Exchange Security and Risk Factors

[bettercrypto]

Share your experience on DEXs and CEX

You don't have to care of exchange security, it's their platforms and their issues to handle, not you. What you need to care of, is your fund security. In Bitcoin, we have "It's your not your private key, it's not your bitcoin" to remind people that if they store their bitcoin anywhere that does not give them private key, it's risky place and they shouldn't store their bitcoin there.

CEX is not such place.
DEX is good if you want to use them as Peer to Peer platform for your trade with Bitcoin. If it is with altcoins, be more careful because with smart contracts, liquidity pools, slippage, sale tax, you can lose your money by trading with DEX too.
Reminder: do not keep your money in online accounts
Security checklist.
Bitcoin security and resources.

Therefore, whichever of the two we use, whether CEX or DEX, they still have the same risk to give to anyone who enters a fund on their platform. In short, it really depends on the trust we give to both platforms as to how far we can give it to them.

For example, I know if there is a risk in the CEX platform, as others say we should be ready and accept the fund that we will lose if ever there is a problem that comes unexpectedly,
but of course, as much as possible, we don't want that to happen.

[salad daging]

Therefore, whichever of the two we use, whether CEX or DEX, they still have the same risk to give to anyone who enters a fund on their platform. In short, it really depends on the trust we give to both platforms as to how far we can give it to them.

For example, I know if there is a risk in the CEX platform, as others say we should be ready and accept the fund that we will lose if ever there is a problem that comes unexpectedly,
but of course, as much as possible, we don't want that to happen.

DEX can be exploited so that when DEX is affected, DEX users usually have to revoke.cash
CEX is often hit by hacks so that the platform is temporarily suspended this will be the anxiety of users.

At least we have to be careful, never store too much money on the CEX platform.
Using DEX must be careful and indeed this is a good choice sometimes it becomes vulnerable when you swap shitcoins that are not recognized.

[lixer]

Both DEX and CEX  have their own  risks associated with them, but in all you do, avoid storing your coins with exchanges as this is not a good practice. People do this but they stand the chance of losing their bitcoins if the exchange gets hacked and they may become too vulnerable to Phishing attacks depending on which exchange they are using.

For those of us who care so much about our privacy, and wish to have total control over our bitcoins, Decentralized Exchanges is a better option. CEX does not guarantee that. Users of CEXs have to do KYC, thereby exposing their privacy to third parties which is not really ideal.

I think it was only in a CEX where it's possible to store a crypto but for a DEX, as soon as we disconnect our wallet, our accounts will get logged out too, so there are no coins that are left inside the DEX. Not all people in crypto are storing their coins inside an exchange, as they already know the risks associated with it. For those who do, they might only be a newbie that still lacks on knowledge but being a newbie is not an excuse because doing a research is only a simple thing to do.

People won't store a crypto on an exchange for no reason but they do this mainly because they are a trader or they are earning an incentive. They might be aware of the risks already but they just take it because it is part of the game and if not, how can they be able to do these things that they are having an interest with?

It is not only through Hacking is where we can lose our Bitcoins but also when there are shady deals like if we are using a P2P site, or if there are bugs in the system. It is also known that an exchange can collapse sometimes, either intentional or not. CEX is centralized but it is possible for us before to be private on using them because back in time, there were no KYC yet but so many things have changed later on including it.

[hd49728]

I think it was only in a CEX where it's possible to store a crypto but for a DEX, as soon as we disconnect our wallet, our accounts will get logged out too, so there are no coins that are left inside the DEX.

Disconnect is not absolute safe. You need to revoke smart contract access as well if you want to be safe, but it's on chain transaction so it requires transaction fee.

On DEX, you interact with them through smart contracts, and firstly to spend your fund, you need to approve smart contract access to your fund, later if you no longer want it, you must revoke it. Not many people revoke smart contract access to their fund.

How to Revoke token approval.
https://etherscan.io/tokenapprovalchecker
https://revoke.cash/
https://app.unrekt.net/

Master guide to crypto security: Crypto sallets, smart contracts, DeFi, and NFTs

[JeffBrad12]

When you use DEX, you will have to do several things.

First thing is storing your fund in non custodial wallets that you control, and it's up to you in choosing good wallets for fund storage. Open source is another specification of a good wallet, and this specification must come together with non custodial.

Second thing is securing your device and wallet, to keep your fund safely. It's your own wallet, your own bank and if you can not secure it, you might lose it to hackers.

Last thing is choosing a good DEX to use, and don't use scam DEX.

that's great list but I think i need to add one really important thing that people should look into when they are trying to use DEX.
which is availability of the liquidity provider. DEX is known for its lack of liquidity specifically for newer coin, if you're not careful, setting slippage recklessly could drain you out of your money.
fortunately most of the DEX set 0.1 % slippage as default and will prompt you if the slippage is bigger.

after all, the main purpose we exchanged money is because we want to get fair rate.

