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In the physical world, a financial institution is often a lender licensed to obtain deposits, transfer funds, and store money for its clients. Banks can legally offer the right to exchange one fiat currency for the next to its customers.

Inside the digital world, a cryptocurrency exchange provides services much like banking for their clients; additionally, exchanges work as much like a stock market.

What is a cryptocurrency exchange?

A cryptocurrency exchange is a borderline illegal online marketplace where users can exchange one kind of digital asset for one more using the market value of the given assets. The situation with cryptocurrency exchanges is because they often facilitate the trade of unregistered securities, can be used to launder money, and also have limited, if any, AML/KYC so that they can evade regulations.

Cryptocurrency exchanges played an important role within the ICO boom of 2017. Cryptocurrency exchanges were looking forward to new projects without any real business design, product, or future to launch so they could list these projects on the exchanges and make vast amounts in transaction fees out there trading pairs. However, you can think of a cryptocurrency exchange like a bucket shop.

Exactly what is a cryptocurrency?

There are a few features that distinguish digital currencies from cryptocurrencies.

Cryptocurrencies are coins and tokens without any real purpose-they don’t have utility plus they are created for free more than speculative purposes and facilitate crime.

Unlike digital currencies, most cryptocurrencies do not conform to law; in reality, some cryptocurrencies were even designed to evade regulations. Privacy coins are cryptocurrencies created specifically to facilitate crime by obfuscating the path a transaction has traveled from sender to recipient.

Ultimately, cryptocurrencies are tools utilized to enable crime, whether that be fraud, money laundering, or racketeering, while digital currencies are protocols which allow the digitization of data and money.

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