What Are Cryptocurrency, Blockchain, and DEX Exchanges? A Beginner’s Guide
When you first hear the word "cryptocurrency," you may wonder, what is it? Cryptocurrency is a unique type of digital money that operates on blockchain technology. It doesn’t require intermediaries like banks, and all transactions are recorded in a shared database accessible to all network participants.
So, what is this blockchain technology?
Blockchain is a digital ledger — a specialized system for storing information. It is a distributed database, which means information isn’t stored in one place but is spread across many devices worldwide. All data in a blockchain is recorded as a chain of blocks, where each block contains information about specific transactions.
The main feature of blockchain is its transparency and security. Every transaction recorded in a block becomes viewable but cannot be altered. This makes blockchain a reliable way to store information.
When you make transactions on the blockchain, such as sending or receiving cryptocurrency, your device (computer or smartphone) becomes part of this decentralized network. It helps process and verify new data, ensuring the entire system operates smoothly.
How can I use blockchain and cryptocurrency?
This is where a DEX exchange comes in handy!
What is a DEX exchange?
A decentralized exchange (DEX) is a platform for trading cryptocurrencies that operates on blockchain technology, allowing users to make transactions without intermediaries. The key advantage of a DEX is that users can trade cryptocurrency without registering or depositing funds, maintaining full control of their assets.
The lack of centralized control enables exchanges to occur without involving traditional financial institutions. Such exchanges are powered by smart contracts — specialized programs that automatically execute agreements if all the required conditions are met.
Smart contracts are an essential part of decentralized exchanges because they allow trades to occur without third-party interference. All smart contracts are stored on the blockchain, ensuring high transparency and reliability. This means that every transaction is recorded in a public ledger and cannot be altered or tampered with, significantly boosting users' trust in the platform.
To understand this better, let’s take the example of STON.fi, an advanced cryptocurrency exchange based on the TON blockchain. Here are its key features:
- Low fees and minimal slippage: Thanks to the TON blockchain's efficiency, the platform ensures nearly zero fees and low slippage during trading.
- User-friendly interface: STON.fi offers an easy-to-use interface that integrates directly with TON wallets, making cryptocurrency trading convenient even for beginners.
- Cross-chain functionality: The platform supports exchanges across different blockchains without requiring trust in intermediaries, broadening users' opportunities in decentralized finance (DeFi).
- Decentralization: The platform does not have access to your funds or require personal information, ensuring complete user control over assets.
- Automation: As an Automated Market Maker (AMM), STON.fi uses liquidity pools and algorithms to determine token prices, providing an efficient and automated trading process.
STON.fi also has its own token, STON, available for trading on various decentralized and centralized exchanges. The most active trading pair, STON/TON, is on STON.fi (V2), where the 24-hour trading volume recently reached $52,571.36.
To use a DEX, users need a wallet compatible with the blockchain the exchange operates on. In the case of STON.fi, it’s the TON blockchain. Once a user has a wallet with tokens, they can easily create an order to exchange supported cryptocurrencies.
Orders automatically go into the liquidity pool and are executed without any user intervention. All you need to do is select the token you want to exchange and the token you want to receive, and the transaction will happen automatically! On STON.fi, this can be done in the SWAP section.
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