The 7 Major Type Of Exchanges In The Paradigm Of Finance

Different exchanges have different features and functionalities which have been discussed below.

Before we start a discussion regarding the 7 major type of exchanges in the paradigm of finance, let u take our readers through an introduction to digital exchanges. The content also gives a basic insight about exchanges and its features.

What is a cryptocurrency?

A discussion about exchanges or crypto exchanges is incomplete without the definition of crypto currencies. It is a digital asset structured to function as a platform of exchange that uses cryptography to safeguard high value or critical financial transactions and verify the process of asset handover.

Where can I deal in cryptocurrencies?

Cryptocurrency Exchange! It is the place where you can buy and sell.

What is an exchange?

If we define in terms of a layman, an exchange is also known as a bourse. It is basically a venue for trading tradable securities, futures, commodities and forex. This platform basically draws brokers and dealers who are willing to trade in the objects mentioned above.

What is a cryptocurrency exchange?

While we extend our discussion forward on cryptocurrency exchanges, let us explain first what a cryptocurrency exchange is in practice. An exchange is a platform which allows the user to exchange one cryptocurrency for another. It is a digital currency exchange platform which ensures proper trading of the digital crypto currencies. The novices in the field of cryptocurrencies would be more inclined towards using exchanges or brokers. With numerous cryptocurrency exchanges available at the disposal of the users since 2017, there might be confusion while picking the best exchange. Thus, it is very important for the readers to have a lucid overview of the different cryptocurrency exchange platforms accessible in the markets. As a reader, you should be familiar with the following type of cryptocurrency exchanges:

Type of Cryptocurrency Exchanges:

1. Fiat Crypto Exchanges

These are the exchange platforms where you can make a cryptocurrency purchase using a fiat currency. A fiat currency is a government based currency just like your American Dollar or British Pound. It is very popular with novice users since they are able to purchase a variety of cryptocurrencies without any particular hassles. The only visible drawback with this exchange is its inability to offer a choice of coins to the user.

2. Crypto Exchanges

These exchanges allow you to purchase one cryptocurrency using another. It mandates you to make a purchase through the fiat crypto platform and then send it to the Crypto Wallet to validate a particular transaction. Here, you are not allowed to use Fiat Currencies to buy a cryptocurrency.

3. Peer to Peer Exchanges

The peer to peer exchanges simply match a buyer with a potential seller which ultimately offers the best price option to the buyer. Thus, it is more potentially user friendly when it comes to helping the buyer in making a pertinent choice from a list of options.

4. Brokers

Brokerages are not typical exchanges, but they allow you to conduct transactions without actually creating a wallet.

Key Findings:

• Only 52% of small exchanges actually have a formal government license compared to only 35% of the large ones.

• Bitcoin has the flexibility of all exchanges followed by Ether and Litecoin which have an exchange acceptability of 43% and 57% respectively.

• There are predominantly four national currencies which dominate the entire global cryptocurrency trading volumes. They are USD, Euro, Yen and Chinese Yuan.
• Only a 53% of exchanges are supporting the national currencies other than the five major global reserve currencies i.e. USD, CNY, GBP, JPY and EURO.

• 73% of the total exchanges take complete custody of the user funds. Only 23% allow the users to take retain custody.

• 79% of exchanges offer timely training to the users on the best trading methodologies to the members to ensure that they do not incur any losses due to erroneous trading methodologies.

• More than 90% of exchanges use a variety of robust internal security measures, differences can be identified with the approach of the different exchanges.

Some of the other types of Exchanges are:

Forex Exchange

These exchanges enable transactions of currency with other available assets like fiat currency (flat money). As a user, of Forex Exchange, you can also use other fiat currencies and convert to the desired currencies using this particular platform. This exchange allows sending of fiat to a user’s personal digital wallet. The same can be converted into anonymous prepaid cards which can be used later on to transact or rather draw money from ATMs around the world.

Stock Exchange

A stock exchange enables the exchange of one’s stock holdings for a new, purchase or selling of stocks along with the exchange of normal running stocks to real currency. The stock exchange is a virtual platform which gives a real time insight about each and every move made on the stock markets. With real time reporting and analytics, it helps the traders manage their stocks, purchase and buy at remarkable speed. The modern software platforms ensure that all transactions conducted are immutable and safe!

Commodity Exchange

In plain and simple terms, a commodity exchange is basically a tangible asset which may act on behalf of a commodity, contract or utility in the real world scenario or in the virtual world on the available blockchain network. The commodity trade is one of the most high volume and high profit yielding faculties of trading. Today, commodity trades have a major impact on the stock markets. A commodity exchange is a platform which allows the smooth exchange and transaction of commodities over a safe and secure network. it helps the users to convert existing commodities to wallets to be withdrawn through ATMs or bank checks and conversion of real currency to purchase commodities.

This article is intended to educate readers on the various types of exchanges which can be used by the users. In case you are new to the domain of dealing and trading in various exchanges, you will find this information to be very interesting and educative from the perspective of the user.

Post 2017, the excitement and popularity associated with cryptocurrencies have increased manifolds. Today, a lot of information is available over the internet which can help readers understand the dynamics of the cryptocurrency network. Understanding the basics of crypto and other financial exchanges is equally important since it helps the end user to understand the different trading commodities actively available in the market.