For a non-technical user, these are the three most commonly used methods to exchange cryptocurrencies: OTCs, centralized and decentralized exchanges. Let’s consider their pros and cons.
1. Centralized exchanges
As the popularity of cryptocurrencies has increased significantly in recent years, many centralized exchanges seem to meet demand. Normally, they are vying for the number of trading pairs. If you change cryptocurrencies, you can auto exchange with a trading pair at a reduced cost or even free of charge.
However, this diversity has its price. The target group of such exchanges consists mainly of traders. Which makes the platforms adapt their offers accordingly and does not make it easier for ordinary people to get involved.
The disadvantages of this method are as follows:
- Complicated interface. An unprepared user can easily get lost in the abundance of indicators, graphics, orders, and other elements.
- Fees, fees, and fees again. To make a simple transaction and exchange one cryptocurrency for another, you would have to pay at every step of your trip. From deposit to final withdrawal. So you may never know what amount you will end up in your wallet.
- Complicated KYC procedure. For some exchanges, the verification process is quite difficult and it can take days, weeks, or even months for a new user to receive his account verification.
- Price fluctuations. Since the volatility of cryptocurrencies is quite high, the price of an asset can even change in a short time when you carry out a transaction. Your order may not be completed and you may have to repeat the process again to complete the transaction.
2. Decentralized exchanges
DEXs were primarily invented as an alternative to a centralized exchange and have actually managed to overcome some of their problems.
They do not require verification, as the money is simply transferred between users’ wallets. Since they are “decentralized”, they are not dependent on any central server and accessible anywhere in the world.
However, decentralized exchanges also have some serious disadvantages:
- Low liquidity. The popularity of decentralized exchanges is low, which has a negative impact on their liquidity. If you want to exchange a really large sum, this would be a big challenge.
- A small selection of assets. As a rule, DEXs attract projects that do not have sufficient budgets to be listed on large centralized exchanges. The variety of coins available for trading there is quite small and in most cases, these are the assets that are not very well known to the public.
Over-the-counter exchanges or OTCs for short are perhaps the easiest way for a non-technical user to exchange cryptocurrencies. Typically, they are integrated into centralized exchanges via API and offer their users a simple interface without all this confusing background noise.
However, this coin also has its dark side:
- While OTC transactions are processed via centralized exchanges, the entire process remains completely opaque. Users may never know the final exchange rate and may be able to be victims of manipulation.
- The worst course. Since over-the-counter providers add their own fees for each transaction, the price, for instance, illuvium price, would ultimately be much worse than with centralized exchanges.
Lets exchange offers a solution
Here at Letsexchange, we have developed our own way of exchanging cryptocurrencies, which eliminates the problems associated with all the above methods and simplifies the entire process. This is the answer to how to change cryptocurrencies when you don’t have time to become a programmer.