📝 Definition:
An exchange is like a big online shop where you can buy, sell, or trade different types of cryptocurrencies, like Bitcoin (BTC) or Ethereum (ETH).
It's called an exchange, because you exchange your crypto with other users through the platform.
🔑 Key Features:
- Number Of Cryptos: How many cryptocurrencies are accessible on the exchange.
- Buy and Sell: You can use your regular money to buy cryptocurrency, or sell it to get regular money back.
- Current Prices: Shows the latest prices for crypto.
- Other Features: Most crypto exchanges offer way more than a way to exchange crypto. They also offer ways to trade, earn interest on your crypto, loans and more.
⚙️ How It Works:
- Sign Up: Make an account with your email and confirm who you are (this is known as KYC - Know Your Customers).
- Add Money: Put fiat money or cryptocurrency into your account.
- Trade: Use the website to swap digital money based on prices that change according to who's selling and buying on the site.
💡 Applications:
- Investing: People buy cryptocurrency hoping it will be worth more later.
- Day Trading: Some buy and sell on the same day to make quick profits.
- Diversify Investments: Adding cryptocurrency to your investments allow you to split the risks of one type of investment going down.
🔍 Example:
Imagine you’re at a currency exchange booth at the airport where you can exchange your dollars for euros or other currencies.
Just like at that booth, an Exchange online lets you swap one type of cryptocurrency for another.
You see a screen showing the latest rates, choose Bitcoin, and exchange it for Ethereum.
All through a secure website that works like the currency exchange booth, but for digital money.