Centralized Exchange (CEX)

Centralized Exchanges (CEXs) are cryptocurrency exchanges that are operated by a single authority working as the governing body. CEX facilitates their trades between their users while maintaining an order book. This consists of all the purchase and sell orders executed by individual traders.

CEX is not actually involved in exchanging cryptocurrencies to their fiat value or vice versa. On the contrary, they deposit these funds to an exchange that takes custody of the given asset and issues the corresponding IOUs to the trader. CEXs are responsible for keeping track of their user’s IOU internally since they trade hands until the very end when someone converts them to an actual currency for withdrawal.