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Are all cryptocurrency exchanges blockchain-based?

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Are all cryptocurrency exchanges blockchain-based? Blockchain PlatoBlockchain Data Intelligence | Vertical Search AI

Cryptocurrencies or digital currencies are all based on blockchain technology.

But not all cryptocurrency exchanges are block-chain based.

Cryptocurrency exchanges are either centralized or decentralized. Most of the cryptocurrency exchanges that exist now are centralized. Anything that is blockchain based can never be centralized.

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The centralized nature in cryptocurrency exchanges is one of the most important features for processing transactions. Unlike Blockchain where no information is stored at a single point, these exchanges keep the users’ private keys in a centralized server.

Some may find the concept of a centralized exchange to be misleading, as digital currencies themselves are often termed as “decentralized.” The term centralized cryptocurrency exchange, refers to the use of a middleman or third party to help conduct transactions.

The crucial difference between centralized and decentralized exchanges is whether or not a middle man is present. Decentralized exchanges are less widespread and less popular as compared to centralized exchanges.

The digital coins on these centralized or decentralized exchanges have its own blockchain on which the transaction data is stored.

To conclude, the centralized exchanges that are the most popular way of trading aren’t blockchain based. However, when a trade is carried out, the information is recorded on the blockchain of traded cryptocurrency and is temporarily stored on the blockchain based crypto wallets.

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