.

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Downsides to using a CEX:

A major major major downside to all CEX is you are at their mercy. They can easily lock your accounts, lock your funds up, the exchange can get hacked, and so on. The reason for the saying, "Not your keys, not your crypto." It's because if you don't control the keys and aren't the only ones controlling the keys. Then you are at the mercy of whomever controls them.

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Another major downside is on some exchanges there is hidden fees, staking benefits could be a lot less, in some cases staking on exchanges doesn't mean the exchange is actually staking the stuff. Kraken, a highly beloved exchange of this sub even got in trouble for this. On some exchanges there is hidden fees when you withdrawal. A number of exchanges artificially slow down transactions going off the exchange.

Random rule changes or things can lock your funds up. For example, if you move crypto from a gambling site to Coinbase, this will lock your account down. Where if you move it to your wallet and then Coinbase they ignore this. My point is, you are at the mercy of the CEX personal moral and ethic police.

CEX are highly targeted when it comes to government bodies wanting information. CEX are highly targeted when it comes to cyber security. If someone tricks the CEX, they can get access to your funds. Every time you have to do the KYC stuff if you get locked out, lose your 2FA ability, etc. More eyes are on your personal information.