From the physical world, a financial institution can be a traditional bank licensed for deposits, transfer funds, and store money for the clients. Banks can legally provide to exchange one fiat currency for another for the customers.

From the digital world, a cryptocurrency exchange provides services just like banking to their clients; additionally, exchanges serve as much like a stock market.

What is a cryptocurrency exchange?

A cryptocurrency exchange can be a borderline illegal online marketplace where users can exchange one sort of digital asset for one more in line with the rate in the given assets. The situation with cryptocurrency exchanges is that they often facilitate the trade of unregistered securities, can be used to launder money, and possess limited, or no, AML/KYC so that they can evade the law.

Cryptocurrency exchanges played an important role in the ICO boom of 2017. Cryptocurrency exchanges were looking forward to new projects without real business model, product, or future to file for so they really could list these projects on their own exchanges and make millions of dollars in transaction fees from these trading pairs. With that being said, you can think of a cryptocurrency exchange as a bucket shop.

What is a cryptocurrency?

There are many features that distinguish digital currencies from cryptocurrencies.

Cryptocurrencies are coins and tokens without real purpose-they do not have utility and they are intended for free a lot more than speculative purposes and to facilitate crime.

Unlike digital currencies, most cryptocurrencies don’t comply with law; in reality, some cryptocurrencies were even built to evade the law. Privacy coins are cryptocurrencies specifically made to facilitate crime by obfuscating the road a transaction has traveled from sender to recipient.

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

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