Exchanges
A centralized exchange is a company that holds customer funds, runs an internal order book and matches buyers with sellers. You create an account, verify your identity, deposit dollars and trade. It is the only practical way to convert between a bank account and crypto, and your balance there is a claim on the company rather than an asset you hold.
How it actually works
When you buy on a centralized exchange, no blockchain transaction happens. The exchange updates two rows in its own database. Your dollar balance goes down, your crypto balance goes up, and the actual coins never move.
The exchange holds a large pool of crypto and tracks who owns how much internally. Only when you withdraw does a real onchain transaction occur.
Reading an order book
| Part | What it is | Why it matters |
|---|---|---|
| Bids | Buy orders waiting, below the current price | Shows where buyers are willing to step in |
| Asks | Sell orders waiting, above the current price | Shows where sellers are waiting |
| Spread | The gap between the best bid and best ask | An immediate cost on every round trip |
| Depth | How much sits at each level | Determines how far a large order moves the price |
| Last price | The most recent trade | What people mean by the price |
Order types worth knowing
Limit order
Trade only at your price or better. You add liquidity, so fees are lower. It may never fill.
Market order
Fill immediately at whatever is available. Guaranteed execution, no price guarantee.
Stop limit
A limit order that only activates once price reaches a trigger. Used to cut losses or protect gains.
Recurring buy
Automatic purchases on a schedule. The simplest form of dollar cost averaging.
Where the fees actually are
Most beginners dramatically overpay, and it is almost always for the same reason.
| Fee | Typical | How to avoid it |
|---|---|---|
| Simple buy interface | 1.5 to 4 percent | Use the advanced or pro trading view instead |
| Taker fee | 0.05 to 0.6 percent | Use limit orders where you can |
| Maker fee | 0 to 0.4 percent | Often zero at higher volume tiers |
| Card deposit | 2 to 4 percent | Use ACH bank transfer |
| Spread | 0.5 percent or more on simple interfaces | Advanced interfaces expose the real book |
| Withdrawal | Network dependent | Withdraw over Base, Solana or another cheap network |
Using one safely
Pick a regulated exchange
In the US that means a registered money transmitter. Offshore platforms offering more leverage and more tokens are offering it because they are not subject to the same rules.
Turn on strong two factor authentication
Authenticator app or hardware key. Never SMS, which is vulnerable to SIM swapping.
Use a unique email and password
Ideally an email address you use for nothing else, so credential leaks elsewhere do not reach it.
Whitelist your withdrawal addresses
Most exchanges support this. It means an attacker with account access still cannot send funds anywhere new.
Do not store long term holdings there
Keep a working balance for trading, and move the rest to self custody.
The exchanges we recommend
These are referral links. We may earn a commission at no extra cost to you, and each one has a full review including its drawbacks.
Common questions
What does not your keys not your coins mean?
If a company holds the private keys, you do not hold the crypto. You hold a claim against that company. When exchanges have failed, customers became unsecured creditors in a bankruptcy rather than owners of assets.
Are exchange balances insured?
USD balances at US exchanges often carry FDIC pass through eligibility. Crypto itself is not FDIC insured anywhere. Some exchanges carry private crime insurance covering a portion of hot wallet holdings.
Why does an exchange need my ID?
US anti money laundering regulation requires registered money transmitters to identify customers. Any platform serving US customers without it is operating outside those rules.
Where to go next
Set up your first exchange account with us
Account creation, two factor authentication, bank linking, a first purchase and a withdrawal to your own wallet. About an hour on a screen share.