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Binance

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Bitfinex

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Coinbase

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Kraken

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Centralized exchanges

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IDEX

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Kyber

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Binance DEX

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Some blockchains were created to enable cryptocurrencies. Others serve primarily as smart contract platforms, allowing to decentralize digital economy: online platforms, financial flows, collaboration... and of course the nascent Web3 sector.



The number of blockchain use cases is constantly growing, as does its ecosystem.



This is a high level view on what blockchain in practice looks like today. 



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<h2 class="wp-block-heading">Cryptocurrencies </h2>



With <a href="https://d.center/explore/bitcoin" class="ek-link">Bitcoin</a>, the first practical application of the blockchain was currency, or more precisely “P2P electronic cash system”, as described by Satoshi Nakamoto himself. Invented in order to remedy the failing monetary system, the blockchain proved itself to be particularly well suited for such a role, providing an independent, immutable and transparent transaction ledger.&nbsp;



Following Bitcoin, new <a href="https://d.center/explore/cryptocurrencies" class="ek-link">cryptocurrencies</a>-focused blockchains have emerged, trying to ameliorate this or that aspect of the blockchain: transaction throughput like Litecoin, privacy like Monero… 



Some cryptocurrencies have appeared as an extension of a community, like the Doge memecoin.



Other cryptocurrencies, created as tokens (and not native coins), serve as representations of fiat currencies on the blockchain. They are called stablecoins, the biggest ones being USD-pegged Tether and Circle.



<h2 class="wp-block-heading">Smart contract blockchains</h2>



Currency is not the only thing that can profit from the blockchain's decentralization.



Virtually any digital system (hence most of organisation that use them) can benefit from eliminating central authority.



This is achieved through the use of <a href="https://d.center/en/explore/smart-contrats" class="ek-link">smart contracts</a> - autonomous and self-executing programs that run on the blockchain. Smart contracts allow the development of DApps, or decentralized applications, and power the emerging web3 sector.



The first and most popular smart contract platform is Ethereum blockchain, but it has many competitors: Solana, Cosmos, BNB Chain... etc



The difference between a Cryptocurrency blockchain and a Smart contract blockchain is now rather theoretical and can be understood only by questioning the blockchain’s purpose: whether it was conceived to support a currency or to host elaborate smart contracts. Both types of blockchains need a native coin to pay the network nodes for running the protocol, however in cryptocurrencies’ case the native coin is a goal in itself, whereas for smart contract blockchains it is a payment for running smart contracts. 



<h2 class="wp-block-heading">Blockchain use cases</h2>



Almost every traditional economic sector can use blockchain's qualities.



⛓️ Decentralized systems are intrinsically fairer than centralized ones: their transparency and self-executing nature are much better in redistributing value and allowing the users to be true and sole owners of their data. This quality is substantial when it comes to online platforms, be it social media, cloud computing or ride hailing.



⛓️ Blockchain being a transparent and immutable ledger, it is also particularly suitable for data certification purposes.



⛓️ Smart contracts can automate numerous processes, not only increasing the overall cost and time effectiveness, but also providing users with a guarantee that no one can unilaterally change the rules underlying the DApp.&nbsp;This notably enables the new type of trustless collaboration within DAOs, or Decentralized Autonomous Orgnizations.



⛓️ Finally, the blockchain structure allows fast and easy data and values transfer, without any borders or other limitations. This quality is highly appreciated in finance, and many traditional players have already incorporated crypto into their offer: exchange, custody, asset management, asset tokenization... Besides, a crypto-native version of finance, known as the DeFi, is developing very fast.







<h2 class="wp-block-heading">Web3</h2>



Blockchain and cryptoassets can be used both in centralized and decentralized way. 



The exact boundary between the two is not always clear, but usually when the core operations happen on-chain, the value is transparently distributed, and governance decisions are taken by the community, we can speak about <a href="https://d.center/en/explore/web3" class="ek-link">Web3</a>, a new era of the internet where users are in control. 



The most obvious example of web2 using blockchain vs web3 are exchanges: a centralized one like Binance is centrally managed and controls its users' cryptoassets, while a decentralized exchange like Uniswap never gets in the possession of its users' funds and evolves according to its DAO's decisions.



<h2 class="wp-block-heading">Blockchain ecosystem</h2>



Blockchain is a collective endeavor, and it needs an extensive ecosystem to function and to serve its purposes. 



Numerous products and services have therefore been developed: <a href="https://d.center/explore/crypto-wallets" class="ek-link">wallets </a>to interact with the blockchain, <a href="https://d.center/explore/crypto-exchanges" class="ek-link">exchanges</a><a href="https://d.center/explore/crypto-exchanges" class="ek-link"> </a>to buy and sell crypto, <a href="https://d.center/en/explore/oracles" class="ek-link">oracles</a> to interact with the real world and feed information to smart contracts, not to mention the miners who maintain the network, or interoperability protocols connecting different blockchains. 