[fikrett]

I think it was only in a CEX where it's possible to store a crypto but for a DEX, as soon as we disconnect our wallet, our accounts will get logged out too, so there are no coins that are left inside the DEX.

Disconnect is not absolute safe. You need to revoke smart contract access as well if you want to be safe, but it's on chain transaction so it requires transaction fee.

On DEX, you interact with them through smart contracts, and firstly to spend your fund, you need to approve smart contract access to your fund, later if you no longer want it, you must revoke it. Not many people revoke smart contract access to their fund.

How to Revoke token approval.
https://etherscan.io/tokenapprovalchecker
https://revoke.cash/
https://app.unrekt.net/

Master guide to crypto security: Crypto sallets, smart contracts, DeFi, and NFTs

Thanks for the great list of sources to dig into it! Surely, many people and newbies probably don't think about them - heck, even I who used DEXes to try them out a bit, didn't think about it (mainly because I probably will continue to use them from time to time, but the fact remains).
Much appreciated!

[john_egbert]

When you use DEX, you will have to do several things.

First thing is storing your fund in non custodial wallets that you control, and it's up to you in choosing good wallets for fund storage. Open source is another specification of a good wallet, and this specification must come together with non custodial.

Second thing is securing your device and wallet, to keep your fund safely. It's your own wallet, your own bank and if you can not secure it, you might lose it to hackers.

Last thing is choosing a good DEX to use, and don't use scam DEX.

that's great list but I think i need to add one really important thing that people should look into when they are trying to use DEX.
which is availability of the liquidity provider. DEX is known for its lack of liquidity specifically for newer coin, if you're not careful, setting slippage recklessly could drain you out of your money.
fortunately most of the DEX set 0.1 % slippage as default and will prompt you if the slippage is bigger.

after all, the main purpose we exchanged money is because we want to get fair rate.

Yep, that's the gist of it on newer coins and memes especially, if you want to be first - you put it up, and you pay the price for trying your theories and ideas out to be the first on the lead.
However, the risks should be always calculated and taken into the account.

[betswift]

Therefore, whichever of the two we use, whether CEX or DEX, they still have the same risk to give to anyone who enters a fund on their platform. In short, it really depends on the trust we give to both platforms as to how far we can give it to them.

For example, I know if there is a risk in the CEX platform, as others say we should be ready and accept the fund that we will lose if ever there is a problem that comes unexpectedly,
but of course, as much as possible, we don't want that to happen.

DEX can be exploited so that when DEX is affected, DEX users usually have to revoke.cash
CEX is often hit by hacks so that the platform is temporarily suspended this will be the anxiety of users.

At least we have to be careful, never store too much money on the CEX platform.
Using DEX must be careful and indeed this is a good choice sometimes it becomes vulnerable when you swap shitcoins that are not recognized.

We need to stay responsible on both, in fact, because both have their cons which people use to get you drained in no time  We are talking especially about those who think that lucrative deals and contracts just fall off to their wallets from nowhere.

[FortuneFollower]

Therefore, whichever of the two we use, whether CEX or DEX, they still have the same risk to give to anyone who enters a fund on their platform. In short, it really depends on the trust we give to both platforms as to how far we can give it to them.

For example, I know if there is a risk in the CEX platform, as others say we should be ready and accept the fund that we will lose if ever there is a problem that comes unexpectedly,
but of course, as much as possible, we don't want that to happen.

You just pick what suits you best and stay vigilant nevertheless.
After all, there are risks on both of the platforms, however, in different regards and different places. There is no panacea of sorts or a platform that would be without such security issues - you just need to know better and stay away from the deals that may shake you up.

[_act_]

You don't have to care of exchange security, it's their platforms and their issues to handle, not you. What you need to care of, is your fund security. In Bitcoin, we have "It's your not your private key, it's not your bitcoin" to remind people that if they store their bitcoin anywhere that does not give them private key, it's risky place and they shouldn't store their bitcoin there.

You are correct. You see what some hack in the past led to. Examples are the Mt. Gox, Cryptopia and FTX. It is not good at all to leave coins on exchanges. Better to withdraw them into a noncustodial wallet instead. But how about traders? I mean the day traders that traders that are trading within minutes or less than a day. How can they protect their coins on the exchanges?

[$weetne$$]

CEXs are used for engaging in transactions where buyers and sellers do exist but have control over the funds and the assets of the users. However my question is, In terms of the level of risk and security, how do decentralised exchanges DEXs compare against centralised exchanges CEXs

Decentralized exchanges are supposed to be more secure than centralized exchanges but from the numbers of hacks that I have seen happen from when I was researching, I think decentralized exchange are more vulnerable to hack than centralized ones and this is because a centralized exchange can stop the attack before it happens when they notice an irregular activity of withdrawals happening since they control everything and monitor what is happening on their exchange. Decentralized exchange are different and before a hack is noticed, lots of coins would have been moved already although this doesn't mean centralized exchanges are better than decentralized ones because when you do not have your coins on any exchange, you will be safe from the hacks.