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What Is An Exchange?

An exchange is a place or organization where shares, currencies, commodities, etc., are bought and sold.

Deeper Definition

An exchange connects people who want to buy and sell something in exchange for something else. Using a gold analogy, buyers place a ‘buy order’ indicating the price in US dollars at which they are willing to buy gold. If there is a ‘sell order’ at the same price, the exchange matches these two orders, a trade occurs, and gold and dollars exchange hands. This is now the ‘last traded price,’ and you see this figure on your television screen when you turn on the news.

When the next person places an order, the exchange checks again to see if there is a matching order on the other side (buy or sell), and the last traded price changes with each trade.  A quick aside: if there is not another order at the same or better price (higher is better on the buy-side and lower is better on the sell-side), this order remains open until a future order match against it or is canceled by the person who placed it.

Exchange programs allow participants to learn, grow, and collaborate with others to solve common problems and ensure a secure future. Future leaders are formed due to exchanges, and they instinctively recognize the importance of international collaboration, understanding, and empathy.

Exchange Example

Patrick is a businessman who has repeatedly been defrauded by scammers who sell fake goods to him in exchange for a huge sum of money. To put an end to this unfortunate situation that has been causing him losses, he decided to give an online exchange a trial. Here, he could buy his good/commodity without fears or worries and at reasonable prices. On this same platform, Tony got buyers for his goods. His business became less stressful, more profitable, and more secure financially.

An example of a cryptocurrency exchange is Binance. Created by Changpeng Zhao in 2017, it is the largest cryptocurrency exchange in existence. Users can use the exchange to trade various cryptocurrencies in a trusted and secure manner.

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