How crypto exchanges work

What happens when you buy crypto on an exchange, what the fees and pairs mean, and how to keep your money safe.

Centralized and decentralized exchanges

Centralized exchanges (such as Binance, Coinbase or Kraken) are companies. You open an account, deposit money, and the exchange holds your coins and runs the market. Decentralized exchanges are programs on a blockchain: you trade straight from your own wallet, with no account, and no company holds your coins, but mistakes cannot be reversed.

Trading pairs: BTC/USDT

Every market is a pair. BTC/USDT means the price of one bitcoin in USDT, a stablecoin designed to stay worth one US dollar. Most crypto is priced against stablecoins because they move like dollars but live on blockchains.

The order book

Like a stock exchange, a crypto exchange collects buy orders (bids) and sell orders (asks). The gap between the best bid and the best ask is the spread. Popular coins have tight spreads; small coins can have wide ones, so buying and selling straight away loses money.

Fees: maker and taker

A maker adds an order to the book that waits (a limit order); a taker trades against an existing order (a market order). Takers usually pay a bit more. Fees are a small percentage of each trade, but they add up quickly if you trade often.

Spot, futures and leverage

On the spot market you buy the coin itself. Futures and margin trading let you borrow to make bigger bets, up or down. Leverage multiplies losses as well as gains, and positions can be closed automatically (liquidated) after a small move against you. Most beginners who use high leverage lose money.

Who holds your coins

Coins left on a centralized exchange are held by the exchange. If it is hacked or goes bankrupt, you can lose them, as customers of several failed exchanges did. Many people move long-term holdings to a wallet they control; then the recovery phrase is the only key, and losing it means losing the coins.

Staying safe

• Turn on two-factor authentication with an app, not text messages.
• Never share your password, recovery phrase or verification codes. Real support staff never ask for them.
• Be wary of anyone promising guaranteed returns, "signals" for a fee, or help recovering lost funds.
• Check the web address before you log in; fake exchange sites are common.
• Only use money you can afford to lose.

How this site gets its prices

Our charts and crypto pages use Binance's public market data. We never connect to your account and never trade. See crypto prices today or open the live charts.