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        • What is an Exchange?
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        • What is Staking?
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        • Scallop Chain Faucet: All you need to know!
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        • Liquidity Pools
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        • Centralised Exchanges VS Decentralised Exchanges
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        • Why are regulations essential in Crypto Market? How does Scallop lead the way?
        • Banking on Blockchain
        • E-money Tokens
        • The Power Surge of Cross-Chain Interoperability in Blockchain's Future
        • Crypto Trading 101: Must know candlestick patterns for a successful trade
        • Exploring blockchain innovations and their real-world breakthroughs
        • Do not miss these common indicators of the crypto bull market
        • Decoding the Dynamics of Permissioned Blockchain Consensus Mechanisms
        • Summary
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        • Can Quantum Computers be a potential threat to Crypto?
        • Unlocking the cryptocurrency potential: How Banks can thrive in the digital age?
        • How do privacy-enhancing technologies ensure anonymity on the blockchain?
        • What Does Fintech Mean? Understanding the Intersection of Finance and Technology
          • Decoding Data Tokenisation: Its Vital Role and Relevance
        • Unravelling the Concept of the Time Value of Money: Its Implications and Applications
        • Unlocking the Potential of Real-World Assets
        • What is Byzantine fault tolerance?
        • Global Crypto Adoption and Its Potential Socio-Economic Impact
        • How ZK-Rollups are Supercharging Blockchain Transactions?
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      • Skimming of Credit and Debit Cards: What You Need to Know
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      • Keeping Your Account Safe
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      • Beware of these common frauds while using payment cards
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      • What Can You Do On An Exchange?
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      • Summary
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          • Scallop Whitelist
        • Scallop Chain: Built on Cosmos and Secured by Biometric Bridge
        • E-Money Tokens and Scallop
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    • Getting Started
      • Getting Started: Fiat Onboarding And Exchanges
      • Getting Started: The Defi Walkthrough
      • Getting started: Scallop Exchange
      • Staking
        • Scallop Staking Guide
          • Useful Resources
          • 1. Setting Up Metamask Wallet
          • 2. Importing existing wallet
          • 3. Installing Binance Smart Chain
          • 4. Setting up a Kucoin Account
          • 5. Buying SCLP with a market order on Kucoin
          • 6. Transferring from Kucoin to Metamask
          • 7. Connecting Metamask to the SCLP Staking platform
        • LP Staking Guide
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    • Tokenising Real Estate
    • How to Donate Crypto to Ukraine
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On this page
  • Summary
  • Centralised exchanges
  • Decentralised Exchanges
  • Pros and Cons
  • Top exchanges
  1. Guides
  2. Crypto
  3. Basics

What is an Exchange?

How do we use them?

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Last updated 1 year ago

Summary

  • A cryptocurrency exchange is a digital marketplace where users can buy or sell different digital currencies. Some exchanges only support digital currencies whilst others support fiat purchases too.

  • Exchanges act as the intermediary between buyers and sellers, taking a commission for the transaction

  • There are two types of exchanges, centralised and decentralised

Scallop has it's own exchange! Visit to start trading, or visit our guide to getting started

Centralised exchanges

These exchanges have similar business models to a traditional stock exchange, they involve a third party that facilitates the trade, takes deposits and safeguards the holdings of its users. These exchanges can be used to trade fiat currency into digital currency. You can deposit USD or GBP and buy BTC or ETH in a single transaction.

Centralised exchanges use order books to facilitate trade, this is essentially a list of buy and sell offers including the number of tokens / shares / currency being offered.

In the above example, the market is trading at 1.0233 (this was the last price a trade was made at) with 662.1252 units being offered. So what this means is, there is someone that is looking to buy 662 units at 1.0233. Say now that there is no one left that wants to buy at that price, the sellers will have to look for the next buyer which will be the price below.. there they will find this...

It's the next best price and its 351 units.

In this way the market finds a price depending on how much demand and supply there is.

Decentralised Exchanges

Pros and Cons

Exchange type
Pro's
Con's

Centralised Exchange

User Friendly

Hacking risk

Reliable

Transaction Fee's

Decentralised Exchange

Anonymity

Lack of fiat payments

Less hacking risk

Complexity

Better transaction fee's

Liquidity issues

Less market manipulation

Top exchanges

It is good to be on a top exchange because the more trade that takes place, then the more you can be sure that you will get a good and fair price. To tell which is the top exchange we look at volume, which is a measure of how much trade has taken place on a given exchange. The exchanges with the highest volume at the time of writing are as follows:

To learn how to place orders and buy tokens on exchange, you can visit our tutorial

These are interesting as they have no middle man, they are known as 'trustless' as they are built on smart contracts. They don't use an orderbook, instead they have an algorithm that makes a market for buyers and sellers using a . We cover this in more detail in our intermediate section

If you are just starting out you will need to likely sign up to a centralised exchange like Kucoin. This will allow you to deposit fiat currency to trade. We have a guide - so go sign up and get trading!

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https://www.scallop.exchange/en_US/
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liquidity pool
Top Cryptocurrency Exchanges Ranked By Volume | CoinMarketCapCoinMarketCap
this example taken from Kucoin shows the price on the left, and the amount offered at that price (middle column) and the cumulative amount being offered (right)
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