FUNCTIONING OF CRYPTOCURRENCY EXCHANGES
Whenever we hear the word cryptocurrency, the 1st and the foremost thing which comes into the mind of the people is that it is something which can be bought by the currency which is issued by the government and can be kept as a form of asset and the value of the same increases and decreases which depends on the working of the stock market.
But wait a second have we ever pondered how this exchange system of fiat currency and virtual currency works and for the people who don’t know what is a fiat currency let me tell it you that it is a form of currency issued by the government and is a valid legal tender for the circulation in the particular country and it differs from place to place or country to country because every country has a different specified form of fiat currency.
Now getting back to the question of our concern that how this exchange works? And whether this system of exchange is important to us or not? So, this cryptocurrency exchange is a very important platform that helps and facilitates the exchange of virtual currency with fiat currency. There is a body of people called cryptocurrency exchange which accounts for the sale, purchase, and transfer of virtual currency from one person to another.
FUNCTIONING OF CRYPTOCURRENCY EXCHANGES
What they do is, when a person is willing to buy a virtual currency and makes a request through the website which is providing the service of buying and selling of the cryptocurrency like https://patterntraders.pl. Whenever a person makes a request to buy the cryptocurrency and make a payment on the website it is then the role of the cryptocurrency exchange that comes into the picture.
There are two kinds of cryptocurrency exchanges working in the crypto market, the 1st one is centralized exchanges and the 2nd one is decentralized cryptocurrency exchanges. A centralized cryptocurrency exchange works on the principle that it is widely accepted and has a greater value of significance as compared to the decentralized one. However, the work of both the types of crypto exchanges are similar in nature and they both play an equally important role but it is the centralized crypto exchanges who are greater in number and plays a more important role but when a buyer is buying cryptocurrency be it any virtual currency the person on 1st instance is unaware of the exchange which means the kind of exchange which will work in the background to bring out the things in one channel.
Now it is important for people to understand that the most accepted form of fiat money for making a transaction in the cryptocurrency is the US dollar as it is widely accepted by the people without any preconceived notion of it not being accepted anywhere else. However, a person trying to buy or sell one cryptocurrency should always try to make a transaction in the form of fiat currency which is widely accepted across different countries.
FUNCTIONING OF CRYPTOCURRENCY EXCHANGES
Once the transaction has been made it is the responsibility of the exchange houses to keep a track of the same and look into and record the details of the transaction for the accounting purpose and the allotment of the crypto to the buyer by naming the particular ledger of the currency on the name of the person who has paid a price of the currency.
This is the work that is done at the backend of the office but it is one of the most important works as they are keeping a track of the transaction and these transactions are also responsible for the future transaction which will take place when a crypto holder will sell off the asset owned by him to any other buyer who is paying off a good amount of money to the original buyer so again there has to be a lot of work that needs to be done at the backend like again the change in the name of the ledgers and also facilitating the person engaged in the transaction to get the money of the deal in whatever manner opted by them in a hassle-free manner.
FUNCTIONING OF CRYPTOCURRENCY EXCHANGES