Bitcoin can be traded in a number of ways, here are some of the basics of how Bitcoin trading works. If you want to trade Bitcoin, there are many options out there for you. The two most basic categories of Bitcoin exchange are a centralized exchange, and a decentralized exchange. While neither is going to be a perfect fit for everyone, both have some distinct advantages.

Centralized Exchanges

A centralized Bitcoin exchange more or less combines the role of a broker with a market making operation. These exchanges require you to deposit funds in an account, and then you are able to trade with any of the Bitcoin pairs that the exchange offers. The good part is that many centralized exchanges offer options, futures, and leverage. The downside is that you take on the exchange as a counterparty.

Decentralized Exchanges

A decentralized exchange allows people to trade cryptos on a peer-to-peer basis. This removes the risks associated with depositing your tokens with the exchange, and it also means that you tokens are always under your control. The downside is that the trading options are generally more limited, and you may not get the same pricing that a centralized exchange offers.