Toward Understanding the Use of Centralized Exchanges for Decentralized Cryptocurrency

TL;DR

This study explores user experiences and perceptions of centralized versus decentralized cryptocurrency exchanges, revealing usability, fee differences, and security concerns influencing user preferences.

Contribution

It provides the first qualitative analysis of Chinese users' perceptions of CEX and DEX, highlighting usability and security factors affecting exchange choice.

Findings

CEXs are preferred over DEXes due to usability and lower fees.

Users perceive security differently based on country-specific factors.

DEXes offer better privacy but are less favored due to usability issues.

Abstract

Cryptocurrency has been extensively studied as a decentralized financial technology built on blockchain. However, there is a lack of understanding of user experience with cryptocurrency exchanges, the main means for novice users to interact with cryptocurrency. We conduct a qualitative study to provide a panoramic view of user experience and security perception of exchanges. All 15 Chinese participants mainly use centralized exchanges (CEX) instead of decentralized exchanges (DEX) to trade decentralized cryptocurrency, which is paradoxical. A closer examination reveals that CEXes provide better usability and charge lower transaction fee than DEXes. Country-specific security perceptions are observed. Though DEXes provide better anonymity and privacy protection, and are free of governmental regulation, these are not necessary features for many participants. Based on the findings, we propose design implications to make cryptocurrency trading more decentralized.