Cryptocurrency has taken the world by storm over the past few years. As more and more people become interested in this new form of digital currency, the need for cryptocurrency exchange platform increases. Around 46 million Americans have invested in Bitcoin to date.
So, how do the platforms work? This guide will talk about the basics of a cryptocurrency exchange platform like Swyftx and how it operates.
What is a Cryptocurrency Platform?
Cryptocurrency platforms are websites or applications that allow users to exchange cryptocurrencies for other assets, such as traditional currency or other digital currencies. They can buy goods and services or exchange one cryptocurrency for another.
The platform uses a wallet system to make it easier for users to send and receive their cryptocurrencies.
How Does a Cryptocurrency Exchange Platform Work?
Cryptocurrency exchange platforms like Swyftx work in two ways: Peer-to-peer and fiat-crypto exchange.
Peer-to-peer exchanges allow users to trade cryptocurrencies with each other. They are often used because they offer a more personal experience and are usually cheaper than other exchanges. However, they can be risky because no central authority regulates the trade.
They generally work like this: The buyer chooses a seller from the list of offers, and the two parties agree on a price. The buyer then sends the appropriate currency to the seller’s wallet address, and the seller confirms that the funds have been received. The seller then sends the buyer’s chosen cryptocurrency to their wallet address.
The platform is used as a third party to store the cryptocurrency in escrow. This type of exchange is decentralized and unregulated, so it can be risky.
The advantage of P-to-P exchanges is that you don’t have to use a bank or other financial institution to make the transaction. Furthermore, these exchanges don’t require you to provide personal information like your name or address.
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2) Fiat to Crypto
The fiat-to-crypto exchanges allow users to trade fiat currency for cryptocurrency. They work similarly to traditional stock platforms, such as the New York Stock Exchange.
These exchanges function like this: The buyer places an order to buy a cryptocurrency and sets their purchasing price; for example, $1000 for one Bitcoin. If the current price of Bitcoin is $800, then this order will be higher than any other order on the exchange. The order is placed in a queue until it’s filled by another buyer or is canceled.
When the order is filled, the buyer receives Bitcoin in their wallet. The buyer pays the seller by sending them fiat currency through a bank transfer.
The advantages of fiat-to-crypto exchanges are that they offer a more secure experience and have higher liquidity. If you are using an exchange that only accepts fiat currency, you can ensure that the money is safe and protected by government regulations.
These exchanges are faster than P-to-P exchanges because the order is filled by another buyer rather than dependent on another person.
Cryptocurrency exchange platforms are a necessary part of the cryptocurrency ecosystem. They make it easy for users to buy and sell cryptocurrencies.
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