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How cryptocurrency exchanges work Part 2

Exchange Wallets

Funds that participate in the trade are stored on the exchange’s wallets: cold and hot.
The main wallet of the cryptocurrency exchange is called “hot” – it is used to transfer user funds to the balance and withdraw funds.

A cold wallet is backup storage where the main fund of user funds and the exchange itself is stored. Cold wallets are not connected to the Internet, so as a result of a conditional hacking of the exchange, attackers do not gain access to its main assets.

As necessary, the exchange regularly transfers funds from hot to a cold wallet and vice versa – to avoid risk.

Additional modules

Additional modules of the cryptocurrency exchange conduct non-trading and administrative operations, confirm applications, register users and authenticate them. Modules are also used in the calculations.

Trading Room Interface

Cryptocurrency exchange seems complicated only at first glance – you can understand the charts, indicators, and numbers without special knowledge.

The central place is occupied by the course chart: this is the dynamics of changes in the value of one cryptocurrency in relation to another. In our case, the screen displays the dynamics of the Bitcoin Cash (BCH) rate against Bitcoin (BTC).

The same charts are presented for any other pair on which the exchange is trading. On Bitzlato, you can easily switch between them in the window on the left.

Cryptocurrency exchanges use a type of chart called ” Japanese candles .” Each candle in it shows a change in the course over a selected period of time (the left and right borders of the candle): green means the growth that has occurred, red – the fall.

The upper part of the candle’s “body” is the mark at which the course was located at the moment it began to be built. The lower part shows the course towards the completion of the candle.

The lines that go beyond the boundaries of the “body” are the “shadows” of the candle. Shadows show peak (minimum or maximum) course values ​​for the selected time period.

An exchange request – or order – is an offer by an exchange user to buy or sell cryptocurrency. When creating an order, the cryptocurrency rate and the amount that is available to complete the transaction at this rate are set.

The exchange groups purchase and sale orders separately, and the generated lists are called the stock exchange “glass” or the order book. When an order is found suitable for its conditions, the exchange will automatically conclude a transaction between users, and executed orders will disappear from the list.

Next to the bid book is a list of completed transactions. The trading history contains key information – the transaction rate, its amount and the exact time of the transaction.

The application form corresponds to the name. To register your offer in the application book, indicate the cryptocurrency rate and the amount you expect to conduct a transaction in the form of a purchase or a sale, respectively.

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