Exchange

An exchange is any service that lets users trade Bitcoin for other assets (fiat currency, stablecoins, or other crypto). The two structural categories matter more than the brands:

• Centralized exchange (CEX). A company holds customer funds, matches orders on an internal order book, and settles trades on its own books. The exchange, or a custodian it hires, holds the private keys; customers hold a balance on the exchange's ledger. Coinbase, Binance and Bitstamp are examples, and there are dozens more.
• Decentralized exchange (DEX). Trading happens through smart contracts or peer-to-peer matching protocols; users keep custody of their own funds throughout. On Bitcoin specifically, atomic swaps and protocols like Bisq fall here.

The trust model is the dividing line. A CEX is a custodian: you trust them not to lose, freeze, or steal your coins. A DEX (in the strict sense) is a venue: you trust the protocol, but you keep your keys.

The CEX failure record is one of the most important things a new Bitcoiner should learn from. The major historical collapses:

• Mt. Gox (2014): Tokyo-based exchange that handled about 70% of Bitcoin trades in April 2013; reported ~850,000 BTC missing in 2014, most of it stolen from its hot wallet over the years before. The trustee began repaying creditors in bitcoin in July 2024. In October 2025 it said repayments were largely done for creditors who had completed the paperwork, while many others were still unpaid, and it moved the deadline to October 31, 2026.
• QuadrigaCX (2019): Canada's largest crypto exchange. After its CEO died in December 2018, the company said only he could reach its cold wallets. The court-appointed monitor found them empty since April 2018, and the Ontario Securities Commission concluded the exchange had operated like a Ponzi scheme. Clients lost at least CAD 169 million.
• Celsius (2022): Crypto lender that froze withdrawals in June 2022 with $4.7 billion of customers' assets on the platform, and filed for bankruptcy a month later.
• FTX (2022): One of the world's largest crypto exchanges; collapsed within days in November 2022, when a run on the exchange exposed that customer funds had been sent to its sister trading firm, Alameda Research. ~$8B customer shortfall.
• BlockFi, Voyager, Genesis, Gemini Earn (2022-2023): Crypto lenders and lending products that froze withdrawals during the 2022 contagion.

The pattern is consistent: a CEX is only as safe as its operators' competence and honesty. Most users start on a CEX for convenience (KYC fiat on-ramps, simple UI, customer service), but the manifesto rule from chapter 4 still holds: not your keys, not your coins. Withdraw to self-custody for any amount that matters to you.