Cryptocurrency Exchanges are exchanges or online platforms/businesses that allow customers to trade (buy or sell) Cryptocurrencies or digital currencies for other assets, such as conventional money, or other digital currencies. Investment in Cryptocurrencies is usually done through an exchange. A user can store their assets/money, either in an online wallet in the exchange, or offline in a hardware wallet-a physical electronic device.
Conventional money in Coin trading is termed as Fiat money, i.e currency that a government has declared to be legal tender, and not backed by a physical commodity. Though all exchanges support crypto vs crypto pairing/trading, only some exchanges support Fiat money vs Crypto pairing/trading.
Cryptocurrency Exchanges can be centralised as well as decentralised. Like any other centralised agency, a centralised Cryptocurrency Exchange holds the assets of the customer, has full access to his account, and acts as a middle man between the user and his account, just like how a bank functions. But in a Decentralised Cryptocurrency Exchange (DEX), there is no middlemen and trading is done through smart contracts and is peer to peer and the currency never passes through a third party service. A centralised Cryptocurrency Exchange is more popular among the traders, as of now.
To start an account, most of the exchanges require basic verification such as a copy of the users ID/passport, and also a two Factor Authentication (2FA) enabled. A two factor authentication is a two step verification where a user along with a user name and password, has a piece of information/physical token that only they know, to access the account. 2FA is regenerated often, so it is needed very time a user logs into their account. It is a second security layer, that will reconfirm your identity.
In one word, exchanges are online marketplaces for the entire cryptocurrency network. The following is a list of some of the Popular exchanges.