From the physical world, a financial institution is a lender licensed to obtain deposits, transfer funds, and store money for the clients. Banks can legally provide to certainly exchange one fiat currency for one more for the customers.

Within the digital world, a cryptocurrency exchange provides services just like banking on their clients; additionally, exchanges be much like a stock trading game.

Exactly what is a cryptocurrency exchange?

A cryptocurrency exchange is really a borderline illegal online marketplace where users can exchange one kind of digital asset for another based on the market price from the given assets. The issue with cryptocurrency exchanges is because they often facilitate the trade of unregistered securities, are often used to launder money, and still have limited, or no, AML/KYC in order to evade legislation.

Cryptocurrency exchanges played an important role within the ICO boom of 2017. Cryptocurrency exchanges were eager for new projects without real business structure, product, or future to file for so they could list these projects on their exchanges and pull in vast amounts in transaction fees out there trading pairs. With that being said, you can imagine a cryptocurrency exchange as a bucket shop.

What is a cryptocurrency?

There are some features that distinguish digital currencies from cryptocurrencies.

Cryptocurrencies are coins and tokens without real purpose-they don’t have utility and they also are intended for nothing over speculative purposes and to facilitate crime.

Unlike digital currencies, most cryptocurrencies usually do not abide by law; in reality, some cryptocurrencies were even built to evade the law. Privacy coins are cryptocurrencies specifically made to facilitate crime by obfuscating the way a transaction has traveled from sender to recipient.

Ultimately, cryptocurrencies are tools used to enable crime, whether that be fraud, money laundering, or racketeering, while digital currencies are protocols that enable the digitization of knowledge and your money.

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