Quote:
Originally Posted by afc wimbledon
although it does pose a question, what's the point of the exchanges then?
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Mostly it's for trading and for moving in and out of traditional banks.
Centralized exchanges are good at offering users things like stop-losses, puts, automated trade bots, leverage etc., but all of those things come with the risk of having the exchange holding all your tokens. And, they're easy to use. The don't require the user to understand any best practices for self-custody, which can be scary for people at the beginning.
Also, when you make a trade on a centralized exchange, you're not actually interacting with a blockchain at all. The trades are all just being conducted on their database, so the only transaction costs are the exchange's fees but not the blockchain transaction fees. For large sums of money that's not a huge advantage, but it's a big deal for small amounts of money that a lot of small retail traders are playing with.