What is a centralized exchange (CEX)?
DefinitionA centralized exchange (CEX) is a company-run platform where users deposit crypto or money, trade with each other through an order book and withdraw to their own wallets. While funds sit on the exchange, the company holds the keys, not the user.
How a centralized exchange works
You open an account, usually verify your identity, and deposit crypto or local money. The exchange records your balance in its own database and matches your buy and sell orders with other users’ orders. Trades inside the exchange don’t touch the blockchain; only deposits and withdrawals do.
The exchange pools its users’ coins in its own wallets. The balance on your screen is a claim on the exchange, not coins in a wallet you control.
CEX vs DEX vs self-custody wallet
Many people use both: an exchange for active trading, and a self-custody wallet for what they hold.
- Centralized exchange: a company holds your funds, matches orders and usually requires KYC; fast and liquid, but you depend on the company
- Decentralized exchange: smart contracts execute swaps straight from your wallet; you keep your keys but handle slippage, gas and fake tokens yourself
- Self-custody wallet: stores and sends crypto with keys only you hold, and can include in-app swaps or P2P trading
Risks of keeping crypto on an exchange
Before you deposit, check the exact network and memo on the exchange’s deposit page, and send a small test amount first if you’re unsure.
- Withdrawals can be paused and accounts frozen, by the exchange itself or at a regulator’s request
- An exchange can be hacked or go bankrupt, and customers may wait years or lose their funds
- Your account can be targeted with phishing and SIM-swap attacks
- Deposits sent on the wrong network or without the required memo can be delayed or lost
Using an exchange alongside Waletifi
Waletifi is not an exchange; it is a self-custody wallet, so your keys stay on your phone. When you withdraw from an exchange to Waletifi, choose the network shown on your receive address. When you deposit to an exchange, Waletifi lets you add the memo the exchange asks for and warns you when a destination looks like it needs one.