<h2 class="wp-block-heading"> </h2>

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A well-developed ecosystem is crucial for the blockchain: while assuring its maintenance and specific functions it also allows people to easily use cryptocurrencies.



The blockchain is a decentralized method of storing a continuously changing ledger and registering all transactions that compose it. It is a powerful tool that has generated an entire ecosystem around it, assuring that:



<ul class="is-style-checked"><li>the blockchain network is correctly maintained (mining for PoW-based blockchains)</li><li>a user can easily connect to the blockchain, initiate and receive transactions (<a href="https://d.center/explore/crypto-wallets" class="ek-link">wallets</a>)</li><li>a user can exchange a cryptoasset against [tooltip content=" fiduciary money with no intrinsic value backed by and dependent on the government (e.g. dollars or euros) "] fiat money [/tooltip] or another cryptoasset (<a href="https://d.center/explore/crypto-exchanges" class="ek-link">exchanges</a>)</li><li>a user can spend her cryptoassets paying for a real-world product or service not yet available in crypto (crypto payment systems)</li><li>a decentralized application (DApp) working on a blockchain can get real-world information in order to be able to execute its pre-programmed sentence (oracles)</li><li>different blockchains can work together, allowing people to use the most suitable blockchain for each particular purpose and easily switch between them when needed (interoperability protocols)</li></ul>







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With all these directions developing really fast, the blockchain ecosystem becomes yet more efficient and complete, further propelling crypto adoption.

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Exchanges are the platforms where different cryptoassets can be exchanged against other cryptoassets or fiat money (euros, dollars etc...)&nbsp;



Crypto exchanges work in a way like traditional stock exchanges, with Market Makers (liquidity providers who undertake to buy or sell a specific asset at a specific price) and Market Takers (entities who wish to fill their trade immediately at a proposed price).



In the crypto space the exchanges can be centralized (trading happens 
 off-chain 
 outside the blockchain
 on a platform run by a company), or decentralized (trading happens 
 on-chain 
 on the blockchain
 via a smart contract).



<h2>Centralized exchanges</h2>



Centralized exchanges are owned and operated by companies that maintain total control over the orderbook and transactions. The orders are matched and executed on an off-chain platform, which means that the exchange becomes a custodian of its users’ funds, whether it is cryptoassets or 
 fiat money 
 fiduciary money with no intrinsic value, dependent on the government and central bank (e.g. dollars or euros) 
 .



In order to exchange a cryptoasset a user has to send it to the exchange's blockchain address, and in order to exchange fiat money a user sends it to the exchange’s bank account. Such a system allows real-time trading of different types of assets, including cryptos from different blockchains or fiat money. However such convenience has a major drawback - the exchange acts as a trusted third party, with all the risks attached. The exchange being a custodian of the clients’ cryptoassets, it keeps all the private keys related to them. So if the exchange is hacked or its owners are dishonest or careless, users’ coins can be easily stolen. Hence the major principle of handling cryptoassets : not your keys, not your money. To decrease the hacking risk for users, many exchanges nowadays use cold storages to stock the majority of coins and take insurances for the coins that stay in their hot wallets (see <a href="https://d.center/explore/crypto-wallets" class="ek-link">Wallets</a>).



You can see how to buy cryptocurrency on a centralized exchange in our short tutorial <a href="https://d.center/posts/how-to-buy-cryptocurrency" class="ek-link">here</a>. 



<h2>Decentralized exchanges</h2>



Decentralized exchanges, or DEX in short, try to carry out the same functions as their centralized counterparts, but avoiding a trusted third party. Their infrastructure is deployed on a blockchain, where transactions are made, and the users keep control over their private keys - no need to trust any company. DEX offers more independence, but the tradeoffs usually include slower trading speed and limited choice of trade pairs: it is impossible to exchange fiat money (the bank system cannot be connected to a blockchain) and some crypto pairs from different types of blockchains.



There are different types of DEX that can broadly be divided into 3 categories depending on the way they manage orderbooks: on-chain, off-chain and AMM (Automated Market Maker).



On-chain orderbook DEX: all the process happens on a blockchain, which makes it transparent, but also more slow. An on-chain DEX also carries a risk of front-running, where miners could place their orders before users.



Off-chain orderbook DEX is faster and avoids front-running risk, however it is considered less decentralized, for the orderbook is kept by a company. Such method is used notably by Binance DEX, IDEX and Etherdelta.



AMM is the latest type of DEX that was also one of the reasons for the recent DeFi explosion. The orderbook is automated and functions thanks to liquidity pools, which can be joined by anyone. Among these burgeoning DEX one can name Uniswap, Sushiswap, Curve and Balancer.







Centralized exchanges undoubtedly dominate the market, however the AMM DEX growth is quite impressive. Crypto exchanges are important not only for an overall crypto adoption, but also for decentralized finance, allowing anyone to trade cryptoassets with an unprecedented simplicity.