Cryptocurrency exchanges act as an intermediary between a buyer and a seller and charge a commission or transaction fee.
For new investors, cryptocurrency is the buzzword. As much as it is promising in terms of giving returns over a short time, it is also volatile and risky. The whole idea of cryptocurrency is based on a distributed ledger that stores information on every transaction or trade. Also, the trade is protected by high-grade cryptography. The simplest way of investing in cryptocurrency is by trading (buying and selling) of any crypto coin like Bitcoin, Ethereum, Dogecoin, Cadence, etc. These are done through online exchanges where investors open an account and start the trade.
What Is A Cryptocurrency Exchange?
These platforms facilitate cryptocurrency trading in exchange for digital and fiat currencies. They act as an intermediary between a buyer and a seller and charge a commission or transaction fee. CoinDCX, CoinSwitch Kuber, and UnoCoin are some examples of online exchanges operating in India. An investor can also use an online exchange to convert their crypto coins back into fiat currency (Indian Rupee or US Dollar) for withdrawing the amount from their bank account later.
How Does It Work?
A cryptocurrency exchange acts like an intermediary – a brokerage firm – between a buyer and a seller of cryptocurrency. It allows a buyer to deposit money using several methods like direct bank transfer, UPI, using debit or credit cards, etc. It charges a set commission or fee for every transaction done using its services.