Broadly speaking, there are two categories of crypto exchanges: centralized exchanges and decentralized exchanges. Each category comes with its own advantages and disadvantages.

Centralized Exchanges

Centralized crypto exchanges (CEX) are managed by one organization. Centralized exchanges make it easy to get started with cryptocurrency trading by allowing users to convert their fiat currency, like dollars, directly into crypto. The vast majority of crypto trading take place on centralized exchanges.

Some crypto enthusiasts object to centralized exchanges because they go against the decentralized ethos of cryptocurrency. Even worse in the eyes of some crypto users, the company or organization may require users to follow Know Your Customer (KYC) rules. These require each user to divulge their identity, much as you would when you apply for a bank account, to combat money laundering and fraud.

There’s another concern with centralized exchanges: hacking. With a CEX, the exchange holds the crypto traded on its platform—at least in the short term, while trades go through—raising the risk of hackers stealing assets.

To address this risk, centralized crypto exchanges have beefed up security over recent years. Among other strategies, they now store most customer assets offline and take out insurance policies to cover crypto losses in the case of hacking.

If you like the convenience of a centralized exchange, you can reduce your risk by transferring crypto to a separate, off-exchange hot or cold wallet.

Decentralized Exchanges

Decentralized crypto exchanges (DEX) distribute responsibility for facilitating and verifying crypto trades. Anyone willing to join a DEX network can certify transactions, much like the way cryptocurrency blockchains work. This may help increase accountability and transparency as well as ensure an exchange can keep running, regardless of the state of the company that created it.

The trouble is that decentralized exchanges are much less user friendly, not only from an interface standpoint but also in terms of currency conversion. Decentralized exchanges, for instance, don’t always allow users to deposit dollars and exchange them for crypto. This means you either have to already own crypto or use a centralized exchange to get crypto that you then use on a DEX.

You’ll also likely be engaging in direct peer-to-peer trades. This means it may take longer for you to find someone looking to buy what you’re selling and, if liquidity is low, you may have to accept concessions on price to buy or sell a low-volume crypto quickly.

Global Crypto Exchanges

There are nearly 600 cryptocurrency exchanges worldwide inviting investors to trade bitcoin, ethereum and other digital assets. But costs, quality and safety vary widely. With an emphasis on regulatory compliance, Forbes Digital Assets ranked the top 60 cryptocurrency exchanges in the world.