Centralized exchanges are the earliest version of exchanges. It is the kind of ecosystem built with trust as the backend. Here, the admin of the exchange has direct control over trading. All the data, funds are stored in the central server, i.e the single pathway for data. It enables quick and easy data handling.

Centralized exchanges (CEX) are platforms where users can trade various assets, including cryptocurrencies, fiat currencies, stocks, and commodities, among others. These exchanges are operated by a central authority or company, which acts as an intermediary between buyers and sellers. In centralized exchanges, users deposit their funds into accounts managed by the exchange, which then facilitates trading on their behalf. The exchange typically provides order matching, order execution, custody services, and liquidity, often charging fees for these services. Examples of centralized exchanges include well-known platforms such as Binance, Coinbase, and Kraken.

While centralized exchanges offer high liquidity, user-friendly interfaces, and a wide range of trading pairs, they also come with certain drawbacks. These include concerns about security, as users relinquish control of their funds to the exchange, and risks of censorship or regulatory intervention due to the centralized nature of the platform. Despite these drawbacks, centralized exchanges remain popular due to their convenience and accessibility to mainstream users.