A crypto exchange is an online platform that lets users buy, sell, and trade cryptocurrencies, usually against traditional currency like the US dollar or against other cryptocurrencies. Most beginners make their very first crypto purchase through an exchange rather than buying directly from another person.
Exchanges generally fall into two broad types. Centralized exchanges are run by a company that manages an order book and typically requires identity verification, similar to opening a brokerage account. Decentralized exchanges instead use smart contracts to let users trade directly from their own wallets without a central company holding their funds.
When you keep coins on a centralized exchange, the exchange technically controls the private keys on your behalf. This is convenient, but it also means you are trusting that company's security, which is why a common piece of advice is to move significant long-term holdings into a personal wallet.
