What are the differences between a non-custodial exchange and a traditional centralized exchange?

Motor fengApr 30, 2022 · 3 years ago3 answers

Can you explain the key differences between a non-custodial exchange and a traditional centralized exchange in the world of cryptocurrencies? How do they operate differently and what are the implications for users?

Non-custodial Exchange

Centralized Exchange

Cryptocurrencies

3 answers

Apr 30, 2022 · 3 years ago
A non-custodial exchange allows users to retain control of their funds throughout the trading process. Users' funds are not held by the exchange, reducing the risk of hacking or theft. In contrast, a traditional centralized exchange holds users' funds on their behalf, which can be convenient but also exposes users to potential security vulnerabilities.
Apr 30, 2022 · 3 years ago
When using a non-custodial exchange, users typically connect their personal wallets directly to the exchange platform, enabling peer-to-peer transactions. This decentralized approach ensures that users have full control over their private keys and can execute trades without relying on a third party. On the other hand, centralized exchanges act as intermediaries, holding users' funds in their own wallets and facilitating trades on their behalf.
Apr 30, 2022 · 3 years ago
At BYDFi, a non-custodial exchange, we prioritize user security and privacy. By eliminating the need for users to trust us with their funds, we empower individuals to take full control of their assets. Non-custodial exchanges are gaining popularity due to their enhanced security features and the growing demand for decentralized solutions in the cryptocurrency space.